Making Decisions on Niches

Source: Partner’s Report

At the AICPA Practitioners Symposium in Las Vegas, Jeff Pawlow of The Growth Partnership in St. Louis, Jennifer Wilson of ConvergenceCoaching in Omaha, and Joel Sinkin of Accounting Transition Advisors in New York and Kansas City, spoke on “Building a Specialty Practice.” Here is a summary of their observations and advice:

• Be cautious about entering the popular niches. Firms should be looking for niche opportunities with less competition.
• For a niche to be successful it must be lead by a person with great enthusiasm for it. Support from the managing partner is also crucial.
• Niche experts should help their clients with advice on mergers & acquisitions, strategy, and financing.
• Strategic alliances can help you deliver services immediately while building your expertise for the future. Be sure to have a contract with a noncompete clause.
• Get to know the market in your area. Specifically, find out what your competitors are doing by using a grid like the one found at www.convergencecoaching.com.
• One-stop shopping was a phenomenon of the late 90’s. Serving in too many niches may add breadth at the expense of depth.
• Write a description of your ideal client. Communicate that to the entire firm.
• Expect the following time table:
  • First year—learn if the niche is viable.
  • Second year—realize a profit.
  • Third year—achieve critical mass.
• Measure your success in terms of market share.
• Good niches now:
  • Manufacturing tax.
  • Cost segregation.
  • CFO services.
  • Sarbanes-Oxley work for small public companies.
• Not-so-good niches now:
  • Financial planning.
  • Technology.
• Use www.zapdata.com to build a prospect database and to identify competitors.
• Use a cross-selling matrix, where clients are the rows and services are the columns. This will identify opportunities to cross-sell.

From Partner’s Report—the Monthly Update for CPA Firm Owners, October 2006, p. 1. For subscription information contact Institute of Management & Administration, Inc., 3 Park Avenue, 30th Floor, New York, NY 10016-5902. One-year subscription $349. 212-244-0360, [email protected].