by Wayne Schulz

Would you like to make so much money that you could retire? To hear industry experts talk, by focusing services on smaller niche markets, technology consultants can achieve unbelievable riches, lose weight overnight and realize ultimate success.

Once you clear away the smoke and mirrors, just how does this magnificent promise measure up? Well, for two long years I was firmly on the niche bandwagon. I traveled all over New England, promoting what I thought was a "can’t lose" nonprofit niche. The package went belly up and became completely extinct, orphaning the half-dozen clients of mine who used it.

Let me give you a healthy dose of reality about what I encountered during my two-year trip down Niche Lane. A niche is a wonderful opportunity, so long as you go into it with these seven issues firmly in front of you.

The travails of travel

I hope you like to travel. Becoming successful in a niche practically demands it. In order to make money (due to high marketing costs and lower closing ratios) I had to target engagements over $20,000 in size.

When I looked within 90 miles of my home office, I was underwhelmed by the limited numbers of potential prospects. So I was forced to start traveling to other states to find enough business. In my case, the term "suspects" can replace prospects. Suspects were easy to find, and they made me feel like I was on the right path.

However, too many suspects didn’t have the checkbook to match their wish list, and too many decided they didn’t need niche software after all. Lots of those suspects used me for a free education.

Where are all my prospects?

The day before you take the financial plunge and sign on to your niche market, it seems the flow of suspects is never-ending. However, once you enter the market you’ll be shocked by how narrow your prospect pool really is.

Test my theory yourself. Run a Dun & Bradstreet listing of target organizations within 90 miles of your office. Now narrow that list down by showing organizations with over $5 million in revenues (any lower and the suspects will be eternally grateful for your free days/

months/weeks of demo time, but won’t be able to buy). When I ran this listing I was dazed by how much smaller my pool of suspects was than I had initially thought. In order to compensate, I found myself driving to neighboring states to hold demonstrations and meetings.

You have to sell larger-sized engagements to recover the higher costs of marketing to your niche. There are a lot fewer large engagements than you might think.

Bait and switch

Just when you think the sale is in the bag -- the prospects switch songs. And the tune won’t switch until you’ve spent 40 hours demonstrating, proving and providing references to your delighted clients. After all this effort on your part, half of the time you can expect to be paid back by a suspect purchasing the lower-cost QuickBooks or Peachtree.

Some will thank you for the free needs analysis you helped them perform, while others will just condemn you to listening to their voice mail. The ones who don’t purchase the low-end systems stay as-is, upgrade what they have, or use an off-the-shelf system.

I got into the habit of asking the prospect why they didn’t purchase QuickBooks or Peachtree, upgrade their existing system, or purchase off-the-shelf software. I always tried to do this in the first meeting in order to cut off as many shoppers as possible. Make the suspect convince you that they need to purchase a niche package.

Oops, where did my staff go?

You’ve got a few signed contracts under your belt. Now you are all ready to go out and get that software implemented. Time to get the staff out and the training started. Don’t underestimate the need to send staff to vendor-sponsored training classes. That, however, only gets the staff about halfway to their goal of being able to provide great service to niche prospects.

Suddenly, when on-site, your staff will be inundated with, "What do other people in our industry do?" You have to handle this and get enough training for your staff so they don’t respond, "I don’t know, you are my first or second client." The easiest way to get around this is to acquire a company with a fully trained staff that is already serving a niche industry.

How many references?

You’ve found your first client. They are ready to sign. All they want is a couple dozen references. You only have one reference? No problem -- you can probably get some from the vendors!

Watch out, because when your suspects called the references, they’ll find out that you didn’t install the software and then get an earful about how great another VAR was.

Don’t underestimate the need to be able to provide solid references. Borrowing them from vendors is usually not going to close a larger, more complex sale.

Want to be our first client?

Getting that first happy client in your niche is the toughest job of all. Until you have a happy first client, you can’t get any hands-on experience, references of your own, or (most important of all) revenues to pay for all the marketing you have to do in order to find suspects.

Be prepared to discount your services or outright give them away in order to get your first couple of references. I never found a good way around this. And to top it all off, those engagements that you start aren’t reference-able until you are completely finished.

The vendor’s my friend, right?

Some vendors are just starting out with a VAR channel. In these instances you are going to be initially fighting a battle against them -- since they are likely used to selling directly to end users in your territory.

So don’t be surprised when you sign on to be an "exclusive" VAR in your state and suddenly someone else (usually the manufacturer) is selling to what was supposed to be your client base.

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