Industry and service specialization is hotter than ever. Deep industry or service expertise enables firms to differentiate themselves from the competition and establish a reputation of thought leadership in their chosen niches. In addition, firms with well-developed niche practices focus their investments in training, service delivery, marketing, and selling in those areas and develop efficiencies that increase engagement success and profitability. Ultimately, niche firms with a strong market presence and excellent client service build a reputation that brings niche opportunities directly to them.
While the benefits of niche practice development are many, too many firms fail to make the investments needed to achieve real niche success. In this article, we’ll explore practice management strategies that facilitate niche practice success.
- Go deep, not wide. Firms frequently boast a long list of the industries they serve and services they offer. These lists are often aspirational and do not reflect areas where the firm has developed deep expertise or a true concentration of clients. To reap the benefits of a niche strategy, carefully choose a very small number of industries and/or specialty services in which to “go deep” in your practice development efforts. A good rule of thumb is that depth, bench strength, and practice continuity can be developed when a firm has two or more partner-level resources per niche. In a five partner firm, you would then expect to find traditional core services of audit, tax, and accounting and the ability to develop up to two deep niche specialties.
- Choose firm niches strategically. When a firm commits to developing specialized niches, selecting which niche specialties to invest in can cause disputes among the leadership group, especially when partners have “pet” industries or services and resist giving up their niche in favor of another. When this is the case, partners should agree to focus niche practice development resources first on industry or service niches that have at least three of the following attributes:
(1) Industries that are thriving or expecting growth in your locale
(2) Service specialties that your firm’s clients have asked for or seem to need
(3) Industries or service areas where your firm’s primary competitors do not have strength
(4) Industries or services where you have capable leaders who are interested in and willing to own development of the niche
(5) Industries or service areas where your firm has some experience to leverage and perhaps even client references
(6) Industries or services that have the potential to drive additional opportunities to other industry or service areas of your firm
- Dedicate one owner to each niche. One person should be responsible for the management and success of each niche, although this person may not be dedicated full time to the niche, especially in smaller firms. Even so, the niche practice leader should allocate non-billable time to plan for and grow the niche, and the firm must budget for this time. If you want your chosen niches to succeed, ensure that your compensation model allows for this administration time and does not penalize the niche owner for time away from client work. Niche practice leader responsibilities should include:
(1) Producing a true niche business plan annually (more on this in our next article) and ensuring that the business goals for the niche are being met
(2) Being accountable for the financial performance of the niche
(3) Communicating status and needs internally and garnering support for the niche
(4) Managing niche resources and coordinating with other service line leaders to share resources as needed
5) Developing and implementing the niche’s marketing and business development strategies
(6) Ensuring that compensation is tied to specific performance benchmarks and milestones called for in the niche plan
- Do not under-commit. Firms often under-estimate the time, money, and resources needed to gain niche practice momentum and under-commit resources. This frequently results in disappointment with the success and traction of the niche. To alleviate this, niche plans should call for specific commitments of non-billable time, people, and dollars needed to ensure niche success. The niche owner should review these commitments with all partners so they are all aware of the investments required of themselves and the firm. If the niche practice leader finds that they need more partner time or more support, such as partners referring clients to the niche, they must spell out exactly what they are requesting and get commitments from each partner for those specific actions. Firm leaders must avoid stalling on their commitments or under-committing resources and support or they risk killing the niche altogether.
As mentioned above, the assigned leader for each niche will create a business plan each year and assign enough resources and marketing effort to truly develop the reputation you desire in your chosen specialties. We’ll discuss the specifics of a niche plan and some other niche practice development tips in our next article. Until then, evaluate your firm’s current list of niche industries and services and work to narrow or change them as needed based on the criteria above. Then your niche owners and support resources can focus their efforts on building truly successful niche practices for your firm!
Jennifer Wilson is a partner and co-founder and Krista Remer is a consultant of ConvergenceCoaching, LLC, a leadership and marketing consulting and coaching firm that specializes in helping leaders achieve success. Learn more about the company and its services at www.convergencecoaching.com.