Starting a business is never easy. And doing so amid a tepid economy magnifies the inherent challenges—particularly when the business is in financial services and focuses on managing people’s money. That’s what Shane Northrop discovered when he started his accounting firm, Northrop Financial Group, in August 2011.
The economic climate and competition for clients have been difficult to overcome, but Northrop’s biggest asset is leveraging his time to network and meet with current and prospective clients.
While Northrop was prepared for the challenge of navigating government registration requirements to open his accounting firm, overcoming the effects of the down economy was his first big hurdle.
His firm is based in Southwest Florida, an area hit particularly hard by the collapse of the real estate market. Businesses closed, incomes decreased and many people left the area—not a favorable situation for a fledgling accounting firm serving individuals and small businesses.
“The economy has made clients more cautious about their spending,” Northrop says, explaining that it was difficult to find people willing to share their financial information. “When clients are struggling to run their own small business, it’s more difficult to sell them on my services.”
In addition to forcing Northrop’s clients to rethink how they manage their finances, the economy affected how his competition does business.
“Not only do small professional service companies like mine have to fend off competition from other local providers, but we’re also facing competition from large nationwide companies,” Northrop says.
In the past, larger CPA firms only went after the big fish, because the smaller fish weren’t profitable, he says. After the recession, everyone in the pond has become fair game for firms of all sizes.
"Firms are offering customers the ability to outsource their bookkeeping and tax-return preparation to foreign countries or larger firms for a reduced cost,” Northrop says. “Also, with the development and improvement of cloud computing, customers are being offered cloud-based versions of accounting and tax programs, which cuts into our market share.”
Many clients are also taking advantage of at-home money management and tax services, such as QuickBooks and TurboTax®, instead of seeking professional help.
One way Northrup is overcoming these circumstances is by focusing on his unique competitive advantage: quality over quantity.
“I strive to have a personal connection with all clients and show I care about them,” he says. “Establishing this connection helps to attract and retain clients, because it’s something the [bigger] nationwide companies can’t offer.”
Northrup establishes personal connections with new clients and prospects by offering free 30-minute consultations, during which he facilitates discussion about their financial goals and gets to know them on a personal level. He also uses this opportunity to emphasize the importance of trust and to reinforce that he always has his clients’ best interests at heart.
Another way Northrup fosters personal connections is by participating in networking activities. In addition to drumming up business, these events are an opportunity to show people that he is involved in the community.
Most importantly, Northrop has found ways to capitalize on a common obstacle for client-focused businesses—non-billable hours—to turn his downtime into new opportunities.
When he isn’t meeting with clients or networking, he is chipping away at behind-the-scenes, non-client work that has to be done to build a successful business into the future.
“When growing a small business, you have to use whatever resources you have in excess supply,” he says. “For me, that resource is time. I’ve been using my free time to offer services to local companies at no charge in exchange for client referrals. It’s a great partnership that has led to more business.”
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