Last week Big-4 accountant KPMG announced that they were pulling out of the small business accounting market. This follows their high profile launch and expensive advertising campaign only a couple of years ago.
This shouldn’t come as a surprise to anyone who listens to and understands the 3Ms of marketing – Market, Message and Media.
At face value their entry into this market – followed by others in the Big-4 – looked sensible. A large quantity of businesses needing accounting services and the rapid growth of cloud accounting solutions to automate their service delivery.
But superficial thinking – rather than thinking deeply and accurately – is rarely enough and as KPMG have found comes at a huge cost.
Like the other Big-4 firms, KPMG makes its money from auditing, financial accounting and tax compliance services. Their business model relies on leveraging junior staff to perform routine work. Their skill set isn’t in accounting, business analysis and management reporting.
Their clients are typically large organisations run by professional managers (rather than owners) whose goals are to increase shareholder value (and the value of their share options).
Contrast that with the requirements of a typical owner manager whose interest in statutory accounts and audits is zero (at best) and wants a relationship with an experienced commercial accountant, who understands their business, can help them interpret their numbers, manages their taxes and offers practical business advice.
Now I’m sure KPMG have some really good experienced accountants; but at hourly rates of £500+ these weren’t the ones advising the small business clients who needed them.
Their business model just didn’t work in practice.
And this matters in your business too. Understanding your ideal client doesn’t just mean finding a market with lots of prospects; it is about matching your skills to the needs of a segment of a market where you can differentiate your product or service from your competitors.
The more closely you can define whose need your business can profitably meet, the more accurately you can position your message to that market. Time spent thinking deeply is never wasted and can avoid expensive mistakes.