How to Develop New Practice Areas

In my previous article “75 Non-Conventional Areas of Practice for CA/CPA/CMA/CS”, I have stated in brief, the various non-conventional areas of practice for professionals like CA, CS, CMA etc. I received many comments from the readers in our WhatsApp practice development groups as well as on email. Basis the comments, I understand that why many professionals are skeptic for developing new practicing area. Some of the major questions / comments were:

• How to identify the right practice area?
• How to assess the market of, and competition in, such practice area?
• How to acquire necessary skills and expertise?
• How much will be investment in developing new practicing area?
• How to find clients?
• How new practice area will impact the existing practice?

In this article, I would like to answer all the above questions.

How to identify the right practice area?

CA/CPA, CS, CMA firms are mainly in accounting, auditing, taxation, regulatory compliance, and finance and therefore you can easily find out the new practice areas within these domains:

New practice areas can be found out by adopting following strategies:

Vertical Integration

Vertical integration means value extension of the existing services either upside or downside.

First, you need to see in which areas your firm has expertise and client base. You also need to find out the exact pain points of your clients. Pain points are the burning issues which your clients are facing. You can easily find non-conventional areas of practice within your existing practice and thereby you can provide much value added new non-conventional services to your existing clients as well as new clients.

Vertical integration is beneficial and effective because you need not to invest much in the additional resources to develop new practice area in terms of expertise, experience, tools etc.

Vertical integration can be forward integration or backward integration:

Forward Integration

It is a next step value addition to the existing service. For example, if you have existing practice in indirect taxation, you can consider the non-conventional services such as tax optimization audit / review (to find out the tax leakages, non-compliances, tax process controls etc.), forensic tax audits (to find out the tax frauds within the company), tax process outsourcing, foreign indirect tax advisory to Indian companies (GCC VAT offers excellent opportunity to Indian CA/CS/CMAs or even ACCA/CPA qualified in India), indirect tax litigation support to law firms, designing systems and process for indirect taxation to ensure controls and full utilization of input tax credits, indirect tax training to SME & large corporates etc. So, you need to analyze and find out your niche area within your existing practice.

Backward Integration

Whereas in the case of goods, backward integration is related to the raw materials or inputs for the products, in services business or consulting business, backward integration means providing services which are backend of the services you provide. For example, if you are providing financial reporting services (i.e. the finalization of balance sheet and P&L per the accounting standards), you can provide accounting and transactions processing outsourcing services also to the same client.  

Horizontal Integration

Horizontal integration means foraying into new area. It may be indirectly related to your core practice. For example, if you are mainly in audit and tax practice, you can foray into investment advisory or investment banking or financial modeling services.

Whether you are going for vertical integration or horizontal integration, you need to assess the synergies of developing new practice areas. 

How to assess the market of, and competition in, such practice area?

It is a very dynamic and practical matter that how you can assess the market and competition. You need to be in touch with the professional circles. You need to scan internet extensively. You need to do lot of desk research as well as field research. Find out who are the key players in the market providing the services, which you intend to provide? What is the demographic and psychographic attributes of their clients? What is the strength (financial, expertise, experience, HR etc.) of those players? This sort of analysis will give you insights in the market. You can extensively use LinkedIn premium or LinkedIn Sales Navigator or even the databases such as VC Edge, VC Intelligence, Capital IQ etc. for market intelligence.

Let me give you an example: If you want to develop preventive forensic audit services, you need to go through the annual reports of various companies using specific database tools. You should perform top level financial analysis of companies where you can identify certain ratios which may indicate unusual facts, such as high cash balance, decreasing net sales to debtors ratio, current & quick ratios, z-score, etc. You can scan the market reports, analyst reports etc. You can also find company intelligence through LinkedIn. You should study corporate governance practices of such companies. You should scan company announcements on BSE/NSE websites and other financial websites regarding unusual resignation of auditors, resignations of independent directors, non-executive directors, senior executives, etc., unusual exit of investors, unusual changes in debt equity ratio or capital structure, etc. Basis that, you can prepare the heat map of the companies for the possibilities of fraud and shortlist prospective companies where you can offer your forensic audit services.

How to acquire necessary skills and expertise?

As the professionals, we always need to sharpen our edge by continuous learning. For developing the new practice, you need to give at least 6 months to 1 year in mastering the practice area. The premier institutes viz. ICAI, ICMAI and ICSI are providing various post qualification courses for learning new practicing areas such as competition law, WTO & international trade, forensic accounting, financial due diligence, M&A, international taxation, securities law, corporate governance etc. Institutes are also arranging the various CPE programs. Apart from that you can learn through private training providers and online learning platforms such as Udemy.com, LawSikho.com etc. You can also consider the international courses such as DipIFRS from ACCA, Advanced Diploma in International Taxation from Chartered Institute of Taxation, Insurance certifications from Insurance Institute of India, NCFM / NISM / BSE certifications etc. Finally, books and software are very useful in developing new practice. You should invest in software or platforms such as IBFD, Taxmann, Capitaline, Prowess etc. Even LinkedIn learning is providing 15000+ courses in nominal monthly price.

Remember, without gaining and demonstrating expertise, you can never succeed in the new practice area and at the same time our basic CA, CS, CMA or LLB / LLM qualification don’t make us expert in everything.

Apart from your own learning, you can also outsource the expertise by hiring the experienced experts and competent people in your team. One person can not be everything. So, if you are expert in company law matters, and you want to foray in project financing, you should hire somebody expert and experienced in that field like ex-banker and let that person build competent team.

How much will be investment in developing new practicing area?

It depends on how much you are committed to the new practice area, at what scale you want to develop, how fast you want to develop and so on. The major investment is in learning through various aids as stated above, memberships of various organizations, cost of acquisition of digital tools, software & platforms, talent cost i.e., hiring new practice leader and team of experienced professionals.

Of course, the investment / cost stated above are matter of general knowledge, but here I would like to emphasize one thing based on my experience that there are many professionals who think that if we get the clients, we will invest in resources. This is just like, if I get customers, I will start the shop! So, if you are serious and committed and have taken the strategic decision to foray into new practice area, you need to invest first and then market your practice.

In relation to the database platforms for practice, there are many professionals, who simply rely on Google for information and they don’t believe in the specialized database services. Let me bluntly tell you that the free stuff available on internet can not be always useful and there might be issues of accuracy, authenticity, applicability, validity etc. of information. So, not investing in databases is not a wise decision.

In relation to the talent acquisition for new practice lines, you must always hire experienced experts rather than relying on the interns and articles. There are professionals who hold back while inducting the experts in their team and they delegate everything to the articles / interns, but that will adversely affect your quality excellence and client servicing. Clients are paying consultants for expertise and when such consultants simply delegate to interns, client will not be happy as client is not a fool!

How to find clients?

A very crucial question that how to find clients? To get the clients for your new practice area, you need to first create a client avatar, means what exactly your client should be. Now you have four types of prospects (1) your existing client base and (2) your existing network, who are not your clients, (3) your clients’ and network’s references and (4) unknown people.

First, your existing clients are the best prospects for your new services. You need to have an eye over the clients’ activities through intelligence tools, so that you can find out that what are the pain points of existing clients, and what other services you can provide them. One of the approaches is implementing a CRM. A special method called Client Book Method is very much useful in identifying the new consulting opportunities within the existing clients. It is an elaborative and hence not explained much here. However, in my book “The Million Dollars Digital Practice for Accountants & Advisors”, this approach is elaborated comprehensively, and I can guarantee you that with Client Book approach, you can multiply your revenue from your existing clients only!

Second, your existing network, who are not your clients right now but are prospects, as they might be looking for some solutions which you can provide them. Due to the acquaintance with the network, you can easily convert them into clients.

Third, the references from your clients and others in network are also good prospects to convert into clients, as the level of assurance, confidence and trust will be high due to the testimonials from your clients and acquaintances.

Finally, the fourth category is unknowns. The market is very much vast, and you neither know everybody, nor everybody knows you. So, to attract such unknown people, you need to resort to the marketing strategies and of course NOT solicitation or advertising, which is prohibited or restricted under the code of ethics. There are various digital marketing strategies such as social media funnels, advanced funneling, growth hacking, etc. which professionals can easily use to attract the unknown prospects and convert them into paying clients. Please note that social media is like a ocean! If you are not a good swimmer, you will be drowned!

Again, at the cost of repetition, I would mention that in my book “The Million Dollars Digital Practice for Accountants & Advisors” various advanced digital marketing strategies for professionals like CA, CS, CMA, Lawyers etc. are comprehensively explained in lucid and non-tech jargon.

How new practice area will impact the existing practice?

As stated earlier in this article, you need to assess the synergies between the existing practice and new practice. The impact should be analyzed before foraying into new practice area. If there are no synergies, you should either avoid new practice areas or if your existing practice areas do not give you sufficient revenue as well as professional satisfaction, you can even quit by selling the practice and starting fresh new practice. Of course, it is a strategic decision and hence you should take it only after due consideration and discussion with all the stake holders (including your near & dear ones)

Some of the benefits of foraying into new practice areas and its impact on existing practice can be perceived as:

• Better servicing to existing clients
• New revenue stream will allow you to invest in and reinforce the existing practice.
• Synergies will increase the revenue more than proportionately.
• Increase in productivity in existing practice.
• Increase in the Life-Time Value (LTV) of the client
• Increase in valuation of the firm.

In the coming articles, I will also elaborate each practice area separately and explain how to develop such practice area including its technical aspects, execution, and marketing aspects. You can also see my book “The Million Dollars Digital Practice for Accountants & Advisors” for understanding the dynamics of practice through digital strategies.