There’s been a lot of media coverage the past few years about identifying niche markets and how CPAs should invest resources into targeting/creating them. Given demands already placed on you and your practice, it is important to know why niche markets are worth finding.
For one, the niche industries you’ll want to target should be highly profitable. This may seem like an obvious point, but it’s worth noting. What’s less obvious is identifying the niches from the top down. For example, the construction industry as a whole could be growing at a slower than average rate, but Sageworks data shows that the small business residential building construction industry (NAICS 2361) grew by 14.8% and was the fastest growing industry for small businesses with less than $10 million in revenue for 2012. It’s important to keep in mind that growth doesn’t always equal profitability, so you should examine both when identifying potential niches. Finding all of this information can be difficult and will likely require some research and access to an extensive database of industry records.
Aside from fast growth and high profitability, what other advantages are there to targeting these niche markets? Often times, the fastest growing small businesses are those that are newer, or just hitting their stride. Therefore, competition for their business is more scarce and less cluttered. Businesses that are growing quickly are also more likely to enlist your services, and more of them. New, fast growing companies may have jumbled financials and no in-house accountant with the knowledge base to successfully organize their statements. Your firm could provide a major value proposition for these companies.
Consider researching some emerging niches in your area and see how you can mutually benefit from the relationship. Synergies are important in the service industry; keep in mind it’s a two way street. To add value to your firm, you must create value for your clients.
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