It pays to carve your own niche

Many are surprised when they discover how busy Jamie Johns FIPA has been over the last few years. As CEO of Sky Accountants, Mr Johns runs a business that specialises in the hospitality sector. Surely, considering the effect the pandemic had on clubs, pubs, restaurants and cafes, that would have been the business equivalent of backing the wrong horse.

“Throughout the pandemic our own firm actually had some of our busiest years,” says Mr Johns, also co-founder of Wize Mentoring. “Governments around the world used tax agents and registered accountants to qualify and deliver their stimulus packages. You would have thought we would have lost clients and suffered a reduction in work. But more than ever, our clients reached out to us for help.”

Greater certainty around the sustainability of his business was one of the many reasons Mr Johns made the decision to specialise. Other reasons included the ability to charge higher fees, better levels of respect from clients, having a clearer picture of his market and feeling a greater sense of belonging. also meant clients would be attracted to the ecosystem he built, helping him avoid the time, pain and expense of constantly chasing new business.Most of all, he says, finding a niche simply made better sense.

“You can use the shotgun approach, where you do your marketing and you’re spreading your energy all over the place, or you can specialise and focus all of your energy and resources on a specific target market,” Mr Johns says. “This means you’re being more effective in getting your message across.”“It makes sense to laser-focus on an industry, and to make the target market feel at home and let them know that you understand their problem. It’s valuable to them to know that you can provide a solution to their unique problem in that particular industry. And just like a medical specialist, as opposed to a GP, you can demand a higher fee as a result.”

David Smith, founder and director of accounting consultancy SmithInk, says it’s typically a good idea to specialise, but only if the business owner is willing to put in the effort. 

A business that claims to have a specialisation without backing it up with some sort of substance is bound to fail, he says.“You’ve got to do things to prove you’re a specialist,” Mr Smith says, “When you have that substance, it’s a great way of winning clients and a great way of charging premium fees. Businesses absolutely want to engage an accountant who’s an expert in their space.”

DRILL DEEP, GAIN INSIGHT

The most important substance to back up a specialisation claim is knowledge and experience. 

A specialist accountant must be able to demonstrate their ability to drill much deeper into a business, industry or sector than would be required for a straightforward tax return, Mr Smith says. This means having deep, current and accurate insight into the operational aspects of the business, or its industry.

“A firm I’ve worked with specialises in aged care,” he says. “They have done stunningly well in winning clients in that space. They’ve done two things to achieve that.”

“First, they have people who are absolute experts in that space, who can get down to quite fine detail about, for example, how many nurses per resident are required. It’s understanding at that level of depth that attracts clients. That’s what clients are willing to pay a premium for.”

Mr Smith says the second weapon in the aged-care accounting specialist’s arsenal is unique industry insight. That is built around research and benchmarking studies conducted by the firm. 

In fact, a number of firms have achieved great brand recognition as experts in their chosen niche by conducting such surveys, Mr Smith says. They gather knowledge that is valuable to those in the industry and that can be used both in consulting assignments and in marketing campaigns.

“That is where I’ve seen firms really supercharge their specialisation, from both a marketing and a service delivery perspective,” he says. 

“There are two organisations that run the biggest aged care surveys. This accounting firm is not a mid-tier firm; it’s smaller than that. But they have a really strong reputation in the space because they’ve been running one of these surveys for years.”

Such research has also been carried out by accounting businesses in the pharmacy space, Mr Smith says. As a result, some of those businesses have detailed knowledge around specific aspects, such as the margins that pharmacies should be making on health and beauty products. 

That's a powerful insight, and clients are happy to pay for it.

BUILD ON STRONG FOUNDATIONS

Research projects and other forms of professional evidence require investments of time, money and resources. An accounting business choosing to specialise must be willing to make that investment.

“Such an investment doesn’t give an instant return,” Mr Smith says. “You’ve got to build the specialised brand over a number of years.”

Angela Hose MIPA, co-founder and director of Business Lighthouse, has long understood this fact. Her company specialises in childcare, retail inventory and not-for-profits. Ensuring there is substance behind the specialisation claim now requires her full-time attention.

“I’ve currently carved out a lot of time to focus on the sector specialisation and expertise, along with the client relationship and advisory role,” Ms Hose says. “It’s a significant investment in time and energy.”

Ms Hose spends many hours creating content for social media, such as videos and blogs for LinkedIn. Then there are collaborations with associations representing the business’s chosen niches. A significant amount of time is spent cementing relationships with current clients, ensuring the business always knows in advance how it might be required to use its specialist knowledge to provide current and relevant advice.

The story is no different at Johnston Advisory, an accounting business with a niche in sports entertainment, particularly surfing, snowboarding and NRL.

“My younger brother was a professional surfer and my whole family always surfed,” says Ben Johnston FIPA, founder and director. “All of our friends own surf brands or are professional surfers, so for me this was like an embedded, organic network.”

However, even with that network, Mr Johnston has a job on his hands ensuring he remains top of mind among those in his chosen market. He often appears in stories by traditional media mastheads such as the Daily Telegraph and the Sydney Morning Herald. On social media he regularly posts, with permission, video content of his clients performing in their chosen fields. 

Sports-based photographic and video content is placed on his carefully curated Instagram page. He also writes thought leadership pieces and publishes them on LinkedIn

“I actually closed my book some time ago, and now I’m very selective about who I take on,” he says. “But marketing remains very important. It’s not just about building a brand. It’s about maintaining and reinforcing a story you’re trying to tell.”

Sky Accountants’ Mr Johns has just finished writing a soon-to-be-published book on best practices in hospitality. He regularly attends major hospitality conferences and realises a large part of his role is to educate clients around the value he brings to a hospitality business.

“A massive part of running a successful accounting firm is continually drip-feeding information to people within your specialisation,” Mr Johns says. 

“We produce free ebooks for download, as well as gifts and giveaways.

“You’ve really got to create a garden that will attract butterflies. If you create intellectual property in the form of brochures, pamphlets, newsletters, ebooks, videos, podcasts, client testimonials, and so on, all of a sudden you no longer have to go out and catch butterflies. Instead, they’re now attracted to you.”

BE AWARE OF THE RISKS

It’s important that accountants specialising in a specific field regularly run risk analyses from an objective viewpoint, says founder of SmithInk David Smith. Such analyses should cover current and potential competition, changes in the shape and make-up of the market, and how external issues might affect the industry.

Why an objective viewpoint? Mr Smith tells a story to demonstrate its value. 

At a conference in 1995, he said to those in the room that anybody involved in video shops should consider finding another field of business.

“A guy who owned many video shops in Sydney was in the room, and he came up and shouted at me, abusing me and telling me I didn’t know what I was talking about,” Mr Smith says. 

“You’ve got to be clear, emotionally disconnected and cognisant of where the world is heading. You have to realise there are always industries that are going to be dying.”

Ms Hose says it’s also important to be aware that within particular industries, trade secrets have much higher real or perceived value.

“Even though most accounting firms have great governance and excellent reputations in terms of confidentiality, there could be a perception that the confidentiality structures might not be as strong as they should be in an organisation,” she adds.

“Some sectors might feel that is an unacceptable risk, that some clients might come to you as a specialist to get access to inside ideas or to discover the secret sauce. But in most sectors, that’s exactly why specialists are valued, because they have seen best practice and can help lift the entire industry.”

And actually, Mr Johns says, specialisation removes a lot of risk, too. The specialist’s deep familiarity with specific tax laws and other details of the sector makes it far less likely that the accounting firm will offer poor-quality advice.

“If you’re spreading yourself thin across numerous different industries, it can be very hard to keep on top of all that, from a technical point of view,” Mr Johns says. “When you’re in just one or a few areas, you can be sure that you’re giving the very best advice.”

What about risk from bigger firms? If a small or medium accounting business makes an investment in specialisation, isn’t there a risk that larger players will pay attention and swoop in?

Actually, specialisation involves a level of personal relationships that the big end of town simply can’t match, Mr Smith says.

“In developing these specialty niches, the big four haven’t been very successful,” Mr Smith says. “That’s partly because you really do need to find an individual within the business who is happy to invest their time in that space, and who is clearly passionate about it. Generally, you’ll be more likely to find that type of person in a smaller firm.”

“The other side of the coin is that if you’re doing a really good job of specialisation, the bigger firm might ultimately want to eat you up. That’s when you know you’ve done really well as a specialist, when you’ve built such great value that you’ve attracted the attention of a buyer.”