Small business advisers suggest that the more specifically we define and distinguish our target market and our ideal client, the greater our chances of business success. To say it another way, few business advisers would recommend that an accountant like me simply offer his services to ‘the world’. Instead, most develop a niche of expertise in serving a specific segment of clients. The process of defining, clarifying refining and narrowing target market is another way of saying “What defines my ideal client and makes them distinguishable from others?”.
Right now I am in the process of redefining my ideal client and target market. The details included in this blog post are a result of that ongoing work. This exercise is a look at my existing clients and our relationships. I’m posting this publicly now because I suspect that the results of my own exercise might be useful to others.
In 2016 and 2017 I wrote a series of blog posts and spoke about my sudden need to find a new target market in the uncommon situation where my historic client market moved away from me. Until then, for about 15 years prior, I served primarily small business construction contractors in the Philadelphia/South Jersey region. My first major assignment out of graduate school was to sell the initial offering stock of Toll Brothers to their prior home buyer customers. I even served as president of the local professional remodelers group and as a board member of the national association. My ‘claim to fame’ in those early days was that I helped some of them win fraud cases against Donald Trump. But in 2016 the world changed, and many small business contractors elevated the same guy to a role of folk hero. To say that I was surprised is an understatement. Tensions rose against those who prosecuted Trump and we know how the story evolved from there. The end result was that I found it difficult to operate within those professional circles. I felt pushed out of professional circles. I was aware that some prospective clients declined my service proposals based on that perceived difference. I decided at that time that I had to find a new target client market. Even now, I often still see that individuals in the construction industry as not compatible with my own core values.
We now understand that different types of small business owners see the world through a vastly different values filter and that those core values do influence how we choose our closest and most trusted business relationships. So I’ve been engaged in the process of defining my ideal client. This is what I’ve come up with so far:
Investor in real estate or small businesses – Almost all of my clients are investors in real estate and small businesses1. Most are engaged in multiple businesses and investments. My comfort level with private investments, having come from a Wall Street background, combined with a working knowledge of formation, governance, mergers, structured settlements and succession of small business entities is an advantage in serving them. We recognize that using the word “investors” here is also code for “have money”; I can only be effective with people who have money. Some advisers define a specific amount of money. I do not. I resist saying ‘I work with rich people’ because that doesn’t seem useful. Many of my clients do have significant wealth but most have also been in trouble for ineffective management of their money before we met.
Alignment of ideals – We all feel more comfortable working with people who share our ideals. I am active in addressing global human inequalities stemming from the widening wealth and income gap. That directly clashes with people who have an “America first” mentality so it is best to filter for that fundamental clash in ideals in advance of a business relationship.
Education/critical thinking – The majority of my best clients have a college education. Many have impressive academic credentials far beyond that. I work for a handful of PhDs and notice our strong working relationships. It seems that only recently we, as a society, are noticing on a wider scope that level of education is the most useful predictor in determining a person’s ideals and core values as mentioned above2. But for my purposes, it is the more practical aspects of business communication that may stem from this. I find that it is useful and more productive for me to form relationships with people who are committed to the concepts of logic, data analysis and critical thinking that perhaps develop in conjunction with the formal education process.
Age – This is likely a direct function of human comfort levels but I notice that if analyzed, my best clients ages would form a bell curve graph centered within ten years of my own age.
First service request – A small business accountant wears many hats and typically provides a wide range of services. The services I provide are defined individually for each client. We recently performed an analysis of those services provided and determined that the most common and highest initial value service I can provide is IRS tax resolution. Many clients come to me first because they have a tax problem and our longer term relationship develops from there.
Based on this, I can determine that a typical client is a business owner and investor, age 50-70, with a college degree who has interests both inside and outside of the United States. They are likely considering working with me now because they have a tax challenge.
Conversely, I’ve noticed that a few things do not matter in determining the fit of a client relationship:
Geography – I’ve developed a niche serving small business clients throughout the world. The only limitation seems to be that they speak English language because I am not fluent in any other and have not explored any translation services. I have clients on both the east and west coast of the U.S., in India, Canada, Mexico, Belize, South Africa, and London. In fact, my clients who “aren’t from around here” outnumber those who are in my geographic area. This calls into question the time and expense that I put into local business organizations like the Chamber of Commerce. But that’s a topic for another blog post.
Industry – I do not see any patterns where my skills best serve clients of one industry over another. Nor do I see that the relationships are stronger in one industry over another. I serve wholesalers, financial service providers, professionals, home service industries, environmental nonprofits, and others. It would likely be easier to market to a defined subgroup based on profession but I do not have any strong ideas here yet. At this point it seems best to keep an open mind on this but to move forward without defining an industry for target market or ideal client.
1 The size of my clients’ small businesses seems to match the occurrence of small businesses overall and is therefore not a factor mentioned in this analysis. The medium is about 2 employees per business but the range is 1 to more than 100.
2 Much of the post election season media analysis focuses on this issue. An article in yesterday’s New York Times provides detail. Looking past the headline, the article actually documents that education differences, and not economic standing alone, are more closely correlated with political choice (and, I presume, an association with outward-facing core values) in this past election. In fact, the data analyzed shows a .49 correlation co-efficient of election choice for an individual with a four year college degree – the highest of all variables under consideration here. This is consistent with my own earlier postings based on anecdotal observations in the Philadelphia metropolitan area.