110 Building A Micro Niche Accounting Firm

Okay, I think traditional accounting firm advice is lagging behind here. There's another example of where the accounting firm and all professional services, where that model hasn't kept up fast enough with.

The Internet and all the things that ought to change about how you run a practice.

So we're gonna talk about micro niching.

What does that even mean?

How I think it's actually quite different.

To traditional niche accounting firm advice. So come on in, let's talk.

We. We micro nich. Okay, Two things I want to impress upon you. Things that I've said before but have been like, weighing especially heavily on me lately. I don't feel like we talk about it enough. One, you have a distribution problem.

So many of our, I mean, virtually.

All accounting firm problems stem from pricing, not necessarily pricing problems, because obviously pricing is a massive spectrum. But if you could charge double what you charge now, that makes most of your problems go away. Staffing shortages, overwork. It's usually as simple as that. And generally pricing problems are actually distribution problems in disguise. You haven't found the people who will happily pay more, pay you more for what you already do. And most of us are living in a little itty bitty microstock, microscopic bubble of like, within the larger ecosystem of people that we can help. So big. Two, two big things on impressive money. One, you have a distribution problem because the Internet enables access to way more people than we're currently accessing. And two, we can't comprehend how big the world is. And there's just so many examples of this that I see every single day of us underestimating how big and complex the world is because our little heads evolved in these sort of tribal setups where you only have so many relationships. And we, like, we cannot comprehend the notion that millions of people could see something that you make. Like, like we just, we can't get our heads around it. And I always hear the analogy of, oh, you have, you know, 10,000 followers or something like that, and you think about all those people in a room and it's like, gee, gosh, that's so many people. When the reality is you just simply post something in social media and way more people than that oftentimes will see it. So our heads just can't get around how big the world is. And as a result, we don't lean into the bigness of the world. And a byproduct of that bigness, the specificity that's out there, just how many people there are with very, very specific problems. I often see, hear this around myself and you Know, my job now basically just to be visible and be helpful. A lot of people say they see me everywhere on conferences and stuff of stuff like that.

The reality is we're in such an.

Itty bitty echo chamber. I think, uh, probably less than 1% of accountants have ever heard my name. Maybe less than a tenth of a 1% of accountants. Like that's. The reality is the world is just like always bigger than we expect it to be. And the reality is we still aren't that far removed from a time when everything was being done in person. I mean, there's people that listen to this, that remember this more intimately than I do. But even when I started in the profession, like you didn't have stuff like social media, or at least it was very rudimentary compared to how it is now. And if you were going to build your business, it was all about going to the chamber of commerce stuff and like local organizations. And think about the amount of time and effort that's still invested into those things. When literally on your phone you have access to something that is, you know, 10,000 times the size. It's the thing that everybody's consuming all day, every day. Idle time is just spent scrolling algorithms. But probably 99% of accountants aren't present on those algorithms. And that's just a, that's just something that I don't think we talk about enough. How when the Internet came around, you probably just needed to throw out whatever the accounting firm model was or the professional services firm model was and really think through that again from scratch. Because all of the constraints, all the geographic constraints and the ways that you met people really ought to have changed overnight in a really positive way. That's not to say you still can't run a firm around that local stuff, but right Now I think 90, maybe 90 plus percent of firms are still run that way. And that certainly shouldn't be the case. If you think about what you see online from accountants and from accounting firms, it is a tiny, tiny subset of them creating any sort of content online. A lot of it is the canned boilerplate stuff that maybe they're paying a subscription to get access to. The rest of it is really, really corporate stuff. Generally there's a distinct lack of, you know, personality, like a person present in that content to build a relationship with. And even then, most of that stuff is really just like high level, very general how to manage cash, how to understand your financial statements. Like it's very, very basic stuff. And I'm definitely a believer that you don't need to reinvent the wheel in the content that you're putting out there. We try to like do very 200 IQ things when our clients are operating at 50 IQ usually.

But I will say there's virtually nothing.

Out there that is like really compelling stuff for a super specific niche. So wet like man, I don't know that I can put my finger on just about any firms out there that are making super, super useful stuff for a hyper niche. And that is not like S corpse. It's not E comm. It's not like a big niche like that. It's somebody within that niche with a very, very specific problem. And I think the reason is it is really, really hard not to chase vanity metrics or this mental model we have of what success on social media looks like. So if you post something and only 50 people see it, you think well, you did something wrong or it's not good enough or it's not helpful or something like that. When the reality is unless you're finding a very, very specific type of person, that information probably isn't like super valuable, super specific something that they couldn't get elsewhere. And niche advice today is generally centered around relationships and referrals and that all is valuable. But that conversation around niching is usually completely disconnected from how you can like build that hyper niche algorithmically. So what are the, who are the people that you can find on social media that have a very, very specific pain point that's a really big factor today and how you ought to build a niche and a really like rudimentary version of this was SEO is if I can build a firm around strong SEO, then like that's a rationale for going into that niche when the like, the reality is these days I think that effort is, is much better spent on social media. Some big question marks about the long term value of SEO as that space has gotten more crowded and as a lot of searches now going to language models. But is there a compelling hook to find these people on social media? Like that's a really big factor to me and how I would decide how to build a niche these days. But let's talk very specifically about like hyperniche versus I think traditional sort of framing of niches. In the past to me, things that are not niches. I support S corps, I support online sellers. I mean just about every business is gonna sell online longer term, right? People in my state, restaurants, influencers.

To me, the beauty of the Internet.

And social media and what that all enables. And this has been for me a very long personal journey of pushing back against vanity metrics and how that feels good and how success and, you know, the outward appearance of the value of what you do is really built on number of followers and public perception of that. Great example. I was hanging with my brother over this last weekend and he's like, man, you've got a lot of followers on LinkedIn. And I'm like, really? I kind of like, I think the opposite because I look up to these mainstream influencer types who have loads and loads of followers, but I feel this pressure to have this outwardly impressive sort of following and lean into these vanity metrics. Right. But I think this ultimately gets in the way of us being really helpful to a super specific type of person. To go back to the analogy or metaphor or whatever it is that I use quite a bit, if you're in that bookstore and you're walking by and there's a book on the shelf, like that thing, what you're targeting is something that is so specific to that type of person that they stop in their tracks and they're like, oh my gosh, this is a thing that is for me. And those social media posts, like the really, really good ones, they give you that same impression, like where you stop scrolling and you're like, holy smokes. This is so specific to what I do. So, so specific to the problems that I face that I have to immediately stop or bookmark this post.

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But for all the same reasons that a lot of us are afraid to niche at all, people are also afraid to micro niche because you feel like you're throwing a bunch of people out along the way when what you're actually doing is becoming more valuable to a smaller subset of people. And at the end of the day, that is what running a successful accounting firm is all about is being extremely useful to a small subset of people.

And all the people outside that bubble.

Will look at what you do and not understand it and it'll look ridiculous and the prices that you charge will seem outrageous because they don't have the same understanding of the very nuanced problems that those people have that you do. And when we look at coaching groups and mastermind groups where people pay astronomical amounts to be there of their own volition, they're choosing to give their money to be there. That's generally us not understanding the specificity of those problems that those people are solving. And we've talked about this a bit recently. The one that stuck out to me was we were doing kind of a challenge episode using ChatGPT and the Web3 stuff and it was like, you know, real estate NFT holders. Like that was a really fascinating, very specific micro niche to me. And I found more and more when I'm brainstorming, I will turn to ChatGPT or another language model to help me think to like a greater level of depth on these things. So I think it's helpful just to solidify like what is that like when we say micro niche, what actually is that to think through some examples. So I got a prompt here. You are a master CPA consultant to accounting and tax firms. You have a deep nuanced understanding of every micro niche niche that accounting firms serve. I currently serve the E commerce niche. What are 10 micro niches within my niche? So say you got an E commerce niche. I label it whatever you want. What are 10 like micro niches within that? Some ideas here. One drop shipping accounting. This involves businesses that sell directly from suppliers to consumers. The accounting intricacies include tracking cost of goods sold, sales tax considerations and international transactions. Subscription box services, digital products and services such as ebooks, software or streaming services have specific needs around sales tax, licensing and revenue recognition. Multi platform retailers, businesses that operate on Amazon, ebay, their own website, all that handmade goods have unique challenges around labor costs, complicated revenue streams from craft fairs, online stores or consignment shops. 6 Print on demand businesses that produce an item after an order, after an order has been made. They often deal with royalty payments, licensing agreements, potentially high advertising costs, influencer backed stores. So e commerce sites that are backed by social media influencers, private labeling. These are like companies that do branded merchandise, that sort of thing. High risk industries, adult entertainment, tobacco, firearms who have legal constraints, high processing fees, specific tax considerations. 10 international E commerce firms that sell products internationally and have to deal with exchange rates, multiple tax jurisdictions, import export duties and all that. Those are all E commerce, right? And even those like especially international e commerce, even a lot of those you could go further into. So high risk industries you go into adult entertainment, tobacco, firearms, marijuana, like a number of these things you can go even further into. And I just see us still being too fixated on the volume model of making money on the path to making more money being serving more clients. And similar to how in the land of social media we have these vanity metrics. I see a lot of vanity metrics around firms too where we're like a successful solo firm is one that's reached a million in revenue or X number of clients, or you've built a team to a certain size or something like that.

When I don't think this takes into.

Account the fact that the Internet enables a different level of specificity in the people that we serve than has ever been possible before. Because for the, for the first time you can find those people and the bigness of the world is made accessible by the Internet, by social media. And so you can serve a much, much more specific type of person than ever before because you have reached to them anywhere. And if we think about how things are trending over time, like in my mind this is the age of the hyper niche and the future is just going to get more niche because the Internet's going to continue enabling greater reach. You have an entire generation of people who have grown up consuming social media, many of them creating stuff themselves on social media, as opposed to the current generation of most business owners, where social media didn't even exist when they grew up, right? So everybody's going to be creating stuff. The platforms will continue to get better and more specific, so everyone will have greater reach, but simultaneously everyone will be able to find greater specificity in the people that they reach. Another huge one is language barriers are practically being eliminated now. A big Trend on, on YouTube is being able to publish videos in 50 plus languages virtually instantly. And the AI translating and dubbing of like, even how their mouth moves is unbelievably good. Now, like, honestly, probably in the next 12 months, I'll be able to publish all of my content in 20 plus languages instantly, like without it creating a whole ton of extra work. And it will look like me speaking that language and it will sound like my voice virtually indistinguishable. And that is going to impact the people that we can reach and the problems that we can support. So if we have right now foreign, foreign language speaking folks who sell into the US and have US tax compliance issues, most US based people who don't know how to speak another language, like they're not able to serve those folks, Those barriers are about to go away. And in general, the world's just getting smaller. Not only like, you know, for me across the US but around the world, the world's just getting smaller in general because we're all more connected. And so if we think about the direction that things are trending, it is more and more and more specific. But the big tripping point for a lot of people, I think is the inability to get over those vanity metrics and what we see success as online because there's still a lot of glorification around those mega celebs and your Internet points being a product of how big your following is and all that, rather than how meaningful the problems you solve are. And I shared, like, this is something that I've, you know, struggled with a ton because I could go out and make cool, mainstream stuff and all of my vanity metrics would be way bigger. But you know, what I don't know that I could do is, like, build a very meaningful business around that, as opposed to knowing who I'm good for, which, admittedly is still a huge subset of the profession. Like, I've kind of settled on small firms, 10 million and under, and that's still a massive, massive pool. But had I not done that, when I hang out with my brother over the weekend and we're just talking about how things are going, and I could have been like, no, I actually have like a hundred thousand followers on LinkedIn. He would have been like, wow, you are a mega celebrity. That is so cool. But the reality is that business would probably be a tenth the size of the business I've been able to build with much greater specificity. Right.

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So if micro niching is the future and things are going to continue trending that way, how do you build it? I think that's where most people are at now. The folks who grew up doing social media or wanting to be a YouTuber or whatever that was. I think this comes a lot easier for them than most of us who did not grow up with that or didn't grow up with those ambitions are still stuck with seeing themselves on camera or the struggle of what do I actually have to say? When you've literally spent years and years learning things that nobody else knows and people pay you handily to help them.

With problems, yet somehow we still don't.

Have anything to say, right, like, it's just a mental shift, like everybody started there. For me, it was definitely a learned skill. But then how do we find those people? How do we reach the massiveness of what the Internet enables to find, like the bottom of a mega, mega filter to find the people with really, really specific problems who will pay me really handsomely for what I do. Two paths to building them in my mind. One, attract them. I think in the future. I've heard said, and I somewhat agree with this, that basically down the road we're all media companies because how we define media companies today are like, you know, companies that are creating, that are producing stuff. But in the future, when people aren't going through the yellow Pages or the white Pages or whatever it was to find the plumber or the accountant, and when we're spending more and more of our time on, on algorithms and consuming things, there's. And what lives in that algorithm gets more nuanced and more specific to that type of person. That's how people ultimately find solutions for problems. So you, like, look at the percentage of consumers spending that has shifted to influencer marketing and stuff that people discover on TikTok and on Instagram and they make buying decisions because of that. There's a very real B2B side of that that we're just now discovering, as opposed to the BD B2C, where e. Com has been massively driven by influencer market and the virality of, you know, a TikTok popping off that features their product. B2B is going to go the same direction with increasing levels of specificity. And so by today's definition of what a media company is in the future, most companies probably look something like what you would call a media company today because they're consistently creating stuff to attract people. And it's really. We look at the really impressive stuff and that's. That's scary. But it's really as simple as just having conversations and doesn't even involve video or you even being on video necessarily. Like, it's just a matter of consistently turning up and having conversations around the pain points that you solve that will attract people that have the same pain points. And obviously there's a ton of nuance in the right and the wrong ways to do that. And how most of us live out our social media lives, like through more of a personal lens that muddies the problems that my clients have versus the problems that I have. And running both of those things through a, through a single social media presence doesn't really work. But Investing the time and having those conversations consistently around the problems that you solve in order to attract people. That I think is ultimately the main way we're going to pull people in. But again, the biggest trap there is, I think people are trying to build something that will attract a thousand views when honestly a 1010 view video for a very specific type of person is probably easier to build a business around. So second, the way that we build this is by finding those people. So attract them and then find them. Social media I think is, and AI in general are going to create this sort of renewed hunger for in person, more experiential stuff. I think we saw this out of COVID There was a big appetite for people to get out of the house and go to events and meet people in person. I think that's just going to keep getting more and more powerful as some aspects of how we communicate with other people are eliminated. Like we don't spend as much time on the phone anymore and, and we don't. Coming out of COVID when we moved, you know, really to virtual meetings, we absolutely haven't bounced back to what it was because of the convenience and simplicity of virtual meetings. And the result is like we like, we all have this human longing for in person connections which makes those in person events super powerful. And so I think we are going to keep like having this sort of increased hunger for those in person events. Those places are gonna be gold for finding people with very specific problems. All the conversations we're having around greater specificity and what we put on social media, same thing applies to in person events. So like, you know, even putting on your own events could be a great way to find them. Greater emphasis on, on micro communities, on online communities being built around specific people and those folks getting together in person and you being able to trojan horse your way in there as a domain expert is absolute gold. That' great way to find clients. And I think oftentimes we go down like the sponsorship path or you're going to engage with that, with that event through the lens of being like a vendor when the most important thing is that you're just there as a person and you're meeting people and you're having conversations and you're learning and maybe you're picking up some clients. But I tell people this all the time in the accounting software space who they're like, I don't know that we're going to have the budget to get a booth or all the booths are sold out. So I don't think we're going to go this year.

The value is in you just being.

There as a human and meeting people and connecting with folks and learning. Maybe there's value in the booth, but there's a ton of opportunity just in being present and learning. So that is the find them side of things. So how do you build it? Attract them that mainly happens on social media and then find them that's happening in person.

And I still think most of us.

Haven'T niched honestly at all. And I always had a complex relationship with niching down or specialization. I didn't get all that excited about it because honestly I was like, we have a firm, it's worked for the last 80 years. Honestly it makes really good money. And so I didn't really feel the pressure to specialize because it felt like what we were doing was working. But all that being said, it certainly didn't mean that it couldn't be better and it couldn't work better that we couldn't be higher margin, that we couldn't charge twice as much for what we did For a more specific type of person, you know, in a larger firm like that where you're running 30 to 50% margins, the reality is you can trade three or four low paying clients for one new really well paying client that was more or less the same amount of work. So while most of us haven't, haven't invested in niching down all that much, I would super encourage you to think more about where things are headed and a much, it's in a much, much more micro niche direction. And I think oftentimes if we're not having success on social media, going into a niche, a quote unquote niche, it may be because it's not specific enough. Like if you're just talking to E comm people online right now, honestly, like you have to be prolific, like your stuff has to be at a really, really high level and when you're starting out it probably won't be and has to be prolific because there's a good number of people already there offering advice for E comm sellers. But the more micro you go, the lower the production and the, I don't know, the clickbait kind of require, the lower those requirements are, I guess. And when you're first starting out, like you're not going to be great at that, optimizing every little thing. And so oftentimes if we are, if we're striking out there, I think it's probably just because we aren't specific enough yet. But what it feels like is maybe you're too specific is, oh, I only posted this video about how to read a balance sheet for E comm providers, but if I would have just made it more general, more people would have watched it. Maybe, probably. But would it have gotten you any closer to meaningfully con, like converting clients? No, like it's the reason that I'm not ultimately interested in having a million TikTok followers. How does that then convert to finding people with really, really specific problems who will come pay you well for what you do? Right. If we're just playing the volume game, that's a hard way to build a firm and that stuff's getting eroded every day by product solutions and AI and all this stuff. Right. That's not really where we're setting up camp. So I'd encourage you to find even more specificity. As I was kind of brainstorming with this, I did that exercise of hopping into ChatGPT and saying, you know, how can I find? Give me like 10 micro niches within this niche. And it's actually really good at that. Pulling out a lot of stuff that I didn't think of. We went through that E comm example and frankly some of those E comm micro niches could have been split out even further. But if you're thinking through, you know, even what you're going to niche into and you have an interest that's vague like you know, gaming or sports or marketing, you know, what, say, figure out ways to drill into that much further to be able to speak to a specific person or combine that interest with another interest of yours or something that you may have domain expertise in from your past to get to something more specific that I think that's ultimately the secret sauce to meaning doing meaningful work on social media when it comes to attracting high paying clients is just getting more specific. So you go micro niching.

I don't think we're talking just quite.

Enough about how the Internet enables us and how that's kind of where things are headed. The algorithm's getting more specific to my interests and how professional services can lean into that a little more. That's all I got.

I'll see you in the next one.