How to Choose an Accounting Niche (and Why It’s a Good Idea)

Focusing on an accounting niche can boost profitability, deepen client relationships, and reignite passion for your work.

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I knew I wanted to give back when starting my own accounting firm, Abacus Hive. I also knew the best way to do this was to use my accounting skills to push my community forward by niching in nonprofits and social enterprises.

I’d be lying if I said I didn’t have doubts about niching. After all, it’s easy to think your accounting practice will fail if you niche, or that you’ll miss out on a large pool of clients.

But nothing could be further from the truth. Choosing an accounting niche can boost profitability, deepen client relationships, and help you scale your firm.

Need the confidence to choose your specialty accounting niche? Here’s what you need to know.

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    What Is an Accounting Niche?

    An accounting niche is a chosen area of specialization within the broader accounting field that allows accountants to niche by industry, accounting type, or a combination of both.

    Let’s take a look at each:

    1. Industry specialization or niche markets is where you focus on serving a particular sector. For example, medical practices, SaaS companies, construction, real estate, and insurance companies.
    2. Accounting type is where you specialize in providing specific services. For example, tax and accounting services, payroll processing, tax planning, forensic accounting, or management accounting.
    3. A hybrid approach is a blend of the 2, where you offer certain services for a specific industry. For example, tax planning for real estate agents or forensic accounting for the banking sector.

    So, Why Niche?

    It’s a good question, mainly because it may feel like you’re losing out on many potential clients by effectively narrowing your market. But upon digging deeper, there are many advantages to niching:

    1. Specialized Accounting Services = Higher Perceived Value

    Niching allows you to provide specialized services, which are often perceived as of higher value to clients. These include:

    • Being an audit liaison who provides support during an audit by attending audit-related meetings and helping management review and respond to initial audit findings. In our case, the goal here is to save the client time so they can focus on the nonprofit’s mission.
    • Consulting services, which, unlike advisory services, are usually built into your agreement with clients and provided on a one-off basis, as needed. We typically consult with our clients on technology implementation and tools that can improve their day-to-day financial processes.
    • Accounting advisory services that go beyond traditional services like bookkeeping, generating financial reports, and filing taxes. It involves examining the present, looking at the future, and guiding business owners to make better decisions to improve profits.Some of these services we offer include helping directors build confidence so they feel comfortable talking to board members and coaching clients on how to talk about financial statements. Our goal is to reassure clients that everything will be fine.

    2. Higher Perceived Value = More Profits

    Because specialized accounting services command higher value, you can charge more for them.

    For example, at Abacus Hive, we took over an account where the client was paying someone $100 per month for general accounting services—and the accountant didn’t even understand the complex requirements of nonprofits. Our specialized skill set allowed us to charge $1,000 per month.

    Higher value services also allow you to attract clients—and drive profits—as they see you as experts who can address their specific needs. Brian Streig of Calhoun, Thomson + Matza explains:

    “Our accounting firm has specialized in the insurance industry, specifically working with insurance companies to audit their annual reports that get submitted to the insurance regulators and the related tax compliance.

    “This niche is a specialized area of accounting, and not many accounting firms are in it. It’s allowed us to attract clients from across the country and expand our reach outside our local market.”

    3. More Trust and Deeper Client Relationships

    Niching conveys an immediate sense of credibility, which builds trust. The trust is essentially built in. A client has never once asked me, “Can you prove to me that you’re an expert with nonprofits?”

    That said, choose a niche you genuinely understand and have expertise in. Otherwise, you will erode your reputation and trust if you can’t deliver.

    Niching also helps you understand the ins and outs of your client’s particular industry: Their needs, pain points, challenges, and aspirations.

    In our case, this level of understanding around whatever nonprofit-related issue our clients are going through is even more important than the amount of experience we bring to the table. It builds trust and helps us build personalized and deep relationships with our clients, leading to loyalty and repeat business.

    For instance, when we connect with nonprofit directors and acknowledge the many roles they’re tasked with, their faces light up. (Hint: It’s almost every role.) They don’t need to explain the intricacies—we’re already on the same page.

    4. It’s Easier to Scale Your Accounting Firm

    When you focus on a niche, scaling becomes much easier. Why?

    First, it attracts clients needing your specific expertise, and as you grow, deliver great work, and become even more known, you’ll obtain a steady stream of clients through referrals.

    Second, offering a few core services for a specific market makes it easier to package and market those services. You’re able to easily create service packages tailored to the particular needs of your audience according to a value-based pricing model. With this model, clients can typically choose between 3 or more packages, each offering incrementally more features, services, and perceived value.

    You’re also able to target your marketing with focused messaging that’s relevant to your audience, addressing their unique pain points and goals.

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    How to Choose an Accounting Niche

    Now that you understand what a niche is and why niching is an excellent idea, let’s look at different ways to help you choose one.

    1. Start With Your Existing Clients

    Consider the clients you’re currently serving and ask yourself these 3 questions:

    1. Are they concentrated in a specific industry? Maybe most of the clients you serve operate in the medical industry. This could signal that you have a natural affinity for this niche.
    2. Are you more engaged with some clients than others? A niche that brings you joy and fulfillment while ensuring you get paid is worth pursuing.
    3. Are more clients demanding a specific service over others? If a particular service generates a significant portion of the revenue, it may signal that it’s worth niching down.

    Pro tip: Define your ideal client to help you tailor your services to clients in your niche. Look at current clients you enjoy working with or that you consider a perfect client, and use them as a template for all future clients.

    Consider how easy they are to work with, whether they pay on time, if they give your referrals, demographics like business size and revenue, and psychographics like pain points and buying habits.

    2. Draw From Your Background, Interests, and Experiences

    Your background, interests, and experiences can all provide opportunities to help you find your accounting niche. Take Joshua Lance of Lance CPA Group. Because he was a home brewer and winemaker familiar with the brewing industry, it made sense to target craft breweries when starting his business.

    In my case, before I chose nonprofits and social enterprises, I did some soul-searching. Both of my parents passed away before I hit my 30s. That experience made me acknowledge that life is especially finite—and with such a limited amount of time, I wanted my impact to be positive. Working with nonprofits was the catalyst for achieving real change with the time I have, and the services I can offer.

    Now, I work with staff, board members, and directors with a shared passion, in the same niche. It’s a great feeling to want to talk about your clients and all the good they’re doing in the world.

    3. Assess Profitability and Current or Future Need

    Some accounting niches are more profitable than others for a variety of reasons:

    • Significant and sustained market demand. Accounting niches that address ongoing needs within the accounting industry or focus on a highly specialized service are often more profitable. Profitable niches include tax planning, compliance, and advisory services.
    • Less competition. You have a better chance of capturing a larger market share if fewer established competitors exist.
    • Specialized knowledge and skills are required. For instance, many clients are willing to pay a premium for tax services that help them navigate complex tax codes.

    Consider Brian Streig’s practice, Calhoun, Thomson + Matza. Their niche—working with insurance companies to audit annual reports and handle tax compliance—is highly specialized, and there’s not much competition, which makes it an incredibly lucrative niche.

    So be sure to conduct a market analysis to understand current demand, growth potential—maybe there’s a future need with huge upside—and the level of competition in your area.

    Also, remember to keep your finger on the pulse of emerging trends shaping the industry, like regulations and new technologies.

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    More Tips on Niche Accounting

    Having gained insights into the niching fundamentals, here are 4 more tips to help position you for success—from taking it slow and presenting your offering truthfully to educating yourself and not being afraid to get super focused.

    1. Niche on Your Own Schedule

    There are leaders out there who say, “Niche now or go home.” Unsurprisingly, many accountants feel like the decision to niche is something they have to make immediately.

    That’s just not the case. Don’t give in to market pressures; rather, do it on your own time. Let passion guide you, consider whether the niche lets you work with clients you want to work with, and don’t be afraid to work within several industries first to discover what works for you.

    2. Present Your Service Offerings Truthfully

    As mentioned, trust may be built into your niche but can easily be broken if you mislead clients into thinking you have expertise when you don’t.

    Sometimes, it’s not even intentional. I see this often with CPAs who are overconfident in their abilities. For example, they will advertise that they specialize in nonprofits even if they have 1 nonprofit client out of 100.

    One client does not make you a specialist. Abacus Hive works almost exclusively with nonprofits and social enterprises, and we’re still learning about the industry daily.

    So, rather, present your offering truthfully and accurately. Don’t be afraid to turn clients away and refer them to more capable professionals. We learned this early on when starting our accounting firm as generalists. We were taking on a few tax clients but realized they would be better served by experts in those accounting niches who were versed in tax codes. And so, we referred that business elsewhere.

    3. Educate Yourself

    Success in any niche also depends on ongoing learning—and I’m not only talking about brushing up on your accounting skills. “Learn as much about your niche target market as possible,” explains Brian Streig.

    “Don’t just focus on the accounting; learn the lingo, the general economics, who the large players are, and what their common struggles are, so you can talk to them in a way that shows you’re an expert in the field.”

    4. Consider Hyper-Niching

    Hyperniching or micro-niching can help you stand out from the competition and attract a specific and loyal customer base. It’s a strategy where you narrow your focus further within a specific niche by targeting a precise and small clientele.

    Within our nonprofit niche, we targeted 501(c)(3) charity-based nonprofits. To take it a step further, our accounting firm could hypothetically focus on 501(c)(3) charities that are exclusively animal shelters. There are probably 20,000 of those nationwide, and we would be the top-choice accountant for all of them.

    It is a strategy, however, that requires careful consideration because the client pool is much smaller. So be sure to do your research, assess the profitability of micro-niching as you would any niche, and determine if it aligns with your business goals.

    Niching Can Benefit Everyone

    It’s easy to think your accounting practice will fail when you niche since you’re shrinking your potential client pool. But as travel entrepreneur and business coach Meredith Hill points out, “When you speak to everyone, you speak to no one.”

    The fact is, niching can be hugely beneficial for accounting firms. It allows you to offer specialized services with a higher perceived value, which can drive profits and assist in deepening client relationships while also helping you scale.

    In my case, niching has allowed me to build a profitable firm that fulfills my passion of wanting to give back to my community. I support nonprofits with practical, comprehensive knowledge, time-saving skills, and intentionality. The nonprofits, in turn, can focus on making an even bigger positive impact.

    It truly is a win-win—and I firmly believe that niching can bring you the same joy and energy it has brought me.

    This post was updated in August 2023.

    John Young

    Written by John Young, Principal and Founder, Abacus Hive Accounting Firm

    Posted on October 19, 2020