Each and every day, small businesses compete directly against the big guy and succeed. This is done by changing the rules of the game and competing selectively. Over time, the small entrepreneurial firm becomes one of the big guys and we forget about their rags to riches story.
At one time, Nike was a startup operation started by a University of Oregon college track coach, Bill Bowerman, and his former middle-distance runner. That middle-distance runner was a degreed accountant from the University of Oregon named Phil Knight. Both invested $500 to form a partnership in 1964, and today Nike is a global athletic manufacturer with nearly $20 billion in sales. At the time, Nike sneakers were totally different from Converse, Keds and traditional sneakers on the market. $20 billion of growth in four decades is pretty impressive and now they are THE global juggernaut in athletic footwear, apparel and sporting goods.
Another example would be in 1996 when a former University of Maryland football player named Kevin Plank was convinced that a moisture-wicking fabric could help regulate the body temperature of athletes better than cotton T-shirts. With $20,000 of his own money and $290,000 in loans, he started his own athletic apparel company from his grandmother's basement in Washington, D.C. With the prototypes that were developed. His first sale was to Georgia Tech, and 15 years later, Kevin's business does at least $1.3 billion in sales under the name of Under Armour.
So, can a small startup operation with limited funds compete against Nike, Amazon, and other global operators? Of course. However, the mouse trap must be unique and compelling.
In each of the cases above, these startups have figured out ways to create a niche in the market without relying on discounting their price. In each example, they command an attractive premium and compete with larger competitors with very deep pockets.
With this orientation, you can probably tell I would not recommend that a new accounting firm compete directly with larger CPA firms by targeting medium and large businesses providing attest, litigation support, Sarbanes-Oxley and nonprofit accounting services. As in the examples above, a new accounting firm should fly underneath the radar screen of more established CPA firms, and provide a unique selling proposition that resonates with small business owners and plays to the strengths of the sole practitioner.
Here are some examples of how the small practitioner can win:
Create an industry niche and own it
To differentiate your practice and acquire the types of clients you want, using niche marketing in your accounting practice can be highly effective. With a niche, you can broaden the geographic radius of your practice because you become an industry expert. It allows you to differentiate your business, attract better clients, and earn higher fees because you avoid having to compete on prices.
There are so many different options for ways to add a niche to your practice. At Build Your Firm, we offer 30 different accounting niches. Start by asking yourself some questions. Do you know more about a particular industry? Are you passionate about a particular industry? Maybe your father owns a medical practice or your spouse runs a non-profit. Do you enjoy a specific niche service?
Blog boldly and consistently
To establish yourself as a trusted advisor, add a blog to your website and post regularly. A blog can help you gain a competitive edge, improve your rankings in the search engines, and showcase your expertise in your industry. Not to mention, it's a great way to show some personality and wit. It's becoming more and more popular for consumers to choose companies that resonate with them personally. By allowing your personality to shine, you can connect with your audience. If your accounting blog is done well, it can slowly pick up steam and create a following.
Write a newspaper column
Most local newspapers are struggling financially as the internet has cut holes into their business model. In addition, as they move to create content online, they need more and more of it. As a result, the editorial departments in most local newspapers are starving for reliable content from someone with your expertise. If you enjoy writing or already have some articles you've written that you can easily repurpose, then reaching out to some local news outlets could be a great way to get your name in front of your local audience and elevate yourself as a local expert in the field.
Start a podcast
Podcasts are growing in popularity. They allow you to demonstrate your expertise and create awareness of your practice. In the past, financial planners have been hosting retirement planning call-in shows on the radio. These allowed them to build their businesses. Why not an accountant talking about small business accounting and tax issues? If you don’t want to commit yourself to hosting a podcast, how about a cooperative approach, or finding some podcast that you could be a guest on and reaching out to them and pitching your idea? In one market, we have a client that has created Tax Tuesdays where he is available for one hour each week to answer call-in tax questions.
Organize for productivity
To compete on fixed fees for smaller businesses, you might want to consider systematizing your production process so you can process clients more efficiently. Many medium and large CPA firms have fixed overhead costs that preclude them from working with businesses below a certain fee level. If companies like Southwest Airlines can turn the airline industry upside down, maybe you can too.
If you are willing to create a unique and compelling point of difference like Phil Knight did with Nike and Kevin Plank did with Under Armour, you too can create a foothold in the market. Be strategic about how you market your practice and then, Just Do It!
