As you scale a professional services firm, you’ll have the opportunity to focus on a certain niche clientele or service everyone that comes in the door. Though it can be tempting to take on any project that pays the bills, I highly recommend that you consider niching early and stick to it.
For professional services, niching is key to achieving significant growth. A clearly defined niche allows your brand and marketing materials to be in alignment. As a result, you will make it easier for your ideal clients to find you.
Niching also allows you to build technical expertise quickly. How so? When you service a niche client base, you will get hundreds of repetitions in a relatively small area of your profession’s code, regulations, and processes. This allows you to not only become an expert relatively quickly, but also build the deep expertise that commands premium prices for your advice.
I niched my firm in real estate tax and accounting services from day one. I truly believe this is a major component of my success. Below we’ll explore the benefits of niching as well as how you can niche your own firm.
Niching allows you to clearly define your target client and help them find you easily
When you are laser-focused on the “who,” marketing your services will become more effective and efficient. Your ideal clients will more easily find you in their search for a service professional. When you couple a niche with producing great content, your lead generation activities will be close to automated.
Let’s take my CPA firm as an example. When you type “real estate cpa” into Google, you likely see my firm’s website (www.therealestatecpa.com) on the first page.
Niching in real estate investors gives my team and prospective clients clarity on who we work with. Choosing a niche is one thing, but boldly stating your niche takes courage.
We are loud and proud of who we service and this automatically weeds out any prospective client that doesn’t fit the nich. On the other hand, it draws in more prospective niche-clients than we’d otherwise have a chance to speak with.
I figured when a real estate investor is interested in exploring tax and accounting services, they probably type “real estate cpa” into a Google search. After checking out Google’s keyword research tool, my hypothesis was proven to be correct. So I purchased www.therealestatecpa.com and officially branded my firm, Hall CPA PLLC, as The Real Estate CPA.
Now put yourself in my potential clients’ shoes. You are looking for a CPA who can provide quality tax and accounting services related to your real estate portfolio. You find me through a Google search and we have a consultation. You ask me if I work with a lot of landlords and I get to reply “definitely, we have over 500 clients very similar to you because we only onboard real estate investors.” That’s a powerful value proposition if you invest in real estate - we have hundreds of clients like you because we only work with people like you.
When you niche, you don’t have to spend time proving yourself on consultations with prospective clients. You don’t have give away free advice to show you know what you’re talking about. Your website, content, and branding will do all of the talking for you because it will be so crystal clear as to who you service.
There are other CPA firms out there that I know of who have successfully branded niches, such as the Fitness CPA and the Brewery CPA.
And if you’re an attorney, check out the SyndicationAttorneys as an example.
I’m not linking to the above firms because I want you to Google search the keywords to fully understand the power of niching.
Niching allows you to build expertise quickly and charge premium prices
Though people like to make it seem easy, becoming an expert in any topic takes a significant amount of time and energy. There’s no such thing as an overnight success, especially as it pertains to professional services firms.
The good news is that when you choose to niche, you are reducing the scope of topics, processes, and regulations that you must learn thoroughly. Additionally, because your scope of work is smaller, you’ll build deep expertise more quickly than those who don’t niche.
Over half of the tax returns I review from prospective clients have errors on the balance sheet pertaining to the implementation of the 2013 Tangible Property Regulations. These regulations tell you how to treat expenditures as it pertains to tangible property. Tax preparers and advisors who are generalists can’t possibly know these regulations inside and out because they are incredibly complex. It takes education, research, and thousands of repetitions that can’t possibly be obtained unless you are working primarily with real estate clients.
My deep expertise in these regulations makes sales calls a breeze. I’m able to point out missed opportunities and errors during the consultation and many times these prospective clients are completely unaware that they have underlying issues in their tax returns. By pointing these issues out, I provide the prospective client with upfront value and the natural reaction is to want to provide me some value back, typically by signing up for our services.
As another example, let’s look at the SyndicationAttorneys. I know Kim Lisa Taylor writes great Private Placement Memorandums and Operating Agreements for real estate syndicates. In my first time working with Kim’s team, I felt confident that they knew what they were doing because, well, they are THE syndication attorneys. After going through their process and seeing their work, it was confirmed they are indeed experts and better than many other securities attorneys I’ve worked with in the past.
When you hold deep expertise, how do you think it affects your pricing? If you guessed that you can charge premium prices, you’re correct.
Though I’ll hold the pricing discussion for another day, don’t be afraid to charge a premium rate once you feel confident you have the expertise your clients are looking for. People are more than willing to pay to have the best advisor in their back pocket.
How to pick a niche
Sometimes, firm owners ask me: how do I pick a niche? I usually respond with: what topics interest you or are you passionate about?
I picked real estate because I love growing my wealth through cash-flowing rentals. Eric Killian picked the Fitness CPA because he has a passion for fitness and being outdoors.
Brainstorm a few ideas. What topics or hobbies excite you? Do you have a hobby or activity that you get consumed thinking about? Perhaps these are potential niches.
Once you have a few ideas jotted down, the next step is to determine if the niche is viable. Basically, we’re trying to determine the potential opportunity of scaling a business if you were to service solely that niche. There’s no perfect way to do this, but here are some things to think about:
- Is this a b2c or b2b niche? If b2c, just know that consumers are emotional buyers. They do not think logically about money and your work will be cut out for you from a marketing perspective (you’ll have to really convince them you’re worth it). If b2b, know that business owners vote with their dollars. They are looking for a direct ROI and if you can show them how your services will provide value, they will be more willing to come on board.
- How many potential customers are there? There’s no right number here and it could also depend on the locations you service. Personally, I only want to pick niches that are rich with potential clients because I use content marketing to find those clients rather than direct outreach or referrals. For example, if I targeted real estate investors in Hickory, NC, the niche wouldn’t be viable as there are not enough real estate investors to service. But if I target real estate investors in the U.S.A, all of a sudden there’s a wide pool of potential customers.
- What will your customers pay? The price you can charge depends on the perceived value of the end buyer. Someone who has the means to invest in real estate values tax preparation at a higher rate than someone who is living paycheck-to-paycheck. Why? The real estate investor inherently places a larger value on his/her time. Who makes up your niche, their characteristics and their values, will play a big role on the price you can ultimately charge.
Try to pick one niche. If you can’t pick two. I wouldn’t pick three or more niches as you’ll lose the benefits of niching, primarily being the clear branding and messaging as well as the deep expertise in your niche’s technical problems.
Are there risks to niching?
There are certainly risks to niching that you need to be okay accepting should you choose to niche. In my experience, the opportunity cost of not niching far outweighs the risks of niching. Here are risks that I’ve experienced when niching services:
The risk of not enough clients: certainly a risk that you need to get a good handle on. If there aren’t enough good paying clients in your niche, you’ll never grow your firm. One way to mitigate this risk is to expand your geographic service area.
The risk of growing slow: you will certainly grow more slowly from the onset when you niche. It takes time to build a brand that is recognizable and drives potential clients to your door. However, niching will provide you with the ability to grow exponentially in the future once your brand is rock solid. One way to mitigate this risk in the beginning is to take on non-niche work as a supplement… but remember, one day you’ll have to get rid of your non-niche clients so be prepared for that.
The risk of choosing too big a niche: you may think you’ve landed on a niche, but you’re “niche” may be too big for you to make an impact. I originally made this mistake with real estate. The “real estate” niche includes agents, wholesalers, developers, builders, flippers, syndicates, funds, and landlords. It wasn’t until I chose a couple niches (landlords, syndicates, and funds) that we took off growth-wise. To mitigate this risk, choose a few sub-categories to really niche down.
The risk of a niche being too competitive: every niche has key players, but don’t worry too much about that as there is plenty of business to be had. You just need to focus on crushing your competition. To mitigate this risk, get friendly with Ubersuggest (www.ubersuggest.com) - a keyword research tool that allows you to see what content your competitors are ranking for and how to produce better content.
Even though these, and other risks to niching exist, you can mitigate most risks with smart planning and execution.
My experience was that it took a while to build a solid brand in my niche. A while being about 18 months. Once my brand was established, we had constant inbound leads and we scaled to new heights quickly.
Start with activities, topics, and hobbies that you enjoy and interest you. And then pick your niche, plaster the fact that you service that niche everywhere and your ideal clients will have a much easier time finding you. In time, your firm will become an unstoppable force in the niche.