By Viresh Harduth, Vice President, Small Business, Sage Africa & Middle East
Many accounting firms specialise in providing financial and tax services to small and medium businesses (SMBs). It’s a vibrant and healthy space with plenty of demand, yet there is also a lot of competition. Some firms find it difficult to truly differentiate themselves and take growth and profitability to the next level.
One of the most viable ways to do so is to choose a niche market to serve and become the go-to financial partner in that sector. You could, for example, specialise in working with medical practices, legal firms, small retailers, construction firms, financial intermediaries, agri-businesses, or real estate companies. This approach has three major advantages:
- You can develop deep consulting and advisory skills in your chosen niches. This will enable you to cement customer relationships and drive profitable growth by becoming a true business partner to your clients.
- From a business development and marketing perspective, you can focus your resources on a select client base. You can, for example, focus on networking through industry conventions or advertising in selected industry publications.
- You can generate internal efficiencies. You can use efficient processes to process accounts and tax returns for similar clients. This should be considered carefully in your staff recruitment, operational requirements, and software choices, ideally before marketing yourself in this niche in the first place.
How do I turn my practice into a niche firm?
There are many niche markets to choose from in the SMB space. The challenge is identifying one or more that will be profitable and rewarding for your business. Here are a few things you can consider as you explore niche markets:
In which industries does your team have experience and expertise?
Start by considering areas where you are technically competent, have an interest or have an existing network. You’ll be familiar with the sector’s cash flow and inventory management challenges if you once ran a restaurant. You’ll most likely also have industry contacts. If you count many doctors’ rooms among your clients, you’ll have a robust understanding of their business issues.
Where are the opportunities?
Market research can help you understand the opportunities and issues in the markets you want to target. Are companies in your chosen niches growing? What are their business’s unique processes and financial management challenges—for example, project accounting in construction or medical billing in medical practices? Do they face new compliance requirements that demand specialised help? In addition to desktop research, contact business owners and ask what keeps them awake at night.
What must you do to create a specialised practice in your sector?
We also recommend that you plan carefully regarding resources and put together a strategic plan for expanding your practice. Will you need to recruit additional staff? How senior do they need to be? Will you need to invest in training and upskilling your existing team or add new software to your current portfolio? Could you benefit from joining or partnering with industry associations in your chosen niche?
Focus but manage the risks Â
Focusing on a niche market can be profitable, but it can also leave you vulnerable to economic change – for example, if a downturn hits a particular sector. This is especially true if you focus on industries heavily affected by economic cycles, such as construction or mining. As such, it’s a good idea to diversify by focusing on more than one niche.
You could, for example, focus on retail, medical services, and legal firms to ensure you are insulated if one sector takes an economic hit. With that caveat, finding niche markets is an excellent way for accountants to unlock new, profitable opportunities. It’s no surprise to hear that more and more practices are focusing on niche markets to optimize budgets and boost internal efficiency.
