The Focus Paradox: You need to LIMIT to achieve LEVERAGE
When an accounting firm—or any business for that matter—starts out it’s common for the owner to view any client as a good client. After all, as a business owner you pay the rent and put bread on the table, so to speak.
I often think back to when I asked a 2-Partner accounting firm in Sydney who I was consulting to improve their marketing strategy and sales process, what their client selection criteria or target market was. They looked at each other sheepishly, chuckled and one replied, “Er, um… anyone with a chequebook!”
The other Partner chimed in, “Oh, and a heartbeat.”
Then they commented that the last criterion was optional. They’re characters!
The problem with this take-all-comers approach is that after a couple of years, you lift your head after pedaling like crazy building the business and you realise:
- Your clientbase is miscellaneous in terms of the types of clients you have
- The referrals you get are just as miscellaneous and often not who you want as clients moving forward
- You’re not doing a particularly great job advising because you have remained a generalist, being many different things to many different people
- When you look at your financials and compare it with benchmarking reports such as the Good Bad Ugly reports by Business Fitness, you realise that you’re business’ performance in terms of revenue per partner, profitability and growth rates are below or barely at the median level.
In other words, you’ve built an average firm. You’re plodding along.
If you’re into being average, that’s okay. But in light of the fact you’re here, reading this, chances are you’re not interested in being average.
A business partner of mine years ago would often say, “You never want to be average. That’s best of the worst. The cream of the crap.”
Imagine if instead—from Day 1 when you started your firm—you had a crystal clear target market in mind. And you marketed to that niche. And you rejected prospective clients who did not fit your target market and business model.
If you had the courage to do that—and it really does take courage—you’d instead create a business where:
- Your clientbase is comprised entirely of your ideal types of clients.
- You get a lot of referrals due to the “birds of a feather, flock together” effect where your clients mix with similar people; be that defined by industry, occupation, demographic, or psychographic traits.
- And the referrals you get are precisely the types of clients you want.
- You’re brilliant at advising your clients because you have specialised and gone “inch wide, mile deep”—to quote Hidden Champions author, Hermann Simon—and as a result you understand the key issues, fears, frustrations, aspirations, terminology and technicalities of the financial lives of your clients. You truly ‘get’ them and speak their language. They relate strongly to you as a result.
- This further enhances the number of referrals you receive from clients who have become raving fans of yours.
- You’ve also become renowned within your niche—and you’ve amplified that with content-driven marketing such as blogging, social media, video and events—so that you’re often invited and PAID to speak at events where the room is full of your ideal types of prospective clients. And they’re there to listen to and learn from you, because you’re the guru. You’re the authority in this field. You have to pinch yourself that you often get paid to market your firm due to your speaking engagements and articles.
- Your business is also incredibly efficient because having similar clients has allowed you to standardise processes which makes it easier to train new staff.
When you benchmark your financials you see that you’re well above Upper Quartile performance across the board, with a highly profitable and rewarding business.
You’ve designed—and built—your ideal business.
This is our focus at PARADOX; helping accounting firms execute this strategy. And we’ve helped many—now multi-award-winning and fast growth, highly profitable firms—achieve it.
To us, it’s simple. But in life, ‘simple’ does not always equate to ‘easy’. The principles of healthy eating and staying active with exercise are ‘simple’, but the epidemic of obesity in many countries shows that most people don’t find it ‘easy’.
So what’s the difference between accounting and advisory firms who successfully follow our advice and implement a focus strategy — versus the many who stick to a deluded differentiation strategy and stay mediocre as a result?
It’s that word again, courage.
But what here takes courage? What is it that firms are afraid of?
To use the modern vernacular, it’s FOMO… Fear Of Missing Out:
- Fear that there won’t be enough prospective new clients in their target niche
- Fear that if they specialise in a particular niche, they will miss out on lots of other potential clients
- Fear that if they reject a prospective client, another client might not be just around the corner
- Fear that if they reject a prospective client, the person who referred them might not be happy and may never refer again
These common fears hold firms back. But just because this is common thinking, doesn’t make it correct thinking.
It’s counter-intuitive to think, “If I take on all types of clients and reject no-one I will actually grow more slowly than if I narrow my focus and am far more selective in who I take on as clients.” And that’s…
THE FOCUS PARADOX
You need to LIMIT your focus
to achieve LEVERAGE
Being a generalist is a recipe for being mediocre. There’s never been a hall of fame built to generalists. The utility players are not remembered. The specialist players are.
You cannot be all things to all people. You cannot be great—or even good—at servicing a multitude of client types. Your business suffers too much process variation. It’s much more complex to build systems and document processes. It’s harder and more expensive to train up staff when they need to be familiar with dozens of client types and industries. And you’ll just be training up mediocre generalists anyway.
As paradoxical as it may seem on the surface, limiting your focus amplifies your reach, and as a result, your growth.
Have the courage to focus. Have the courage to say no. Execute well on a focus strategy, and you’ll become renowned in your market.
If you’d like to find out how we help firms decide on—and then execute—their focus strategy, get in touch for an initial chat with us. You can book a time here.