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August 18, 2010

Public Accounting, The Relationship Business

CPAs often proclaim that they are in the people business.  Some stick their heads out of their office to make their statement, then close their door to return to their reports.  What happens when CPAs make these bold statements and mean it?  In such cases you have very client-centric CPAs.  They return phone calls.  They call to check in on their clients.  They schedule networking events to attend.  They even follow-up on their delivered reports with phone calls to answer any questions that clients may have.

But, truly progressive CPAs left the people business a long time ago.  They are now in the fast lane performing in the “relationship” business.  Of course, they provide accounting services.  But fundamentally, they are in the relationship business.  What is the difference?  CPAs in the relationship business don’t just deliver great client service.  They sustain great relationships that allow them to deliver great solutions to clients.

Accountants in the people business complete tax returns on time.  CPAs in the relationship business actively connect with other CPAs and vendors to have the latest tools and techniques to deliver tax solutions efficiently.  They then ask their delighted clients for referrals for new business.  These tactics are not new, nor untested.  They simply require a commitment to the new rules of successfully growing a practice.  Connecting better with deeper relationships to clients, suppliers, and trusted colleagues lead to higher performing, more profitable firms.

I recently attended a conference featuring CPAs of various sizes and niches.  Overwhelmingly, members point to the connections with their colleagues as one of the most valuable benefits.  Like many conferences, this one had industry experts, vendors, and consultants.  Each of these parties contributes to the relationships that help the accountants’ practices.  However, the relationships with their peers led to discussions and insights that directly affected relationships with clients.  It is a small leap to see how better relationships with clients lead to a better relationship with profitability!  Clearly, progressive accounting firms are in the relationship business.  Accountants who build strong relationships with experts, colleagues and clients will continue to see more fulfillment and success than peers who only return phone calls quickly.

By Glenn Hunter
Director of Member Development, The APA/ Enterprise Worldwide

August 11, 2010

Focus is Power

Recently I was visiting an accounting firm in a rural market of the United States and had a discussion with their management team regarding their work in developing niches in the local market. One of the Partners explained that for their firm developing a niche was almost futile due to the fact that they are in such a small market. Their situation, he said, was unique and forced the firm to remain a generalist.

It seemed as if they had a point as their market is relatively small (< 50,000 population) so there are not an endless number of clients in various niches of the economy from which to choose. At the same time they are the largest firm in their market and have the potential to go deep and serve an industry well.

After reflecting on this conversation for several days I approached Troy Waugh, CEO of Five Star³, with the firm’s dilemma. Troy has been working with accounting firms to help them market and grow business for almost 20 years through The Rainmaker Academy, and he became very animated when I asked the question…so what does a firm in a small market do about this?

Troy explained his philosophy regarding the power of focus. Troy maintains that there is nothing more powerful for a business, or a person, for that matter, than focus. It opens opportunities, provides depth, and most importantly offers the advantage of really understanding peoples’ needs and being able to help them in meaningful ways.

Troy went on to describe the difference between a niche focus and an area of focus. Both of which can be very successful depending on your circumstances.

In a true niche you are focused on 1 segment of a particular market. You are not trying to serve ALL of healthcare (e.g. hospitals, physician groups, veterinarians, etc…) rather you concentrate only on one segment, say physician groups. This happens to be a very effective strategy for accountants who are part of the CPA Healthcare Advisors Association (HCAA), which as a network of accountants across the country, are primarily targeting physicians. They leave the rest of healthcare to others who have experience in those areas.

Markets with larger population bases allow you to work in small segments of the economy and be very successful. When you move into smaller markets there are only so many physician groups available for you to serve.

However all is not lost in a small market. You can still focus and gain the benefits of your expertise by creating an ‘area of focus’ instead of a niche. With an ‘area of focus’ you would not limit you’re your client/prospect list to just one small segment of the healthcare industry. Along with physician groups, you could open up to dentists, physical therapists, veterinarians, and other ancillary business entities within healthcare. In doing so you still concentrate your efforts in a distinct way, leverage your time, and offer clients a fantastic service that other accountants in a small community can’t provide as they have labeled themselves as pure generalists.

The same principle holds for other areas as well such as nonprofit work. Instead of just working with nonprofits you could also include a focus on government entities. By combining these two related market segments you are able to leverage your expertise, separate from competitors, and deepen your knowledge and understanding of your clients’ business.

Focused effort leads to results and it doesn’t matter if you are in a large million plus population base or a very small rural market. You will gain the advantage over any potential competitor by concentrating effort in a specific direction.

10 Steps to Implement the Power of Niche Focus

  1. Find a champion who really wants to be the champion.
  2. Search for a passion. Focus on something you are passionate about and all of the sudden work becomes a dream…. (e.g. accountants who are part of the CPA Auto Dealer Consultants Association (CADCA) love cars so learning more about the industry is enjoyable and that translates really well in serving clients).
  3. Identify a niche that meets the requirements of the first two steps and has enough scope for you to operate.
  4. Research the market to uncover the opportunity, find out whom else is serving the market, determine how you will win in that market, and form a plan to make it happen.
  5. Match your resources to the industry. You may already have the expertise to serve that market, you may need to build proficiency, or you may have to bring some skills into the firm.
  6. Build a list of prospects that match the type of clients you want to work with.
  7. Gain support within the firm. Enlisting the buy in of key Partners and firm leaders will help you in building momentum, support, and in getting the resources to do it right.
  8. Line up an appropriate investment in the niche. There will be a price to pay on more than one dimension. Don’t move forward if you or the firm is not able to commit to what it will cost.
    1. Personal cost
    2. Monetary cost
    3. Be all in. DON’T operate at the fringes or on a limited basis.
      1. Get involved with an industry association
      2. Join the board of an association
      3. Speak at industry conferences (e.g. “ten ways to reduce costs and be more profitable running a nonprofit entity”).
      4. Hold seminars about a key issue within the industry and invite clients and prospects.
      5. Stay at it. Starting a niche or an area of focus will take time and effort before you see the rewards. However, when you are really going strong your focus will really show itself in the form of a rewarding professional life, ecstatic clients, and a strong, vibrant revenue generator.

Patrick Pruett

The Alliance of Professional Associations

624 Grassmere Park Drive, Suite 15   •   Nashville, Tennessee 37211   •   Tel 1.888.797.7246   •   Fax 615.377.7092