By Craig M. Steinhoff, CPA.CITP, Principal, Hill, Barth & King LLC
An accounting firm is no different than most other businesses. We battle with balancing areas of our business: client service, staffing, marketing and training. All of these must be handled while continuing to keep a watchful eye on the bottom line and ensuring a nice return for our shareholders.
CPA firms, similar to most other companies today, do not like to change. “Stay the course. If it’s not broke, why fix it? Let’s do what we did last year.” These are sayings I’ve heard throughout my career. Albert Einstein said “Insanity is doing the same thing over and over again and expecting different results.” Therefore, the business plan of most CPA firms can be defined as insanity. Unless firms are willing to change, they shouldn’t expect different results (in their bottom lines, in employee morale or in the ability to attract and retain the best clients and talent).
Jim Collins said it perfectly in his book, Good to Great. Collins said, “Managing your problems can only make you good, whereas building your opportunities is the only way to become great.” One way firms have been able to outperform others is by identifying and building opportunities. Many CPA firms have made the decision to build or acquire a niche that sets them apart from the typical CPA firm. Some niches I’ve seen firms have success with are focusing on a particular industry: construction, healthcare or nonprofits. Other firms have created a niche product or service offering (i.e. financial planning or wealth management). Additionally, some CPA firms have identified a professional credential (i.e. PFS, CFE, CITP, etc.) they feel will set them apart.
All the niches identified above can turn an average firm into a firm that its peers and clients view as a leader in the marketplace. However, the firm and its leadership must ensure certain things are carried out before it can expect success:
Identify the right niche: Simply because all of the surrounding firms in your area have built a wealth management division, doesn’t mean you should too. Instead, I recommend that you focus your attention on an entirely different niche idea, because it would allow you to become the sole expert in your geographic area. In the end, choose an area that makes sense for the size and location of your firm. For example, a three person firm shouldn’t attempt to develop a SEC niche and a firm in downtown New York shouldn’t attempt to develop a farming niche.
Find the right people: Another great Collins quote from Good to Great is, “great vision without great people is irrelevant.” The only way for a niche to succeed is to build or attract the right folks to run it. This is the reason many firms have failed to build a niche. Once a niche has been identified, firm leadership needs to identify the plan to find or create the right people to take ownership of it. I should also stress that the right person to run the niche isn’t always the person who has the most experience in the niche. Sometimes the best leader for a niche is the one with the most passion for it and that’s not always the most tenured individual. Additionally, sometimes the right person doesn’t currently work for your firm. Find him or her!
Whatever your firm decides; to build or acquire a niche – or do nothing at all. I hope that your firm’s business plan won’t be defined as insanity for too much longer. And if you’re still serious about building a niche practice, read the how-to feature in the May issue of CPA Voice.