How an Accounting Firm Can Create an Industry Niche
Michael Bohinc, CPA, is a baseball nut, the son of a plumber, and the owner of Keeping Score, Inc., an accounting, tax, and business management advisory services firm in Cleveland, Ohio. So he combined his background as he developed an industry niche focused on plumbing and HVAC (heating, ventilation, and air conditioning) contractors.
Bohinc has tips and advice for other CPAs and accountants who are considering creating an industry niche.
Why he created an industry niche
Bohinc said his focus on plumbing and HVAC contractors grew out of the relationships he built with other contractors while keeping the books and helping his father's plumbing business. When he ran into other plumbers and HVAC contractors who knew he was an accountant, he'd learn that many of them had accountants, but they were unhappy with them.
"What I found was that the longer the established relationship, in almost every case, the more strained it was", he said. "The client was just kind of being taken for granted."
Bohinc, who described himself as "kind of introverted, reserved, and shy – more the stereotype of a CPA rather than a marketing person", also came to realize that specializing in an industry he knew gave him more confidence in his skill set and helped him become more assertive in his networking and efforts to generate referrals.
His love of baseball and other sports also drew him to using financial statement analysis in order to help business owners "keep score" more frequently – to help them monitor and understand their numbers so they could improve their own firms.
"You've got to differentiate yourself", Bohinc said. Being able to show plumbers industry benchmarks and how a firm's performance compares with the past or with peers really opens clients' eyes, he said. "This can really make the difference between being successful and surviving hand to mouth", he added.
In fact, Bohinc recently provided an "accounting basics for small contractors" column for the trade magazine Contractor, and he provides business management presentations and classes, including continuing education seminars.
Advice for creating an industry niche
Bohinc said his niche providing accounting and business advisory services to plumbing and HVAC contractors evolved over the years. "There's no question that growing up in the [plumbing] business had an influence on this specialization, but I also made the conscious decision to pursue this", he said.
He has the following tips for accountants or firms considering developing an industry niche:
Commit to investing a specific amount of time in the market niche, or at least in researching it. "Learn everything you can about that industry", said Bohinc, who actually holds plumbing and HVAC contractors' licenses in Ohio. "If you're already working with manufacturers, you can build with that and go farther, but you have to invest the time" to research and grow, he said. He recommends setting a time period – six months, nine months, or a year – to research and really go after a specific industry.
With the resources available on the Internet, it's fairly easy to find some industry financial analysis, and trade associations can be a huge help, according to Bohinc. "See what information they have", he said. From the size of the industry to contact lists to opportunities to network, trade associations often have resources to help you grow your industry niche. The American Society of Association Executives has a search engine to help you find the relevant associations. This kind of research helps with business development in your niche. It also helps you become even more of an expert your clients will see as a trusted advisor.
Use industry data. Some trade groups for industries are better than others at providing statistical data, and government bodies also may have detailed information on some industries. But it's important to look for industry data that can help your clients know how they're doing. Bohinc has a weekly conference call with a group of clients in the same industry who are all trying to grow and improve. He uses the time to review the companies' recent financial metrics, to compare them, and to foster discussions that help the companies learn from each other and improve. Comparing client data with peers in the same state or region or the entire industry can be helpful, Bohinc said.
Be smart about how much of your business you concentrate in one industry. "You need to be cautious of not putting all of your eggs in one basket", Bohinc said. For example, if you had been concentrating only on the building and new construction industry several years ago, you would have faced major problems as the housing market crashed. Look at subniches or related industries that may have different drivers to provide some diversity to your business.
Limiting how much of your business is tied to one industry helps manage your risk. It should also ensure you're not so focused on one industry that you miss opportunities to tap into new types of businesses or industries.
"It's OK to market to your industry niche, to have a section of your website devoted to it, but don't make it all about that, because you may find yourself with not enough business or you could get pigeonholed", Bohinc said.
Don't shortchange yourself on pricing. Use sound business management practices you'd offer a client when you're setting your rates for the specialized business, taking into account the specific services you'll offer, their costs, your breakeven point, and your margin goals. Bohinc said you shouldn't fall into the trap of thinking you'll make up in volume any discounting you provide. "You certainly can premium price your services in that niche", he said.
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Raleigh, North Carolina–based Sageworks is a financial information company. Sageworks' data and applications are used by thousands of financial professionals across North America to analyze privately held companies. Sageworks is now offering its database of industry statistics on privately held companies available for free to all US accounting firms. To sign up for access to the free industry benchmarking data, visit the industry data home page.