3 steps to finding product market fit for your accounting firm
Stuart McLeod
Co-Founder, Karbon
When you’re developing a new service for your accounting firm, it might seem smart to simply do what you’re good at and trust that your clients will find you.
To some degree, I believe that’s true. You have to like what you do (and be good at it) if you want longevity. But there’s a little more to it than just putting your best foot forward and hoping clients get on board.
Product market fit is all about developing a product—or in your accounting firm’s case, a service—that solves a real problem for an identifiable group of clients. It’s about knowing exactly who those potential clients are, communicating your solution through a value proposition that speaks to them, and communicating this in the places that will reach them. It’s about making them so enthusiastic that they’re singing your praises from the rooftops and drawing more clients your way.
I know what you might be thinking:
I own and run an accounting firm. How can the CEO of a SaaS company give me useful advice on finding product market fit in an entirely different industry?
The good news is, there’s a significant amount of overlap between the thinking we employed when developing Karbon and what’s needed to grow any business—including accounting firms. It breaks down pretty easily whether you’ve got a software company to run or an accounting firm.
Here’s how I look at it—finding product market fit is a three-step process:
Target your client
Identify underserved client needs
Use your findings to drive your value proposition
Another important factor is whether someone else is already meeting that need, and how your offering is unique. I’ll walk you through how this process looked for us at Karbon, and how it might look for you as an accounting firm owner or leader.
Step 1: The client in your crosshairs
It all starts with an idea—or for us, what I refer to as ‘the hypothesis’.
My co-founders and I formed a hypothesis that accountants were underserved from a software standpoint. Sure, there’s no shortage of accounting or bookkeeping software offerings on the market, but there were other problems that needed to be solved beyond where to log the ledger.
Our hypothesis transcended geographic locations. And that may be the case for your firm, too. But it’s also possible that you might be better positioned if you also account for your location.
If you’re an accountant in San Francisco, you might not be a pioneer in your field if you decide to serve the startup community (it’s likely others are already doing this). But if you’re in Indianapolis, maybe startup companies are an underserved market. Or, back to San Francisco, you could still consider targeting startups, but niche down even further, selecting a specific arm of the startup scene—like food tech or biochemical engineering.
On the flipside, if you believe that dentists are underserved in accounting, you could cast a wider geographical net while maintaining your specialty.
Once you’ve identified your hypothetical client base, it’s time to dig deeper.
Step 2: Whatever the client wants, the client gets
This is where the rubber meets the proverbial road.
With your client hypothesis in hand, talk to your prospective client base and really get to know them. What’s the biggest pain point—the thing that keeps them up at night? What do they wish they could be doing, but it’s just too hard to pull off on their own?
For Karbon, we conducted hundreds of customer interviews, compiling thousands of hours of footage. Our deep research informed our product development.
By solving common pain points, we were able to develop a product that our target customers would want to buy.
People are willing to pay for the things that actually address problems, not just play at them.
We discovered two main pain points:
Peace of mind: Helping accountants find peace of mind is about ensuring things don’t fall through the cracks, developing systems to verify that staff are doing what they’re supposed to be doing, and working more efficiently. It’s about allowing them to go on vacation, switch off, and have complete confidence that nothing will fall apart.
Talent retention: Karbon never sought to be a talent recruitment app, but we had a hunch that if we solved problem #1, there would be better morale at the firms we served. Now that we’ve been in operation for over eight years, we’ve got the data to back that hunch up, finding greater employee satisfaction at firms that use Karbon.
So what about you as an accountant?
Let’s go back to the accounting firm specializing in dental care example:
While you might not be able to solve the pain point of finding a dental floss supplier for your client, you could help them work out an insurance traffic jam, or a payroll tax conundrum. Once you have the knowledge for one client, you can start delivering it to all of your dentist clients, becoming the authority on a niche problem in the industry. That snowball effect will help to draw word of mouth—another important part of a good product market fit.
Step 3: The value proposition
Once you’ve identified your clients’ pain points, it’s time to make those thorns disappear from their side.
Do this by matching your service offerings to your value proposition.
Karbon’s value proposition is to provide peace of mind for our users. That looks different for finders, minders, and grinders:
For firm owners (finders), it’s a dashboard that shows productivity metrics.
For managers (minders), it’s ensuring you’re up to date on compliance and client satisfaction.
And for individuals grinding out the work, it’s making sure all the little things don’t get lost in the shuffle because those are the things that ultimately keep clients happy.
A surefire way to test your value? Ask your clients how they might feel if they couldn’t use your services. If your absence wouldn’t be a significant loss for them, it’s time to re-evaluate what you’re offering. If you’ve got a good product market fit, they’ll rely on you and feel your absence acutely.
Some product market fit inspiration
Two friends of Karbon come to mind when I think of firm owners who have done an excellent job of nailing product market fit. Both of them have zeroed in on a specific vertical or niche and made it into their bread and butter. They’ve also both been guests on the Accounting Leaders Podcast and shared their stories of how they cultivate their practices.
The first is Katye Maxson-Landis of Moxy Accounting. Katye recognized early on the need for specificity in the cannabis industry’s accounting practices. She’s made herself indispensable to her clients, from providing basic financial literacy to doing the books and managing the complex tax implications of those in the industry.
Similarly, Zane Stevens of Protea Financial carved out his vertical in Napa’s wine industry. Zane had prior experience working with wine in his home country of South Africa, and when his wife’s work brought them to America, he found a gap in the market for wineries needing accounting help. Much like accounting for cannabis, there are a lot of cost accounting and tax nuances for wine. He saw the opportunity and filled the gap. As a result, he now runs a budding business.
Your turn: An exercise in finding your niche
Though both Katye and Zane have laser-focused their client base, you don’t necessarily have to have a vertical in order to benefit from working on product market fit.
Revisiting who you serve, what you offer, and how you serve your clients is a worthwhile activity.
Even if you’ve been up and running for a decade, revisiting your target client and what you can solve for them will help you as your firm looks ahead to the next 10 years. It may just be that your next client specialty is right in front of you, waiting to be served.
