This article was originally published on July 21, 2023 the Intuit Firm of the Future blog.
What if I told you that firing some of your current clients is a key part of growing your accounting or bookkeeping firm? You might think I’m crazy: After all, growing your business means getting more clients, not less. As counterintuitive as it may seem, I’ve recently seen firsthand how narrowing down your book of business and focusing only on the clients that fit your areas of specialization can position your firm for faster growth and the ability to better scale.
Growing vs. scaling
Growing a business is one thing, but scaling is something different. You can grow your business by taking on any and every client that comes your way. And this is what most new firm owners do—myself included!
When you grow by taking on more clients from more industries, and by performing more functions for them, your firm’s revenue will go up. However, what also goes up is the number of staff you need to keep everything running and the amount of time you spend wrangling this chaos. Not to mention the number of headaches. At the end of the day, your firm may have grown, but since operating costs have gone up proportionately, or in some cases, even more than that, you aren’t in any better position.
Scaling, on the other hand, refers to a firm’s ability to bring in more revenue with the same operating costs. Or at the very least, to grow your revenue without growing expenses proportionately.
Narrowing down your firm’s focus can be key to scaling and hitting your long term revenue goals.
Jack of all trades, master of none
In the dynamic world of accounting and bookkeeping, firm owners and clients may mistake the ability to offer broad expertise for better service. Being a generalist and taking on any client from any industry isn’t always the best way to grow. Instead, I’ve found that streamlining your services and narrowing down your niches can lead to better client satisfaction, increased referrals, and significant growth. More importantly, when you narrow your focus, you have a better chance to scale.
The power of specialization
In an ideal world, most firm owners would love to be able to do everything for everyone. But being a jack of all trades usually means you’re a master of none. And that doesn’t lead to the type of long-term, loyal clients you need to get the reputation you want.
By choosing to focus your efforts on a specific niche or a narrowed list of services, you become the go-to expert for that particular area. The expertise you showcase acts as a differentiation point, setting you apart in a competitive market. It also fosters client satisfaction and loyalty, because clients value a partner who truly understands their specific needs and can offer specialized solutions.
Why focus matters
At Capovario, we started off considering ourselves generalists because we love taking on projects from a variety of industries. At the same time, our niche was in the specific services that fall under concierge consulting, regardless of what industry the client was in. As time went on, we found we needed to narrow our focus even more. The advantages of focusing include the following:
- The ability to conduct more targeting marketing efforts: When you choose to narrow your firm’s services, you can create more precise marketing messages. By aligning yourself with the pain points of a specific service or industry, your marketing becomes a surgical instrument rather than an exercise in throwing spaghetti at the wall. As a result, you’re more likely to attract clients who truly need and value your expertise.
- The ability to really stand out in your referral networks: You may have gone all in on Google and Facebook ads, but word of mouth and personal references are still some of the best ways to get new business. The more specialized your services are, the more you can hone in on the particular type of client who needs you most. Once you’re in with one of them, they’ll be able to refer you to their network with confidence that your firm can handle the specific needs of businesses like theirs.
- Boost efficiency and productivity: Being pulled in a million directions at once isn’t the most effective way to work. When more of your clients are similar because you’ve narrowed your focus, you can create more repeatable processes and won’t spend time reinventing the wheel for each client.
- Increase client satisfaction and retention: When clients know you specialize in their type of business, they also know they can’t just leave and find a replacement very easily. Hopefully, the service you provide is so great that no clients ever want to leave, but being an expert in your niche helps make your firm sticky even if you hit some bumps in the road. Don’t forget that your long-term satisfied clients also become ambassadors for your firm within their own circles.
- A foundation for future expansion: If you’ve found your niche and leveraged all the advantages of doing so, you might find it’s time to expand into others. Becoming successful in one niche can serve as a roadmap for moving into other areas without giving into the temptation to once again do everything for everyone at all times.
Co-firming: A new avenue for growth
Another approach to finding your niche without limiting your potential client pool is the concept we call “co-firming.” By participating in a co-firming arrangement with another firm, you can keep your narrow focus on what you’re great at, while allowing other firms to do the same, as you both mutually expand.
Working with your ideal clients is key to growth
Narrowing down your focus isn’t just about the services you provide or the industries you serve. Finding your ideal clients—an inherently limiting exercise—can also mean finding companies that share your values and work the same way you do.
Which scenario would you prefer: A firm with 50 clients, but many are hard to work with and aren’t on the same page as you about what’s important or the best way to accomplish goals? Or a firm with 15 clients that are closely aligned with your firm’s style? Sure, having 50 clients could mean a lot more revenue than having only 15, but on the other hand, consider this: When you have more clients who are less aligned with your area of specialization and your firm’s values, you:
- Spend 80 percent of your time working on 20 percent of your projects because there are more one-offs and exceptions to the rules.
- Spend time and energy wrangling egos and personalities instead of doing the work you should be doing.
- Have to invest in different people, resources, and tech to meet your client base’s broad needs instead of maximizing your ROI by having a narrow focus.
These are just a few of the many disadvantages of going too broad with your firm’s services and industries, and taking on too many different types of clients. Remember the difference between growing and scaling? The firm with a more narrow niche is in a better position to scale efficiently, not just keep adding costs at the same rate as revenue rises.
Think smaller to grow larger
It might seem counterintuitive, but narrowing down your services or focusing on a specific industry could be the key to scaling up your accounting or bookkeeping business. So whether you choose to niche your services, focus on a specific industry, or engage in co-firming partnerships, remember the power of focus. It’s not about offering everything to everyone, but about being the ideal partner for your ideal client.