Serving a Niche Market

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Dave Ligotti serves up accounting functions ranging from payroll and payables to financial management for restaurants throughout the U.S. Working with these restaurants contributes 85 percent of his $1.1 million in annual revenue. "Serving a niche helps differentiate us from other accountants. There are lots of good accountants out there, but it's hard to distinguish one payroll from another. We approach our clients and say, 'We're different because of businesses just like you,'" says Ligotti, CPA and president of Ann Arbor, Mich.-based Oakwood Business Services.

Technology has helped Ligotti and his 12-person staff expand their market and made serving the restaurant niche more profitable.

"One of the biggest challenges a small practitioner faces is keeping up in a rapidly changing environment," he says. "Technology is the key to developing a niche practice, and a niche practice can be the key to success for a small practitioner."

Partner Insights

Ligotti uses a combination of Dexter, Mich.-based Creative Solutions products, including NetClient portals, the Client Bookkeeping Solution, and CSI Accounting, to serve Oakwood's 90 clients.

"The use of technology, such as the Internet and portals, has expanded my potential market. I no longer have to rely on my own backyard as my target market, which would have limited my growth potential. The combination of the technology I use makes it possible to have a practice that is very niche-focused which, for a small practitioner, changes everything," adds Ligotti.

Serving Your Niche

Carol Ann Barnaby baffles her competition.

"When serving a niche, it's important to develop on-going relationships. We want our clients to know us when we call, and develop friendships. In turn, they get what they need, and we're familiar with the community. When we go to tradeshows, our clients hug us, and this baffles people," says Barnaby, vice president of New Brunswick, Canada-based Abenaki Associates.

The company focuses on the Canadian First Nations (native tribes) market, which includes 625 First Nations communities, related organizations, and businesses, at approximately 2,200 located all over Canada.

When the company was established in 1984, it seized the opportunity to begin developing products and services to manage the fund accounting systems for First Nations. "Abenaki was the first computer-related business that many of these clients dealt with, and many of them have been our clients for over 20 years," adds Barnaby.

Abenaki's primary products are Accpac's accounting software, and its custom Social Assistance and Case Management software, which holds information on the client such as personal data and benefit entitlement, and which integrates with Accpac.

However, servicing a niche isn't always easy. Barnaby provides six techniques that over the years have assisted Abenaki in keeping its clients satisfied.

* Join organizations that work with and support the common objectives of your firm and your clients.

* Know all aspects of your client's operations, not just the areas you work with. This way, you can continue to evolve and offer new products and services.

* Contact, contact, contact. Be sure that you talk to your clients often and that they know you're interested in them and what they do.

* Customize solutions so that they meet as many of your client's requirements as you can, but don't reinvent the wheel.

* Have employees who understand the unique requirements of your clients and train them to be your ambassadors. They're the front line and can make or break a relationship.

* Always work to improve your products and services. Don't give your clients an excuse to look elsewhere.

Ligotti isn't the only one who's finding success in serving niches. At a time when most customers are on their second and third accounting systems, resellers and accountants are realizing it's time to offer a more tailored application to fit their customers' specific needs and industries.

"It's time for the next mile of automation. In the last decade our most successful partners were horizontal, now these partners are transitioning to verticals. They're setting up practices, instead of just sales, and they're bringing success to the market," says Don Nelson, general manager for Microsoft.

Taylor Macdonald, executive vice president of channel and sales operations for Best Software, has seen the same trend among Best Software partners. "There is a sweet spot in the market for partners who are experts in a particular area. Everyone has business management software, and now everyone wants something more specific."

Spreading the Word

"If we're good enough at what we do, and we make people aware of us, clients fall into place," says Ligotti.

And they must be, because all of Oakwood's clients come from referrals. Not to mention, it's also how the company started working with franchises, now one of its biggest growth vehicles.

Ligotti discovered that the last thing franchisees want to do is run an accounting department. With a combination of CSI products, he can eliminate this headache.

In 1997, Ligotti began working with his first franchisee, Michael Ansley, manager of the AMC Group, and franchisee of the Buffalo Wild Wings Grill and Bar, a family sports bar with restaurants in 31 states. Ansley currently has five locations in Michigan and plans to open nine more in Florida.

Ligotti's services include write-up, accounting, monthly financial statements, payroll, payroll taxes, and support. He uses CSI Accounting for monthly write-up and payroll, while Ansley's in-house bookkeeper uses CSI Bookkeeping for balancing the checkbooks and accounts payable. Ligotti explains the procedure: "Once Mike calls me and says he's opening a new store, I go into CSI Accounting and set up the new store. I also establish NetClient, which allows Ansley to see his financial statements and bookkeeping such as accounts payable, invoices that need to be paid, and he can run reports on how much food was purchased in the last year. The bookkeeper also uses the portal to do all bookkeeping functions," says Ligotti.

In addition, Ligotti posts Ansley's monthly financial statements, which include statements for each individual store with a typical compilation of balance sheets, income statements, and supplemental statements with labor expenses, and the ability to compare last year's information to the current year's information. Also, combined statements include information on all stores; although stores are listed separately, the information allows Ansley to see the organization as a whole or compare two stores against each other.

"The NetClient portal gives me access to the information regardless of what store I'm located in. I have all my financial information to Oakwood by the 5th of the month and I can view my financial statements by the 15th. The payroll service is also great because they don't nickel and dime us for additional services such as W-2s," says Ansley.

Oakwood charges Ansley $550 per month, per store. "It's classic one-stop shopping. Working with Dave has allowed me to expand without having to add staff. The Internet is great because we can go back and forth, look at accounts, and solve any problems that occur right away. Overall, it helps me with my overhead," adds Ansley.

Since working with Ansley, Ligotti has picked up six other Buffalo Wild Wing franchisees located in four different states. "It's a relationship set-up we can replicate because of the products we work with," adds Ligotti.

Success also depended on hiring the right people, not just on the technology. Ligotti hired one person with hands-on restaurant management experience and another who worked in restaurant accounting.

"This is invaluable not because restaurants are so specialized from an accounting standpoint, but because, and I think this applies to developing any niche, your clients want the sense that you understand their business," he says. "It can be little things like knowing what time of day to call or being able to understand industry-specific language. Even at that level, the client gets a sense of comfort and the feeling that 'He or she's one of us.'"

Knowledge Is Key

Interdyn AKA fell into its specialty two and a half years ago, when it replaced Ziff-Davis's PeopleSoft installation with Great Plains, and added a billing component.

"This engagement allowed us to gain knowledge that we could take to similar companies," explains Alan Kahn, president of the New York-based Great Plains reseller. "We can now come in and show customers, 'Here's what we've done for companies like you, and here's what we can do for you.' We're able to leverage our experience, and show prospects that we know what we're doing."

Last year, about 40 percent of AKA's $6 million in revenue came from its niche in media, publishing, and broadcasting. Kahn says the specialization boosted the company's win rate for customers' business from 40 percent to 70 percent for its target market of companies with $75 million to $300 million in annual sales.

"With a niche, you don't have to call on as many customers, and you're able to add more value for the customers. Not to mention, they're more willing to leverage solutions you offer," says Kahn.

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