If you are an accountant or a bookkeeper and are trying to attract new customers to your business, your first step, well before you think about marketing strategies, will be to define your target market. Who are you trying to serve?
Defining your target market can be a difficult task because the temptation is to say ‘Yes’ to every kind of business. But there are certain businesses that will not need bookkeeping services or may need other services you do not offer. You don’t want to waste your time targeting such companies who may never become clients.
So, in this article, we will discuss the target market for bookkeeping services by looking at the general characteristics that are common among businesses that need bookkeeping help.
With this information, we hope that you are able to find your best target market for bookkeeping services.
Who is the Best Target Market for Bookkeeping Services?
In theory, every business that has revenue and expenses and that generates client invoices and receives vendor invoices needs bookkeeping services. But that doesn’t mean every business will need to outsource bookkeeping services.
Some businesses might be so small that the owner could do the bookkeeping themself. Other businesses are so large that their bookkeeping is done by an in-house team and will they have no need for outsourcing. Some other businesses might be looking for the full package of financial services.
So that leaves us with those in the middle: not so small that they can do the bookkeeping by themselves and not so large to afford to outsource.
And so, we can segment the target market for bookkeeping services based on the following criteria:
- The size of the business
- The stage of the business
- The type of business
Segmentation based on: Size of Business
The target market for bookkeeping services is usually small businesses. If we were to put a revenue range, these would be businesses making between $500,000 and $5 million in annual revenue. These are not hard and fast numbers but they can give you a good idea of the ideal target market.
In reality, micro-businesses may also choose to outsource bookkeeping services because they couldn’t be bothered to do it themselves. Similarly, larger businesses may also find it beneficial to keep outsourcing to a trusted accounting firm or bookkeeping service just because it has worked well for them.
But when you develop your marketing strategies you are best off targetting businesses of a size that are most likely to be open to outsourcing their bookkeeping needs.
Segmentation based on: Stage of Business
An ideal target market for bookkeeping services is businesses that are in the early stages of their business cycle. These are businesses that have been around for less than five years.
During this stage of a new company, the founders are too busy just getting the company off the ground. All their time and that of early employees is spent in raising funds, building their first product, finding office space or a location for a store or restaurant, attracting their first customers, delivering their product or service for the first time, etc.
Accounting, bookkeeping, compliance, etc are seen as overheads that are best outsourced. Also at this stage of their business, they may not be able to afford full-time staff to handle the company’s books. This makes early-stage and small businesses ripe for targetting with outsourced bookkeeping services.
Segmentation based on: Type of Business
A business that is being run by someone with a finance background may choose to do all the bookkeeping, accounting and compliance work themselves. But many businesses, especially small businesses, are run by people who have expertise in their domain but not in bookkeeping or accounting or finance.
Think of a business like a restaurant. The restaurant owner will know what to put on the menu, how to do the restaurant’s decor, how to attract customers to the restaurant, how to hire the best chefs and waiters, etc. But bookkeeping of the receipts and bills? Hmm … Many would prefer to outsource this “overhead”.
Similarly, we can think of many other small businesses which would rather give the bookkeeping to others. Examples include dentists, hair salons, cleaning services, tanning salons, gardening companies, pet services, photography businesses, real estate agents, electricians, and on and on.
When do companies outsource Bookkeeping Services?
Apart from lack of expertise or lack of interest in doing bookkeeping, there are other more important reasons why companies choose to outsource bookkeeping services.
These are:
- They are cash-strapped
- They are growing quickly
- They need help with compliance
- They prefer to focus on what they do best
Businesses that are cash-strapped
Many businesses, especially early-stage businesses are often cash-strapped. They may not have the money to hire an in-house bookkeeping team and so outsourcing is the only option open to them.
Such businesses will shop around for the best value for money when it comes to outsourcing bookkeeping services.
Businesses that are growing quickly
Early-stage businesses are usually growing quickly. This means they have a lot of transactions and their books can get messy. They need bookkeeping services to stay on top of their finances.
But they also need to stay focused on their core business and usually do not have the time to hire and manage an internal bookkeeper. This makes outsourcing the best option for fast-growing businesses.
Businesses that need help with compliance
Many small businesses often don’t have the time or resources to comply with all the tax laws and regulations. Many don’t even know what the law is and what they need to do to be compliant.
Outsourcing bookkeeping to an expert at least can help them be compliant with the way financial books need to be kept. At the very least it will make the task of the accountant and tax advisor easy. And in the worst case, if there is an external audit of the business, at least their books will be in order.
Businesses that prefer to stay focussed on their strengths
Many businesses, especially startups, prefer to stay focussed on what they do best and outsource everything else. It’s not uncommon for companies to outsource even some of their core functions like marketing and sales.
For example, if an engineering company develops a new product it may choose to keep its resources for hiring more engineers to improve the product and build new versions of it. It may outsource marketing to a marketing agency. It may outsource sales to a wholesaler or an integrator. It may even outsource manufacturing to a specialized factory. So, why not bookkeeping?
For a business that wants to stay focussed on what it does best and outsource everything else, outsourcing bookkeeping will be the easiest decision of all. This is the kind of business you need to market to.
How do companies select a Bookkeeping Service?
Most businesses will search for a bookkeeping service that is located near them. This is because it is easier to meet face-to-face and build a relationship.
However, with the internet, it is now possible to find bookkeeping services that are far away. Bookkeeping companies can use online tools to manage books from anywhere in the world.
There are 3 important factors that companies consider when selecting a bookkeeping service:
- Competence
- Cost
- Trust
One of the main reasons why companies will select a bookkeeping service close to them and not the other end of the world (even though it might be cheaper) is because it is easier to check if the bookkeeping company has the necessary competence to do the job. This includes being able to verify qualifications and certifications.
They will be able to meet the bookkeepers face-to-face to discuss their needs. Most of all they will want to know that the bookkeepers are qualified and understand the local laws and regulations as they pertain to bookkeeping, accounting and compliance.
The second factor is cost. Of course, businesses – especially cash-strapped early-stage businesses – will want to save money and so they will try to find the least expensive bookkeeping service that they can. But most companies know that the cheapest option is not always the best and will balance cost against competence and trustworthiness.
Trust is critical because companies are sharing all inside financial information with their bookkeeper. This is another reason why small businesses prefer to stay local with their bookkeepers and to build relationships with them first. They will also ask for references and ask their friends and family to recommend a trusted bookkeeping service for them.
Summary
The ideal target market for bookkeeping services includes early-stage businesses or small businesses which want to stay focused on what they do best and hand over the overhead task of bookkeeping to a company that specializes in it.
We can segment the target market for bookkeeping services based on the size of the business, the stage of the business, and the type of the business. Many companies choose to outsource bookkeeping because they are cash-strapped and cannot hire full-time staff for this task. Other companies are growing quickly, or they specialize in certain fields and do not want to lose time with bookkeeping. Yet others need help with compliance as it relates to managing their books and so they prefer to turn to external experts.
If you are planning to start your own bookkeeping service or are trying to grow your existing service remember that it all starts with being clear about your target market. Once you have that nailed, you can start developing the necessary product and service portfolio as well as the marketing strategies that are most likely to work on your chosen target market.