- Accountants often have a wide spread of clients across various business areas
- However, it can help for firms to specialise in niche areas
- Clients value accountants who understand their business area in detail
- It can also help to link up with firms that offer complimentary services
Need more clients? Nicola Draper explains why it can pay for accountants to specialise in niche markets.
While accountants often have a good spread of clients, from the local shop to a high profile blue chip business, it can pay off to be known as a specialist in one area. Like law firms, accountants can promote and exploit their areas of expertise to gain new clients.
Most people would prefer an accountant who understands their area of business. The accounting principles may be similar, whatever the industry, but an in-depth knowledge of one or two areas of industry or service can stand you in very good stead. Rather than being viewed as having clients who are competitors, clients may well think that your knowledge of a certain area could be of great benefit to them as well.
Certainly, accountants, like lawyers, must respect client confidentiality and if there is a suspected case of conflict of interest, or even potential conflict, you should make that immediately known to a new client. However, a thorough understanding of one or two sectors can pay dividends. While not giving anything away about one client, the knowledge you have gained could certainly benefit another in the same or similar sector. If handled properly, there need not be a conflict of interest.
For example, your knowledge of how client X broke into export markets in Germany might be of great use to client Y, but you can’t use that information without breaching all sorts of professional codes of conduct. However, your general knowledge of how to export, tax situations, currency exchange, taxes on goods or services, bilateral agreements, etc., plus your knowledge of the German market in general could be very attractive to a new client, even if they are in a similar business.
One practice I visited is now looking to expand. It specialises in start-ups. “We are not talking very small businesses,” said a partner. “We tend towards the ones that are usually a spin-off of an industry that the founders have already worked in. One client we had needed venture capital and we had to search with him for the right backers. We also researched possible grants, so that when we first presented to another client in a similar high-tech start-up, we could tell the board of our experience and pretty extensive database of venture capitalists and grant-giving bodies that would be right for them. As we one of three firms presenting, two of them larger than us, it probably gave us the edge to win the business”.
I know another accountant who has a design firm as a client. They recommended him to friends in another design firm. Thanks to his good understanding the first client’s business, he could speak their language. HTML and interface didn’t floor him, although he had to learn to Skype. He obviously can’t divulge any information on one client to another, but his ability to understand the sector has stood him in good stead.
The shoe shop effect
It’s a well known fact in retail that if you open a shoe shop next to another shoe shop, it doesn’t just double the footfall, it creates at least 3 – 4 times the amount of visitors. This ‘shoe shop effect’ can work for accountancy practices too.
For example, one firm I know is looking to expand because they have an area of specialisation that has attracted more clients in the same sector. They started out by acquiring one client in the charity sector. The chief executive of that charity then moved to another organisation and asked them to do their accounts too, and it built up a portfolio of charity clients from there.
It can also pay to build up good relationships with other complimentary service providers. I know one accountant who specialises in, as he describes it, ‘ladies who lunch’ – by which he means single, divorced or widowed women with disposable cash. “They’re underrated as a client base. Many of them only worked a little bit before getting married and have little idea of how to manage their money. I work closely with an IFA and often we’ll attend meetings together. It helps because I cannot make recommendations on issues like investing”, he says.
“We both do email marketing, sending timely reminders about tax and investment deadlines, and ask clients to forward them to anyone else who might be interested”.
It has proved to be a lucrative arrangement and one which illustrates the benefits of pinpointing a specialist market and going after it in an organised fashion
Article written by Nicola Draper from Draper Hinks.
To contact Nicola Draper please email her on n.draper@draperhinks.co.uk