At a recent conference on accounting firm growth, several of my co-panelists described the process they used to enter a new market or launch a new service. One detailed a successful rollout in the litigation support area. Another spoke about taking a local tech-related offering national. Though their presentations were impressive, I was struck with the daunting level of detail. Had I been less informed, like much of our audience, I would have found myself lost in the weeds.
Back from the conference, I reflected on what I’d heard there. I’ve had the pleasure of helping hundreds of firms roll out new services from SOX, SOC reports, CAS, opportunity zones, film and other tax credits, the Paycheck Protection Program, environmental, sustainable and governance reporting, and internal audit outsourcing, across industries/buyer groups as diverse as microbreweries, SPACs, cryptocurrency, cannabis, and agtech.
While the details and tactics differ from one engagement to the next, the same principles apply, regardless of industry/buyer group or service line. Sagely applied, they can demystify what could be a daunting process.
Define and conquer
Catching fish is always the goal, but precisely which school of fish are you after? Where do they swim and gather in the greatest concentration? Defining and segmenting the market is an essential first step to successfully entering it. In microbreweries, for example, does it include the bar/restaurant that might be attached? In the cannabis field, does it include medical? How does it sub-segment? For example, is it investors, regulators and operators — or some other configuration? In one of my clients, our initial take was to target operators, but the market feedback led to other, more promising buyer groups.
The aim of defining your market is not to validate your assumptions, but rather to provide a starting framework. In fact, it almost always will require adjustment as you interview people in the market. That’s why you need to go in with an open-minded explorer mentality.
How many fish are in the pond?
Once you’ve defined the market, of primary importance is market size — in other words, how many fish are in the pond, and how many of each species of fish? Firms often wander into a market because they have attracted a client in that space. If the market is dentistry, for example, and your target universe is a small town with three dental practices, you’ll need to rethink. The number of fish in the pond is almost always the most important factor.
Another important factor is the market conditions relative to other markets. Say you’re considering introducing one of two types of services in the Raleigh, North Carolina, market — one tech-based, and the other agricultural. If your intel reveals that technology is a tenfold bigger industry in Raleigh than agriculture, your direction is clear.
All other things being equal, go to the ponds with the most fish. This seems obvious, but I can’t count the number of times a firm ends up in a pond because of one client, only to find out there are very few other fish. Meanwhile, the next pond over has hundreds or even thousands of fish. Time is money, and efficiency with growth means keeping your eye on getting the greatest return on the least investment of time. Strategic growth is the most efficient growth!
Now get out there!
Having defined your market, and confirmed that it’s large enough in terms of number of buyers, it’s time to jump into the pond and learn everything you can. The secret ingredient is insight gained by conducting strategic research calls with all relevant players — thought leaders, vendors, likely buyers, and even competitors! The research call is a contact sport. There’s no substitute for getting out there face-to-face and discovering where the market holes are and who may be waiting in the wings to fill them.
Having launched two businesses following this formula, I discovered where to go and felt passionate about getting there. However, I made sure not to “fall in love with my robot.” Having come from the tech world, I witnessed tons of tech entrepreneurs build their offering, and only after all the 100-hour weeks and months/years of development effort realize that no one wanted their invention.
Yes, you have a set of skills and knowledge, but leaving emotion out of the mix, you need to prepare yourself to acquire every ounce of available knowledge about what, if anything, the buyers in the market want. Be prepared for disappointment, as you realize that your original idea won’t get traction.
Many years ago, my “robot” was a sales training academy for CPA partners. I came back from a business trip with my head hung low, as I had just interviewed a potential competitor and realized that he owned the market and had been perfecting his offerings for 15 years. I had to pivot and listen carefully for the market hole, and happily found it! When you go into this with an open, inquiring mind, you raise the chances of success and reduce the risk of failure. This requires mental discipline, focus and understanding of the principle. Keep the passion but be prepared to apply it in directions you never anticipated. This is not a “build it and they will come” approach, which may be found in a Kevin Costner movie, but not in the real world of getting something successfully off the ground.
In your research calls, look not just for reasons why you should pursue a particular service line or market, but also for reasons you should not head in that direction. And don’t fear the pivot; it’s part of the process. Pivot now, or keep your happy ears on and pay the (sometimes steep) price down the road.
Time to roll
Once you find your product-market fit, which is the best combination of the service and the buyer group, you’re ready to put the pedal to the metal, and that means identifying an early adopter. Revenue is not the priority here. Rather, the goal is to partner with someone who will share their market knowledge and experience in exchange for access to your product or service. More than anything else, this early adopter program will reveal if you’ve nailed the product-market fit, as well as the distribution channel strategy to move beyond early adopter.
This solid foundation will reveal your next steps to finding your next group of potential clients and ultimately achieve success. When I first developed the idea of an early adopter for my consulting business, I worked without pay, a gambit that paid off nicely. My work with that firm paved the way for me to find my distribution channels, and resulted in my presenting at a conference of dozens of managing partners, five of whom ended up hiring me. From there I found multiple channels, channel alignment and execution of the best strategies to drive revenue.
Opening new services and new markets is not rocket science. It is, however, a series of principles, as immutable as debit is left, and credit is right. Don’t get bogged down in the tactics. Follow the proven steps. Plant the seeds. Then reap the harvest.
