By Kasia White, Illinois CPA Society
Often you start your career as a generalist. But to grow, you have to find your niche—the unique corner of the world where you can become an expert. No matter the size of your firm, finding and embracing a niche industry is key to growth.
But where do you start? We checked in with four CPAs who serve different markets, including craft beer, tech startups, cannabis, and cryptocurrency/blockchain. Here’s how they each found their niche and some actionable insights on how you too can become a strategic business advisor to niche clients.
Crafting Real Value
“General accounting isn’t going to cut it anymore, and it’s not what clients want. They want experts in their industries; they want someone to do more than just tax work,” says Joshua Lance, CPA, Illinois CPA Society board member and managing director of the Lance CPA Group, a boutique virtual firm in Chicago.
That’s why when Lance started the firm in 2013, he knew he wanted to focus primarily on serving craft breweries from coast to coast.
“When you focus on a niche, specifically one industry, you’re able to provide a lot more service and a lot more value to those clients than a general accountant who serves a bunch of different industries,” explains Lance, who himself has a personal interest in home brewing. “We’ve been able to help breweries that are small and just getting off the ground as well as breweries that distribute in 30 states and have big operations. Through this, we’re going deeper into the industry and becoming better strategic advisors to our clients.”
In addition to standard bookkeeping and tax preparation services, Lance and his team put together an extensive benchmarking study each year, which provides their clients with insights into how they compare to their competition, how they can improve, and 12 key performance indicators to track.
“That shows our expertise in the industry because we can specifically pinpoint what items need to change for them and what they need to improve,” Lance says. “We also provide other advisory services, like forecasts, KPI analysis, and cash flow analysis.” To date, craft breweries account for about 40 percent of the firm’s portfolio, and Lance is cautiously optimistic about the industry’s growth.
“It’s been growing rapidly over the last 10 years or so,” he says. “The pandemic has had a bit of a negative impact on that. It’s still expected to grow, just not as fast as it did in the past.”
May 2021 research published by the Brewers Association shows that the retail dollar sales of craft beer decreased by 22 percent to $22.2 billion, and now account for just under 24 percent of the $94 billion U.S. beer market (previously $116 billion). The craft beer industry was hit hard by the COVID-19 pandemic as breweries were forced to close their taprooms, a main source of revenue. Despite this, Lance’s firm grew its brewery niche by 30 percent in 2020.
“We’re able to help our clients pivot and come up with ideas to provide new services or change how they sell to their clients,” he says. “We also helped them with their Paycheck Protection Program applications and their employer retention credits to where even though their businesses suffered, we were probably the last expense they would ever cut because we were providing so much value.”
That value comes from having deep industry knowledge gained from industry events, which Lance says are crucial to attend.
“We’re not necessarily looking to get new clients there. We sit in on sessions about brewing techniques, wastewater treatment, things that are not accounting topics but allow us to learn so much more about the industry,” Lance explains.
Lance also encourages fellow CPAs to network with some of the other professionals serving that niche industry, like lawyers, insurance agents, and bankers. “You learn a lot from making those kinds of connections—and they’re good resources,” he says.
If you’re unsure of what industry to niche into, Lance suggests looking at the clients you already have and enjoy working with.
“You already work with those clients, so you already know something about their industry. Use that as a launching pad,” he says. “Dig into their industry, join their associations, and read their newsletters. Become a sponge to what’s going on in that industry, and then combine it with your accounting knowledge to focus on ways you can better serve and advise them.”
Finding Your Passion
Illinois CPA Society member Michael Carney, CPA, president and founder of MWC Accounting in Chicago, understands the value of making industry connections.
“I’m really involved with the Founders Institute here in Chicago. It’s been a great referral source for me,” he acknowledges. “I will sponsor events there, get up and talk myself, and work with a lot of the Founders Institute alumni. It’s awesome because you start out with these clients from the very beginning. It allows you to help them grow and develop a healthy business every step of the way.”
Since 2009, Carney has focused on serving tech startups. Today, more than 50 percent of the firm’s client base has a heavy tech focus.
“We do everything from accounting, consulting, and tax returns to tax preparation,” Carney says. “We’ll handle outsourced CFO work and help them develop models, budgets, and financing rounds—whatever they need. We run the whole gamut.”
Carney’s words of advice for CPAs looking to enter a niche are simple: “Find something you enjoy. I’ve always enjoyed technology, so taking my accounting knowledge and applying it to that industry is fun—I might not be able to program an app to save my soul, but I could understand what they were trying to accomplish and speak their language.”
Carney believes that connecting to the niche on a personal, passionate level is the most important thing.
“If you have a passion for farming, go talk to farmers,” he says. “It’s really about getting out there and talking to people in the industry that you enjoy. I think that passion will come across to your clients and they’ll refer you to other people in that niche. You get to combine two things you enjoy—the industry you’re helping and the work you’re doing.”
Walt McGrail, CPA, managing director with Chicago-based Cendrowski Corporate Advisors, says the cannabis niche found him.
“I worked with a young attorney in Chicago who saw an opportunity to launch himself into a newly legalized industry back in 2015,” McGrail recalls. “He was willing to oversee my learning curve to make sure that I could provide him with the right expertise in this area. It was serendipity.”
Since then, McGrail has helped cannabis businesses and dispensaries with tax planning and business organizational structuring. The cannabis niche roughly translates to about 6 percent of the company’s top line. And while the cannabis space is the latest industry the firm is serving, McGrail says going niche isn’t anything new for Cendrowski Corporate Advisors.
“We made that decision 20 years ago,” McGrail says. “Very early on, we decided that the traditional green-visor accounting services shouldn’t be the entire scope of our practice. We branched out into things like valuation, expert testimony, and forensic accounting. So, when something new—like cannabis—came along, we weren’t afraid to jump in with both feet and take a stab at it.”
McGrail strongly advises other CPAs to consider the cannabis industry. “In my lifetime, the federal government will remove the undue tax burden on cannabis—even if they don’t somehow adopt it as a legalized substance—and that will create opportunities for folks like me,” he says.
In Illinois, dispensaries are on track to sell more than $1.5 billion worth of cannabis in 2021, according to data from the Illinois Department of Financial and Professional Regulation. “I think cannabis as an industry will continue to grow,” McGrail says. “The weight of evidence is just insurmountable that the industry is here to stay. The best thing I can tell you is you probably have clients that are interested in the space—and they’re going to go somewhere else where they’ve got the expertise.”
But even if cannabis isn’t right for your firm, McGrail’s parting words of wisdom apply to all CPAs seeking their niche: “If you want to add an expertise or a new venture to your professional practice, you have to learn as much as you can about that industry or that particular aspect. You can’t go into it blind. You need to go out and educate yourself—whatever it takes so that you can provide expert advice to your clients.”
Speaking the Language
Like Lance and Carney, fellow Illinois CPA Society member Curt Mastio, CPA, owner of Founder’s CPA in Chicago, believes that sharing a passion and language with your clients is critical when it comes to niche accounting. Hence, Mastio and his team of nine experts are fluent in the languages of cryptocurrency and blockchain.
“I can’t count the amount of times I’ve talked to a high-net-worth individual who bought Bitcoin back in 2016 and told me they’ve talked to five accountants who said they did cryptocurrency tax returns but they didn’t really know anything about it,” he says. “You have to immerse yourself in that niche, in that industry, and really focus on it, and be able to speak the same language that your clients speak.”
When asked how he and his employees gained this specialized knowledge needed to serve the cryptocurrency and blockchain niche, Mastio answered simply: “Honestly, most of it just came from becoming personally involved in the space. We just started trading and then applying the accounting principles and tax knowledge that we already have. There are some good resources from a professional development standpoint, but it’s still a new industry that’s lacking in that regard. The best way that we found to learn is just to actively engage in that ecosystem.”
Even so, the team runs into hurdles. Mastio points out that one major challenge they face is the lack of guidance from the IRS or the AICPA when handling new types of transactions or topics in the cryptocurrency space, especially in decentralized finance. “We have to make judgment calls and look at what the transaction is most like in the universe of what we already know and advise clients to the best of our ability. I wish I could say we have this one resource with all the answers, but the space isn’t at that point just yet,” Mastio explains.
Currently, cryptocurrency and blockchain clients make up more than 25 percent of the firm’s book of business, and Mastio says he believes that interest in digital assets will continue to skyrocket.
“It hasn’t slowed down since we started getting involved with clients in that space,” Mastio enthuses. “You see a lot of institutional money starting to move into cryptocurrencies. You see companies like Tesla buying and holding it on their balance sheet. The younger generations of investors are more interested in holding something like Bitcoin than gold, and a big wealth transfer from the Boomers to the younger generations is expected over the next few years.”
Mastio and his small, yet nimble, team are ready to provide accounting, tax, and CFO services to those clients.
“The more you focus your attention on a particular customer profile and their particular needs, the easier it becomes to deliver on that and do so in a scalable and repeatable manner,” Mastio says. “The more you try to be a generalist and just take anybody who’s willing to give you a dollar for your services, the more you hold yourself back over time if one of your primary goals is to grow and scale.”