The simplest way to find your tax firm’s niche

A couple weeks ago, I wrote an article explaining a specific marketing paradigm through which you should examine your firm’s business development efforts.

Then a couple days ago, I made the case for why you should niche your tax firm.

If you haven’t already done so, I’d encourage you to read both of those articles. Those concepts will put more money in your pocket, period.

Assuming that you accept the arguments I’ve laid out in those posts (which you should, obviously), the next obvious question is: How do you define the target market you’re going to focus your marketing on?

There are a variety of ways to do this, and over the next few articles, I’ll share some ideas on this.

First up: Look and see if you’re already naturally serving a niche market.

Based entirely on where your office is located, or the networking circles in which you swim, you may already be serving a niche. You may never have given it any thought, but you may already be there.

Look at your existing clientele. Are there any specific commonalities? Are many of them in the same industry, same profession, work at the same employer? Connected to the same organization that you’re involved in, such as a non-profit you volunteer for?

If you notice a significant number of clients with some commonality like this, then congratulations, you’re already serving a niche. Now you just need to embrace that fact, and pivot your marketing to dominating that niche.

Still not so sure about this whole “niching” thing? Let me give you two awesome examples.

First, check out the podcast interview I did with Katye Maxson-Landis, CPA in Portland, OR. Katye’s practice is focused heavily on serving Oregon’s growing cannabis industry. Regardless of your feelings about marijuana, listen to the podcast episode to learn about how she recognized the niche opportunity and pivoted into it.

Second, it just so happens that I received a press release yesterday from a reader in Fort Lauderdale, FL, announcing the sale of his CPA firm to his staff. This firm focuses their services entirely on helping aircraft owners. Because of the sale and the niche, the new owners are simply changing the name of the firm to “Aviation CPAs”. Excellent, very excellent!

In The Profitable Accountant newsletter, we provide you with in-depth marketing strategies, niche industry breakdowns, and practice management best practices to help you build … Continue reading

Rise of the 1120S Practice

As we hurtle towards the 9/15 business return deadline, it seems like a good time to remind you of how much gooder this market segment is than the 1040 side of things.

In case you’re new to these missives, verily, I say unto thee:

1). The 1040 prep middle market is rapidly dying due to consumer software and RPA.
2). If >50% of your annual revenues are from the 1040 middle market, your business is totally screwed in the long term unless you pivot.
3). 2020 marks the second year in a row in which 1040 returns prepared by paid preparers has declined — and this decline will accelerate, whether you like it or not.

I could drone on and on about the impact of the two existing AI tax prep companies… How Block’s adoption of the Watson AI is just the beginning of the end… How applications like PwC’s internal K-1/W-2/1099 OCR engine will trickle down to our level in 3-5 years… How nearly 2/3 of IPA 400 public accounting firms already use either RPA or offshoring to complete their 1040 prep… Blah blah blah.

Yes, I’m telling you bluntly and unapologetically that if your tax firm’s revenue are primarily rooted in seasonal 1040 return preparation, your business will be DEAD within a decade. Yes, dead.

OOB, if you want me to use official IRM parlance.

I’ve been singing this song for about 3 years now, and the signs are all around us.

It’s time for you to either:

a). Adapt.
b). Retire.
c). Suffer the consequences.

I hope that you choose (a).

But how do you adapt?

Some quick, dirty, and broad suggestions:

  1. Pivot to the SMB (small-medium business) space.
  2. Target a specific high-income market (the subject of our December 2020 issue of The Profitable Accountant).
  3. Eliminate tax prep from your firm altogether (a solution I embraced for 5 years).
  4. Go do something entirely different.

In all seriousness, the SMB market is where it’s at. I spent eight years in tax resolution in that space, and if all my other business exploded into oblivion tonight at 8:42pm, it’s exactly where I would go back to.

Businesses will always need YOU.

Heck, do you remember the Great Depression???

Eh? Eh? No? Yeah, me neither. I wasn’t born until about 50 years later.

But when history and economics collide, awesomeness ensues. Back in 1929, when even the CPA credential was routinely scoffed … Continue reading

A new marketing paradigm for your tax firm

Over the course of the next few months, I’m going to be writing and speaking extensively about a topic that may be new to you.

It’s a simplified, holistic way to approach the entire subject of client attraction — from lead generation to prospect follow up to conversion to client to upselling and cross-selling of additional services.

The marketing philosophy, business growth paradigm, or practice growth dogma — whatever the heck you want to call it — is pretty simple. Here’s the basic 3-step formula behind database marketing (yet another term for it):

  1. Choose a specific industry or profession + a geography.
  2. Build a list of people that know, like, and trust you.
  3. Send educational information to that list, along with occasional solicitations for your services.

To put it in shorter marketing parlance for any business school folks in the audience:

  1. Define your target market.
  2. Build a prospect list.
  3. Make offers.

Easy peasy, extra cheesy.

Now, just to be clear, this is no different than how you’ve seen me talk about marketing in the past. All the same concepts apply. I’m just giving you different packaging.

Why?

Because defining a simple paradigm to work from makes all other conversations about growing your tax firm easier. It gives a starting point of reference. A place from which to start conversations, anchor initiatives, narrow our focus, and align our strategic objectives. (Can you tell I’m working on MBA coursework? Hmm.)

In reality, all we’re really talking about is direct response marketing. There’s nothing new about that.

But, I want to give you a new structure from which to view it. A structure that will hopefully make it easier for you to implement and profit from.

Let me give you an example. When I was running my tax resolution firm, about 70-80 percent of my marketing was to small trucking companies, with 5-10 trucks, in five states (e.g., my target market). Through a variety of marketing media, including direct mail, telemarketing, Google ads, Facebook ads, and the like, I generated leads (e.g., a list of people that knew me). Some of those businesses moved from the lead list to the prospect list by having a consultation with me. Some (not all) of those prospects became paying clients. So, I was creating three separate lists within my database: Leads, prospects, clients.

All of my follow up marketing to those leads and prospects was … Continue reading