At one time, Nike was a start-up 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; 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. Twenty billion dollars of growth in four decades is pretty impressive, and now they are the global juggernaut in athletic footwear, apparel and sporting goods.
Can a small start-up operation with limited funds compete against Nike and other global operators such as Adidas, Reebok and Russell Athletic? Of course. However, the mousetrap must be unique and compelling.
In 1996, 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. While I presume that a company like Nike will ultimately acquire Under Armour, Kevin has managed to create an attractive niche in a highly competitive industry.
Other examples that come to mind are Samuel Adams, Blackberry by RIM, Whole Foods and Cirque du Soleil. In each of these cases, the people behind these start-ups 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 that we would not recommend that a new accounting firm compete directly with larger CPA firms by targeting medium- and large-sized businesses providing attest, litigation support, Sarbanes-Oxley and nonprofit accounting services. Instead - and as illustrated by the examples above - a new accounting firm should fly under the radar screen of more established CPA firms, provide a unique selling proposition that resonates with small business owners and play to the strengths of the sole practitioner.
Here are some examples of how the small practitioner can win:
• Write a newspaper column - As the internet has cut holes into their business model, most local newspapers are struggling financially. As a result, the editorial departments in most local newspapers are starving for reliable content from someone with your expertise.
• Start a radio program - In smaller markets, radio can be a way demonstrate your expertise and create awareness for your practice. For years, financial planners have been hosting retirement planning call-in shows on the radio. Why wouldn't a CPA talk about small business accounting and tax issues? If you don't want to commit yourself to hosting a call-in radio show, how about a cooperative approach with a DJ? In one market, we have a client that 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-sized 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.
• Proactively pursue QuickBooks clients - While most established, large accounting firms avoid QuickBooks like the plague, many entrepreneurial firms have flourished targeting small businesses that use QuickBooks. To illustrate the point, we've seen one firm that has developed company dress shirts with the QuickBooks ProAdvisor logo. Another firm purchased a yellow VW Beetle to proactively communicate that they are QuickBooks ProAdvisors and encourage cell phone calls from the road. If companies like Nerds To Go can effectively brand computer repair services, why can't you use the same approach and save the franchise fee?
• Create an industry niche and own it - To differentiate your practice and acquire the types of clients your want, have you considered developing a niche? Do you know more about a particular industry? Are you passionate about an industry? With a niche, you can broaden the geographic radius of your practice because you become an industry expert. If large regional CPA firms can develop niches with auto dealerships, why can't you develop a niche within a particular industry that is under their radar screen?
• Secure a leadership role within a local business association - Securing a leadership position within a local business or trade association can work wonders if it dovetails properly with your firm niche.
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 Amour - you, too, can create a foothold into the market. Be strategic about how you market your practice ... better yet, Just Do It!