Mistakes Made – Lessons Learned In Developing a Niche
Mistakes can teach us a great deal. The lessons can be difficult, even costly, but there’s no better teacher. When the goal is establishing a technology niche, or any new service, I’ve seen a pattern of errors worth identifying and avoiding.
One common mistake is to forge ahead without research, in the form of a thorough understanding of the target market. Accounting and technology professionals are typically research-oriented types who seek information in books. You would never deliver work without the required research. The same is true of a marketing penetration strategy. Researching a market you wish to penetrate comes from talking with thought leaders and potential buyers, instead of seeking information in books. But the concept is the same.
Another efficient way to conduct research is by implementing an early adopter program. This means you get a client’s approval to test the offering on a trial basis, for a reduced fee.
Another costly error I see is pursuing a niche with unrealistic expectations. One reason for this is a lack of history within a given niche. A firm that wishes to enter the technical consulting arena has higher success odds with a niche sponsor who is experienced in launching new offerings. The profile is a skilled entrepreneur who is creative, strategic, proactive, a problem solver, and thrives on exploring the unknown.
What if your niche sponsor does not fit the above description? You can supplement their strengths with others that do display some of these traits. You can also train them. I suggest a product management workshop, as well as some serious reading. One of the best books on the topic is Market Leadership Strategies for Service Companies by Terrill and Middlebrooks.
Your sponsor is also responsible for managing revenue expectations, including constant recalibration with accumulated experience and market realities. This requires identifying variables such as the competitive climate, current economic conditions, and the prospect’s needs. Without this information firmly in hand, the tendency is to assign unrealistic revenue expectations. As a result, goals go unmet and the blame game begins. Irrational exuberance quickly devolves into disappointment.
But it doesn’t have to. I advocate establishing the lowest acceptable revenue expectation you can tolerate for the longest period of time. Once you determine these minimum tolerances, you can identify benchmarks (90 days, 6 months, 1 year, etc.) and use them to assess progress and modify strategy. Spreadsheet modeling based upon average opportunity size and number of potential opportunities will provide a basis for realistic discussion.
Find Your Place
Yet another mistake in carving out a niche in technology or other areas is to believe that as a newcomer, you can confront an established competitor head-on. Rather, find a way to profitably co-exist. In discussions with competitors/collaborators you will be able to discern the best position to play on a field they already occupy. There’s a certain finesse to gaining competitive intelligence, but it’s a skill well worth honing.
For example, if the primary competition implements the same software package you implement, find a different twist or unique way to add value. Communicate and sell that difference to your prospects. It doesn’t have to be a big difference. The way you package, price and deliver services all have room for competitive differentiation – your own special methodology.
Mistakes are also made by failing to recognize that the market may not know CPA firms offer a particular skill or service. When you set out to market that specialty, you may need to start by educating your audience. This will lengthen the process; consider that as your build your opportunity development cycle.
Sell Yourself Within the Firm
Another common oversight in niche-building is failure to gain the buy-in of partners who often respond by blocking access to their clients. Their lack of confidence in the offering and in those behind it makes them fearful that approaching clients will disturb the existing relationship.
Demonstrate that you are a tech expert who can boost value for the client and seek a partner to sponsor you in. Sell your abilities and your new niche internally as a means to gaining an introduction to targeted clients. This is hard to do, in part because technology is quite different from tax and audit. There are more gray areas, more fits-and-starts and more potential glitches. Develop rules of engagement with your partners to clarify who does what and how clients are to be managed. Get them comfortable.
Finally, beware of inexperience as you develop a new and potentially profitable niche. There is nothing wrong with communicating with your early adopter clients that this venture is early stage for you and that you’re still perfecting the methodology. Establish appropriate expectations (including a fee structure) for early adopters.
Those who innovate endure. Don’t be afraid to launch that new technology offering. But do so fully aware of common missteps and determined to avoid them.