Developing a Niche as a Growth Strategy

Source: Accounting Today

Many CPA firms rely on mergers and acquisitions to grow, but an increasing number of firms are embracing niche development as a powerful growth strategy. In this article, several consultants and firm leaders share their insights on developing a niche. Here are some highlights:

• Due diligence is critical to selecting the right niche and determining the best approach. Too often, firms explore potential niches from the inside out – that is, they “gather around a conference room table to brainstorm ideas.” A better approach is to identify what the market needs and then determine whether the firm can supply it. Client focus groups can be a good place to start.
• There's no one right way to enter a niche. Some firms acquire a firm with an existing specialty, others hire professionals with the necessary expertise, and others start from scratch. Identifying a current client that can serve as an “early adopter” can help you get your foot in the door, learn about the market, and obtain referrals. Consider your firm's culture, capital, and desired timeline when deciding on the right strategy.
• For firms that don't possess expertise in a niche, a strategic alliance can be a great way to learn about the market without a substantial investment in training or hiring.
• Relationships are critical, so firms without existing clients in the niche might be better off acquiring a firm with the relevant specialty.
• Once you commit to a niche, immersion in the industry is a key to success. Firms should join industry trade groups or associations, attend conferences and conventions, and devote time to networking – with both industry participants and other CPAs who work in the niche.
• Forensics is a hot niche right now, and wealth management is making a comeback. But a niche that may have the greatest potential – but is often overlooked – is international tax, accounting and consulting.

For the complete article, read “In search of new niches: The first step begins with due diligence.”

From Accounting Today, April 1, 2012, SourceMedia Inc., One State Street Plaza, 27th Floor, New York, NY 10004, 800-221-1809.