Panalitix has seen many clients make great strides in 2020. In spite of unpredictable and challenging conditions, most firms have grown revenues, increased capacity and improved on other important metrics.
It remains to be seen whether the growth trend will continue into 2021. For example, generating fees from COVID-related government programs will not last forever.
We are especially encouraged by many firms taking positive steps towards specializing and they are beginning to see the fruits of their efforts. Let’s look into this further.
Specializing to Remain Competitive
A Boston-based, 11-person accounting firm serves clients in the medical industry. Many of their clients have contracted with the US government for research and their accounting needs are quite unique… but well understood by our client, who says:
“In an increasingly changing, competitive and “noisy” market, we got really serious about our niche; government contract accounting. This has brought a new focus to the firm and has put us ahead of many competitors”.
Specializing to Gain Marketing Efficiency
The founder of a firm in San Jose, California was frustrated after pouring cash into marketing efforts which did not yield high-quality leads. Given his expertise helping venture capitalists structure their investments in early-stage businesses, he adopted this as his area of specialization:
“Getting clear on our competitive advantage was important. We know exactly who our target clients are and how to reach them. We are no longer ploughing money into marketing with no results”.
Specializing based on Client Needs
Usually, the clues as to where to specialize are right in front of you; the needs (or ‘pain-points’) of your clients. The founder of a 6-person firm based in Perth, Australia explains:
“Some years ago, we helped a client apply for a license to operate in the hospitality industry. A whole lot of financial information was required and we assembled this for them. We didn’t think much of it… but soon we were asked to do the same work for a different client. Then again… and again. Now it’s our main business. These are long-term, lucrative projects and we’ve created great relationships with the regulators. Even in the depressed hospitality industry, we have a lot of work going on”.
Specializing to Hone Advisory Skills
Being a specialist comes with certain responsibilities; deep knowledge in a particular industry or technical area. Many accountants claim to be “business advisors” but their clients are not convinced. They find this claim too broad and seek business advice from other specialists.
A partner in a 22-person firm with offices in Melbourne and Sydney, Australia, explains:
“For years, we have been drinking the ‘business advisory Kool-Aid!!’ We tried to demonstrate our knowledge of business and turn that into fees… with limited success. Then one of our long-term clients got themselves into trouble and we played a major part in turning around their business. We helped them raise capital, took a seat on their board and offered strategic advice. This was noticed by the Bank who engaged us to help them with other ‘distressed’ clients – and this has become our main niche. In fact, it was 70% of our turnover in the past 12 months. We still do our tax and compliance work but market our turnaround services aggressively to lawyers, bankers and insolvency practitioners”.
Specializing to Make Learning More Efficient
Staying up to date on best practices, developments and trends is tough. A Panalitix client based in Birmingham, UK specializes in the construction industry, mostly helping builders manage costs and drive profitability across complex projects. All accountants and CSC’s have to take professional development courses to better understand the construction industry and their clients’ needs. A senior accountant in the firm said,
“Being able to speak the language of our clients is really important and our clients value this knowledge”.
Specializing to be Viewed as an Authority
A Panalitix client based in North Carolina, USA, is well known to many attorneys in the area. Some years ago, he was asked to give evidence in court and has built a litigation support practice on the back of this experience and his network. He has a good reputation in this field and clients are willing to pay more for the expertise of his firm. He markets through speaking engagements and is writing a book on his experiences.
Specializing to Increase Networking Effectiveness and Referrals
Many accountants have acknowledged that the best leads come from referrals. But how easy is it for your friends, clients and acquaintances to describe your firm? They may completely trust your capabilities but are not good at explaining your value proposition to their contacts. This gets easier when you are a specialist and have a clearly defined value proposition.
A Panalitix client in Phoenix, Arizona has developed expertise in estate planning and asset protection. They’ve put together many case studies which represent the important work they do for clients and “tell memorable stories”. This helps make a strong impression – something that is not easy for “yet another general accounting business”.
Perhaps you are already a specialist or are on the path to specialization? It’s our view that generalist accounting firms will need to operate at large-scale in order to remain competitive in the coming years.
Specialization is an alternative which can offer accountants a rewarding and lucrative business. Please get in touch if you’d like to discuss your pathway to specialization!