12 Reasons Why You Should Niche Your Tax Firm

In order to run a more profitable tax firm, I’ve always advised tax professionals to specialize.

That means niche down into one or two specific target markets and narrow your service offerings.

We’ve all heard the old cliche: You can’t be all things to all people. And if you try, you’re simply going to spin your wheels and go nowhere fast.

I’ve clearly seen this in myself over the years. A clear lack of focus, changing directions too often, trying to do too many different things. It all results in, well… Zero results. Put another way, he who chases two rabbits catches none.

Unfortunately, I see a lot of accountants effectively doing the same thing. They try offering preparation of every type of tax return, while also doing bookkeeping, while also doing attestation, while also doing tax resolution, while also doing advisory in twenty different industries. They try to offer every possible tax and accounting service under the sun, to every profession, industry, and walk of life, without ever developing deep competency in any particular area. While they might make a living, they never actually build a real firm.

While there are rare exceptions, the majority of highly profitable companies have a narrow focus. They know what they do, and they focus on doing it well. Salesforce doesn’t build cars, and Ford doesn’t build CRM software. Outside of the absolute largest public accounting firms, most of the remainder of the IPA 300 run specialized firms. These firms typically choose to specialize in one or both of the following manners:

1). By offering a very narrow range of services.
2). By servicing a very narrow range of industries or professions.

For example, I know one large accounting firm that specializes in tax, accounting, and auditing for car dealerships. That’s it — nobody else. If you’re a engineering firm, they won’t help you.  If you’re a magazine publisher, they won’t help you. If you’re a manufacturing company, they won’t help you.

Car dealerships. Nothing else.

When I operated my tax firm, I offered one service: IRS and state DOR Collection representation. That was it, nothing else. I didn’t prepare tax returns, I didn’t offer bookkeeping. Nope, just tax resolution. On top of that, I had two very well defined niches that I served: Independent trucking companies in five western states, and large TFRP cases post-assessment. That was my universe.

Early last year, during a … Continue reading

What’s your backup plan?

After returning from my recent vacation, I decided that I didn’t want to spend the winter in Wyoming as I had originally plan. Because snow.

So I moseyed on out to the Puget Sound area.
I’m staying on Bainbridge Island for the week, and had a CPE webinar scheduled for this morning..
Unfortunately, the weather decided that tomorrow would be a better day for that webinar.
Overnight, a snowstorm moved in, and dropped a whopping quarter inch of snow on the ground. Back home, a quarter inch would simply be a big nothing burger. But here, the wet snow was heavy enough to snap power lines, close schools, and shut down roads.
I was able to get a couple notification emails out via cell phone (since many cell towers have backup generators), but even 4G LTE isn’t really adequate to run a webinar from.
For something as simple as a webinar, “postponement” is an acceptable backup plan.
But for bigger things in your business, you need a real plan.
A robust plan.
Really, a set of plans for weathering much more than a measly quarter inch of snow.
Have you given this much thought? Have you given thought to what you would do to survive if certain things happened that impact your business?
For example, what if Congress passed a law (and provided the funding) to mandate that the IRS do what a number of other countries already do, and pre-prepared most people’s tax returns? After all, the IRS already has the data on file to do this for the majority of taxpayers, and there is a small movement to make this happen.
How much of your tax prep business would disappear as a result?
For most preparers, at least 3/4 of their business would disappear overnight if this were to happen. One stroke of a pen (and a strangely coordinated Congress), and an entire industry vaporizes.
What would you do?
You may think this is a far-fetched example, but the exact same thing is already in progress, at a much slower pace, due to the rise of AI.
What about bookkeeping? How much of your revenue comes from recurring bookkeeping clients?
You know that AI is killing that, too, right?
I’ll even put my own field on the chopping block. What if the current administrative remedies for tax debt resolution were suddenly eliminated? What if Congress decided that all tax debt cases now had
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Making room for better tax clients

We all want better clients.
And by “better”, I mean better quality…better mix of service usage…better timeliness…better paying.
In order to make room in your practice for better clients — without expanding your overhead — you have to trim the fat.
Remember those cheapskate clients I wrote about last week?
Once you fire the worst of the lot, you can fill their spots with better clients, and life will be better. I personally think that the cheapskate customers should be the absolute first to go, because they cause the most irritation. They’re the ones you lay in bed at night fuming over, so they need to go, and go now.
If they complain about your fees, fire them.
If they call or email you incessantly asking for free advice, fire them.
If they are actively blocking your efforts to resolve their IRS debt, then fire them.
Here’s an even bigger Practice Pro Tip (PPT, hmm, I should make that a thing): When you fire crappy clients, announce it to your leads, prospects, and clients.
You already know that you should have a CRM system of some sort, and you already know that you should be frequently communicating (at least bi-weekly, bare minimum) with your unconverted leads, best prospects, and paying clients. This is all part of your client engagement process, and long-term lead and prospect follow up processes.
But what you may not have ever given thought to is that, along with your client success stories, you also need to write about your bad client stories. Write emails, newsletter articles, film YouTube videos, etc. discussing those bad actors. Don’t name names, obviously, but use those firings. Here’s what this does:
1). By providing concrete illustration of the kind of clients you don’t want, you will help to filter out those leads and prospects that might ultimately engage in similar behavior. They will unsubscribe from your emails, unfollow you on social media, etc.
2). You will be signaling to your unconverted leads that you have time for new clients. You can make specific, targeted offers for folks to schedule consults now that you have all this free time available to help people that really want to resolve their tax problems.
Here’s some inside baseball: Between the “Name Your Own Price” promotion on the 60-day videos and the ensuing emails I sent regarding the “cheapskate” issue, a whopping 8%
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