Is specialization the right move for your accounting firm?
Specializing in a particular industry can simplify your firm’s workflow and help you target your marketing towards a receptive audience. You can narrow your firm’s focus to a specific business niche to improve your revenue and marketing return on investment (ROI).
Here at Gusto, we aim to empower CPAs to increase their profits and get the most out of their accounting services. We partnered with CPA Academy to present an edifying webinar on specialization and marketing your accounting specialty. Our webinar titled “How to Add Revenue to Your Firm Through Specialization” featured Dan Moshe, founder and CEO of Tech Guru. You can watch the entire webinar here.
In this article, you’ll learn all about niche marketing, focusing your attention on understanding your target industry, and how to determine whether specializing is the right direction for your firm.
Marketing is invaluable for increasing your revenue and growing your firm. Accountants can improve their marketing by focusing on a specific business vertical, meaning a niche industry. Once you determine your firm’s specialization, you need to market your services effectively to your target vertical.
Whether you’re marketing your services to a business vertical or marketing to a broader customer base, you need to calculate your return on investment. Your marketing ROI is the revenue you generate relative to the amount you spent on marketing:
“We … [know] we made the right marketing decision … [by] measuring what we call ‘return on investment,’ [or] return on invested capital. … For every dollar that we put in marketing, we need to be able to see two dollars in new revenue just to cover our marketing. … And for it to actually make a return, we’re looking for three times [the amount of money we invested].”– Dan Moshe
Businesses have individual needs when it comes to reaching a successful ROI. Dan’s business has a gross margin of 50%, so they need to make three times the amount they invested in marketing to turn a profit.
Niche marketing can increase your firm’s ROI because you can target a specific business vertical and appeal to the needs of a particular type of business:
“Marketing with intention … [and] meaning is really critical. … Through [your] niche, your marketing will become much simpler, much cleaner, and much easier because now you get to focus on just one type of vertical, one type of space. … It makes it so that instead of focusing on a broad range of options, you can figure out [your marketing tactics] by clarifying your target market.”– Dan Moshe
Your firm can improve its marketing by appealing to a specific business vertical. You can focus your attention on a target audience and win their business by appealing to their particular needs. Dan noted that marketing is essentially a series of promises you make to potential clients or customers, and your firm needs to be able to deliver on those promises:
“Now that we’ve marketed it and … we’re out there in the marketplace, [and the client is] hearing about us, the next thing we need to do [is] to deliver on those promises. Marketing really is just a promise at the end of the day.”– Dan Moshe
If your firm specializes in a business vertical, you need to focus on niche marketing and make appealing promises that address specific needs. For example, if your firm specializes in delivering accounting services to restaurants, you can message your marketing appeal to restaurant owners’ specific pain points, such as payroll issues, to gain their business.
Understanding your target business vertical
In addition to marketing your services to a business vertical, you need to familiarize yourself with their industry. You can establish strong business relationships by understanding your target niche. One critical step you can take towards understanding a vertical is learning how to utilize their industry-specific software and processes:
“Once you select a vertical, you’re going to find there’s a handful of specific industry apps that those organizations use. That almost always … [directly] impacts the general ledger of their business. … Understanding … the accounting [and] how the financials are getting done will position yourself in a uniquely unfireable way because you know the client software and you’re able to help them get the most out of it.”– Dan Moshe
Your firm needs to understand the accounting and finances of your specialization and have the ability to assist clients in their industry-specific needs.
Specializing simplifies your workflow because you focus on learning a single industry rather than many. Dan’s tech company primarily assists accountants, and this enables his business to focus its attention on the accounting industry rather than many different industries:
“[We’re] able to establish CPA-specific playbooks so that we have … the best way to set up CPA firms’ technology. And then ultimately, as CPAs become the majority of our clients, it’s going to really simplify all of our operations … because now we don’t need to know how to manage hundreds of different pieces of software and different ways of doing things.”– Dan Moshe
Centering your services around a particular vertical simplifies your business operations because you focus on the needs of a specific industry rather than many different business types.
Deciding whether to specialize
Although specializing in a vertical can be an incredibly lucrative direction for your firm, getting started may seem like a daunting task. Dan outlined four critical steps you can take to determine whether specializing is the right choice for your firm.
The first step you can take in determining whether specializing is suitable for your firm is simply starting a conversation. You can discuss specialization and specific verticals with different people within your firm. A small step you can take is simply discussing specialization during your next firm meeting.
In addition to starting a conversation, you should ask an expert. Other accountants and associates likely have expertise in specializing, and you can gain valuable insights by reaching out to them:
“Talk to somebody or a firm that … is specializing and get some feedback and ideas from them.”– Dan Moshe
Another critical step you can take towards specializing is to commit to evolving your firm. Whether or not you take the leap into focusing on a particular vertical, you more than likely want to improve your firm and increase your revenue. When you look into different ways to gain more clients, you might discover that specializing is a lucrative direction for your firm. Dan noted a helpful question you can ask yourself when discussing the evolution of your firm:
“‘How can we put ourselves out of business?’ … [The question] helped us push the envelope. We said, ‘Well, if a business opened up next door and put us out of business in a year, how do they do it?’ … Well, it’d probably be more than that. It’d probably be two dozen specialist IT firms that moved in next door into our building and took every one of our clients. We’d be out of business in a year easily. And so we say, ‘Well, how can we prevent that from happening?'”– Dan Moshe
When analyzing your firm’s future, you can address your weaknesses and determine how you can prevent your firm from going out of business. For Dan, the solution was specialization because his company was losing clients to specialized IT companies. Specialization isn’t necessarily for every accounting firm, but you can find the best direction for your firm by contemplating how a competitor could put you out of business.
The final step you can take in contemplating whether to specialize is to connect with your peers. Joining a peer organization is a great way to connect with other CPAs and consider changes to your firm such as specialization.
If you determine that specialization is right for your firm, you can pick a vertical by investigating growth trends in different industries. You can find a niche that will be lucrative for your firm long term:
“Read up on … industries, and … look for one that’s got some positive growth trends [or] maybe some complexities that you are uniquely positioned to be able to help with.”– Dan Moshe
Serving the needs of a particular industry may be a beneficial direction for your firm, so contemplate and investigate whether you should move towards specializing.
Learn more about choosing and marketing an accounting specialty
Focusing on serving a business vertical can simplify your marketing and enable your firm to focus its attention on the inner workings of a single industry rather than many. Determining whether specializing is right for your firm can be difficult, so discuss it with co-workers, contact an expert, commit to evolve, connect with peers, and research business growth trends.
One critical step you can take in expanding your firm and improving your ability to serve your clients is by automating menial tasks. Fortunately, Gusto provides excellent tools that can help you and your clients automate your back offices. You can integrate different automation software’s into your workflow so that you have more time for your clients. Visit our Gusto for accountants page to learn more about Gusto can help you progress your firm.