Are you a specialist or a generalist?
Mark Lee considers the pros and cons of accountants specialising rather than being a traditional general practitioner.
Four years ago I posed the question: Are you a bog-standard accountant? More recently I was asked whether accountants are more likely to build successful practices if they are generalists or specialists.
Most accountants start out as general practitioners and tend to stay that way as their client base has always been quite disparate. Many of those who specialise do so only because they originally trained in firms that had a specialism.
It is especially difficult for multi-partner firms to focus on a single specialism. What tends to happen is that different partners focus on different niches. Indeed this is another reason for there being so many general practices. Even if individual partners focus on a specific niche, the firm itself cannot claim to specialise.
There are several reasons why focusing on a niche makes it easier to make more profits.
The starting point is that it becomes easier to attract more clients. This is because it is easier for people to recognise when to recommend you. Having a clear focus also makes it easier to attract PR. In simple terms an accountant who has a clear and distinct niche will stand out from the other accountants they and others might previously have seen as their competition.
When you try to be all things to all people you end up being the same as everyone else. Why should anyone recommend or refer clients to you as distinct from the accountant down the street? Why should anyone who meets you remember you as distinct from the other accountants they have met or might meet in the future?
Having a clear focus or niche also helps your ranking on search engines. The key point here is to rank highly for what prospective clients are searching for. Being number one for ‘Accountants in London’ is a tough ask. Being number one for ‘accountant for taxi drivers in London’ is easier. And easier still when referencing more specific areas than ‘London’.
Does it matter?
Don't misunderstand me. I'm not saying there is anything wrong in being a generalist and serving a wide range of client types.
I know many hundreds, possibly thousands, of accountants who do just this. Some even secure a continuing stream of new client introductions through referrals from existing clients. Proof, if it were needed, that this model works as well as it ever did.
Equally though I can see that the fastest growing firms, the ones able to charge premium fees and the ones winning more new clients faster than others, are typically focused on serving a specific niche. A genuine niche. Not something generic such as SMEs or even ‘owner managed businesses’. These aren't real niches because everyone ‘specialises’ in them and also because they are insufficiently specific. Claiming them as a niche 'ticks' the box in theory but has little impact in real life.
Equally, claiming to ‘specialise’ in a long list of business types (that match your current client list) you don't fool anyone. You simply come across as the same as the next firm that also claims to specialise in a similar list of client types. How many client types can one accountant reasonably 'specialise' in serving anyway? 3? 7? 20?
Some of the more specific niches I have seen accountants reference include: Homeworkers, divorced women, contractors, hair salon owners, martial arts, entertainers, second home owners, french property owners, vets, doctors, dentists, golfers, the childcare sector, solicitors, barristers and taxi-drivers.
Beyond client types, some accountants focus on providing a limited range of services. 'Bookkeeping' or 'Tax' are perhaps the two most common - and, as with SMEs, they are perhaps too generic to be of much value as a distinct service niche. But such professed expertise still helps to distinguish these accountants from those who choose to do 'everything for anyone'.
On the tax side of things it can help to be more specific and reference services related to, for example, capital gains tax, VAT, share valuations, investigations, customs duties etc.
More specific areas of expertise, that can be just as powerful as a specific business niche include: inheritance tax planning, property tax advice, grooming businesses for sale, raising finance, international tax and/or expansion and expert witness work.
I am less convinced when accountants suggest that their choice of bookkeeping software is a niche. Try telling your business contacts and referrers that you specialise in clients who like your favoured choice of bookkeeping software. It would be like specialising in clients who like the fact you prefer AccountingWEB over Accountancy Age. Or that you use Ariel font rather than Times New Roman.
Yes, you may be able to explain how clients benefit from your choice of bookkeeping software. But few prospects and referrers are really fussed with how you do your stuff. They just want confidence that you do it and that you do it in a way that suits them. (I appreciate the benefits of cloud over traditional bookkeeping, but that's as far as it goes for me).
What about my ‘other’ clients?
I often hear accountants claim that they cannot niche as they do not want to risk alienating clients who do not fit that niche. My advice is always the same. Don’t worry about them.
Firstly, no one says that you have to move exclusively into a niche or specialist area. Even specialists have some clients who do not ‘fit’. As long as those clients are being well served they don’t care either. Indeed, unless you tell them they may not even become aware of your niche. Treat them as individuals and tell them on a ‘need to know’ basis.
You might also be interested in
I am Chairman of the Tax Advice Network - a nighly ranked online resource tfonr anyone seeking indepdent tax advisers. As such it is also a long established lead generation facility for tax advisers and tax accountants.
Before the lockdown I was also speaking at conferences and awaydays for accountants and tax advisers. I had started...