460 This Is THE PERFECT Accounting Firm Client

The path to a happier, more profitable, more sustainable accounting firm. It is kind of all about like, finding your next better client. And today I want to run, run you through an example of what I think is like a killer version of this, a client network that I can see a fast path to getting into in a space where you're solving pains that are both rare and for people who have money to pay for solutions. This is just going to be a super practical example how, how you would build that network from scratch. There's going to be a bunch of crossovers to networks you could probably build. But I also want to get into why this is a particularly good one to help you as you assess what could make sense on your own journey. Buddy, this is going to be fun. Come on in. Let's do it. I don't even want to say the word because it's, it's a very divisive word. Some folks don't like it. I'm going to say the word niche. Whether you're a believer in niching down or not, ultimately the path to finding a client who will pay you more is that client feels the pains you solve more acutely. So they're, they're happy to pay for it. Right? Like the folks that complain about what they pay you right now are the people who won't open your emails. Those aren't generally bad people. It's simply that the things you're doing for them aren't all that painful for them. So. So what we're looking for is clients who are just like paralyzed. Like the lightning bolts in the side from a 1 to 10, this pain is a 10. And then you come in and they're like, huh, take this duffel bag of cash. So we're looking for painful pains for people who have money to spend on the solution to that pain. But even better, if it's a rare pain, then we can be a rare solution provider, right? Like if there's a hundred other providers doing the exact same thing then and there's a bunch of substitutes to us. So last week, maybe it was two weeks ago now, I'll put a link to this down in the show. Notes. I just brain dumped a whole bunch of different niche ideas on LinkedIn. And again, when it comes to niching, it's not about cutting bait and burning the ships. And everything that you got niching down is literally just about the next one client we find. Can that be more profitable? And the only timeline where you go all dramatic and you like rebrand a firm around it and all that. The only timeline where you're ever going to do that is when you've got a bunch of these niche clients and they're way better than all your others. So you're like, well, this is kind of the only thing I want now. So we're literally just thinking one client ahead. Definitely, like looking past that a bit to be like, would this make sense to do a bunch of these? But the reality is like, you learn one client at a time. So I put out this graphic that's 26 niches for accounting firms. A few examples, boutique fitness studios, a specialty food and supply e commerce, independent film production companies, luxury yacht charter services that. I mean, there's so many examples of that where it's like, well, of course, I guess somebody does that stuff, right? Drone photography services for real estate, independent video game developers. Maybe that's a bad example. On the the having money to pay qualifier. Custom tiny home builders. This is what I love about running an accounting firm these days, is pre Internet. How in the world would you have ever found those people? Now with the Internet, all you got to do is go out and talk about these things every single day and those people find you. You combine that with like going out to a couple trade conferences and you can so quickly become the guru because all of these people, they work with generalist accounting firms and are so annoyed about that, they don't speak their language. And so as soon as they see someone who's like, oh no, I'm an expert in this, honestly, whether they are or not, they're like, sweet. Finally an accountant that gets it, understands what I do. Even if all the stuff behind the scenes is the same, you can speak their language. They get excited about that. So an example, like the niche I want to talk about today and specifically why I think it's a great niche you're considering. It is not even slightly, slightly sexy. It is medical device repair shops. And if you're on my newsletter, by the way, if you're not on my newsletter and you're listening to this, what the H man is a link in the show notes. Get on my newsletter. I share like kind of the best, most can't, most can't miss stuff. Also, I do like a lot of important announcements and all that I do over the newsletter because this podcast is kind of evergreen. Like I want somebody to listen to this five years ago, Five. Five years ago, five years from now and still get value from it. So the newsletter is like, I'm going to be in like 25 cities over the next four months am I going to be in yours? You got to be on the newsletter to find out. Anyways, I talked about this specialization in the newsletter a couple weeks back. But the more important thing is is why is this a good specialization and how would I build it? So it's medical device repair shops. I didn't know that this was the thing. They're oftentimes led by what's called a biomedical equipment technician, a bmet. There's like a certification for this. Their customers are ambulatory. Surgery centers are community hospitals that don't want to have their own in house repair staff. But then also OEMs. So like the manufacturers of the stuff outsourcing warranty work so some medical equipment goes sideways, then OEM will hire your shop to come and do those repairs so they don't have to. So these things are very common. There's over 6,000 of these repair shops in the US alone and they bring in on average one to eight million dollars a year. And I like, I love everything about this very common counter argument to niching down is like the tam, the total addressable market isn't big enough. There's 6,000 of these shops in the US alone. How many accounting firms do you think are set up to just serve this type of shop? Probably not many. It's got to be somebody. But these companies are doing 1 to 8 million a year. And I don't, I have no insider information on this. I got to think these things make money, right? Like these things have got to make good money. And so if I can like, if I can be the tax shop, the back office for 50 of these $4 million a year little repair shops, I mean what sort of firm are we talking about then? Let's say 2% of revenue. That's 80 grand a year per client. If I'm running full back office like accounting department in a box for a company like this, this can swing one way or the other depending on the type of business. But I'm generally looking at like 2% of revenue. So that's a 6 to $7,000 a month engagement. I frame this to that company as that's a mid level accounting hire and you're getting access to all of my team's expertise and we're doing your tax and all this other stuff, that is a great investment for them. But if I can get 50 of these clients on board, that's a $4 million niche practice serving 50 clients, one doing back office stuff for very, very similar businesses, that's a killer. Firm gang. And for all the concerns we have about niching down and what if I get bored of this? You know what sort of multiple a $4 million niche firm set up on recurring revenue serving a specific niche. You know what sort of multiple that can trade at a good one. So the worst case scenario here, you get bored of it, you sell it. I probably wouldn't. I would probably just hire a like a higher level team that can come in and operate it. Today's episode is brought to you in part by Team up who helps you directly hire talented accountants in the Philippines. But did you know that they can also help you hire an assistant? Did we? I feel like we just did an episode not that long ago we did about why you should have an assistant. Because if you want your team to learn the skill of delegation, buddy, all that learning starts at the top. And I know, I know I'm not the type of person that needs an assistant. Like it's like giving up. Gang, here's the thing. You're gonna get stuff thrown at you every single day that is below you, that is beneath you. An assistant, they can help with that. And the assistant can even help facilitate like getting some of those things to the right members of your team. This is ultimately an opportunity for you to drop the low value stuff that you're doing to upskill other folks for whom those same tasks are actually an opportunity. Now if you want to hire an EA in the Philippines, I'll give you the salary range. What this usually looks like one to three years experience working with US companies. They're usually going to come in between 1100 and 1200 dollars a month. That is USD full time. Three to five years experience between 1200 and 1400 USD and five plus years between between 1400 and 1600 USD. Buddy. They're out there and they're good and they make a difference. I got an assistant. I'm not ashamed to say it and I think you should too. To learn more about Team Up Chip out help, check out the link down in the show notes. Today's episode is sponsored in part by Client Hub, the practice management system that delivers WOW seasons year round. Not busy seasons. Seasons that will dazzle your clients for two reasons. One, Client Hub is drop dead simple, man. If you're too tired of a practice management system that just feels like you gotta have a PhD in learning something new, Client Hub, you hop in, the vibes are great. It just all makes sense. But two, remember, there's a second reason Client Hub offers a game changing client experience that is you can actually get clients to like collaborate with you and be helpful on the platform because the portal wasn't this like afterthought. Bolt on now. Very cool. Recent development in Client Hub Magic Books review Twinkle sounds so ClientHub syncs in the transactions from your QuickBooks file. You can run an AI analysis on it like from inside of Client Hub. It'll highlight any potential issues you can mark like on the balance sheet P and L. You mark each account one by one, whether or not it's been reviewed. But if you want to troubleshoot, it'll pull you straight back into QuickBooks like so you don't have to learn like a whole new troubleshooting tool. If you'd rather sort that stuff out in QuickBooks. Other cool stuff it'll identify automatically expand expense inconsistencies, purchases without a payee, purchases in parent accounts. Why is. Why can we not disable that in QuickBooks? Large transactions, new accounts, new vendors, new customers. It's Magic Books review inside of Client Hub. I think you might like it. Learn more about Client Hub. Check out the link down in the show notes. So a lot of like very obvious reasons on the surface why I like it. But let's go a little bit deeper. Talk about how to find these people. I'm going to look in three different places. One, I'm going to look in associations. So this industry that like they have a certification. So there's all sorts of associations supporting these types of businesses. I'm going to look at events and I'm going to look at software companies serving this. So let's start with associations. The the fastest way to look reputable from the outside is by association with something that is reputable. So you have an association, amdso. It is an association just for equipment, services and repair professionals. You have the College of BMet. This is the largest certification program for BMWets, the folks who are generally the ones that run these businesses. So you've got got a college that does all sorts of events and their partnerships and all these things. But then almost every state in the US has its own BMET Society. It's not unlike CPATUM and everybody having their own State Society of CPAs. It's the same thing here, which means you have kind of a bottomless source of bodies you can go out and do partnerships with. Now, events, if you go down to the state level, there's tons of events, but the big national events, it's called MD Expo. This is kind of the biggest one for BMAT folks, but there's also a couple other types of adjacent things that are there as well. I found another one, the AAMI Exchange that includes a BMAT career fair where these repair shops will rock up and try to hire people into their repair repair shops. And so that seems like a great place to try to be hanging out. And then there's all sorts of mixers which are like mini expos that are run all over the. All over the country for basically field techs. Most of these, these repair shops start as just a single B met person running around doing everything themselves. All their parts are in the like the trunk of their car. Over time they build out more of a team as evidenced by like the average shop doing 1 to 8 million a year. So that's associations and events. And this was found just with some very quick googling last software and I love buddying up with software companies. In fact, it was maybe last week or the week before we talked about like what are some hacks to get in front of specific types of clients. I love going and helping out software companies at trade shows. Cause they will give you a ticket, they'll get you in the door for free. You'll spend a bunch of time with the software people which will probably open up partnership opportunities down the road. They. But then you're just, you're literally there hanging out, talking with your kind of ideal client because you're there at the conference anyways. A few actual pieces of software that are specifically for these repair shops. One's called ServiceMax. It is for field management with shops with more than 25 texts. Fieldpoint is another with shops with 10 to 40 texts. And then blue folder is a budget option for shops with less than 15 texts. And this is almost like an embarrassment of riches here. And this is where one, one area where if there were a number of people in the space already, I would probably try to specialize with a specific software vertical. Like I would say like I was the go to for Field Point or blue folder or something like that and do just a bunch of work with them because I, I get the impression there's not a ton of accountants operating in this space. You can probably work with all of these people. And I mean the awesome thing and the funny thing about budgets and big company budgets is that like it's literally these people's jobs in these companies to spend these budgets. And all you got to do is convince them that you are like the best place to spend that. And so that could be writing guest posts, going on their webinars, them having you out to, like, the conferences, them sponsoring, maybe an event that you want to run. Just think about how much money these companies spend to try to get in front of the folks that you want to get in front of every single quarter and figure out how do we piggyback that, right? How do we come along for the ride? Because those are the same people that I want to be serving now, the blockers that we always have when. When we get a little bit afraid of. Of getting more specific. Well, I'm not an expert in that thing. Like, I have no business going down that path. I don't care what it is. If you see something and it's interesting, right now you are like a couple podcasts away from being more of an expert than the generalist firms that serve those people now. And if you're looking at a space where there aren't specialized accounting firms, when that person comes to an accounting firm right now, the accounting firm's like, yeah, we could figure it out. Those people are not experts. And so, like, that's, that's the thing right now is it's so easy to become a quote unquote expert. That is no more than any generalist does about a category. Like, go to a trade show, listen to a couple podcasts, and you're there. You can speak the language. You know it better than the generalist accountants do. So. So it's not a very high bar to become a quote unquote expert. And it's just like anything else. You become an expert by doing more of it. The fear of a specialization getting wiped out, like, that's always another common one. People like to point to restaurants. Well, they used to just work with restaurants, but then when Covid happened, that really put them in a tough spot. Take it from me, as somebody that worked with dentists and all dental clinics got shut down overnight, and I was billing percentage of revenue, or in their case, percentage of collections. I know what that feels like now. It didn't last as long for dentists as it did for restaurants, but restaurants have bounced back. And even if you're looking at a category that does go completely under, which is very unlikely, what I always come back to is just the act of specializing and the act of niching down makes you aware of so much more that you wouldn't have otherwise been aware of. So when I go to this trade show and I learn about these repair shops, I'm learning a ton about the entire ecosystem of everything going on here. And if something does happen with these repair shops overnight, I'm in a position where I understand actually a whole bunch of very nuanced, very rare pains that I wouldn't have understood otherwise had I not started down that path. And maybe the biggest thing here in general is just you investing in yourself the skill of learning to specialize because it's not something that you're just going to do once in your life. You probably will get bored and you'll probably go explore something else. Like this is just part of doing business. Like this is part of finding better clients is always going after specific pains and trying to find the one that kind of hits the Venn diagram of something that you enjoy and can be energized by and is very painful. And the folks have money to pay for those solutions. So think of it as like an investment in yourself and just your business skills to know that this isn't just the best way to build an accounting firm, it's the best way to run any type of business. Like every business has this conversation of how specialized do you get? And there's always the folks that are like, no, that's too risky. Or, or the fact that they can run a business without specializing is an argument for not specializing. It's like, no, like that's just a more optimized, more profitable way to run the same business. And you will still have people that do really good versions of it and really bad versions of it, just like any form of running that business. But the people that you want to listen to are the people who have done it, the people who have specialized. And the reason that I've gotten more convicted about this is the number of people I talk to who have. Which admittedly is a small percentage of firms. But the people who have are like, yeah, no, they, they don't get it. Like we will never go back to running a firm the same way again. Like once they've kind of been red blue pilled, can never remember which way the pills go. Once they've experienced that, they're like, yeah, no, it's like very obvious. That's a no brainer, that's just the best way to do it. But this one, I, I don't know, I, I was basically putting together a bunch of resource research for like just generating some ideas, looking a bit into each specialization to put together that list for social media a couple weeks ago. And this one's just seems like a slam dunk in so many ways. But then the more I thought about, I'm like, why is this a slam dunk? That's probably worth digging into if you're exploring a specialization or even on the fence or thinking about it or blocked by anything, man, let tell me about it. Like post that down in the comments below. Or if you're even on the other side of this where you've done a specialization and you have some insights to share, share that stuff. Also, the big enemy is inaction. That's the only way we don't learn right is by not doing anything. And you, buddy, you got a lot to offer the world, K. Don't hide it under a bushel basket. All right, See you in the next one.