In another article here at EzineArticles, I talked about "Target Market Segments." If you read that article, then by now you should have developed a list of the target markets you serve, and those you think you can effectively serve. This list should be a list of categories of clients for whom you are effectively creating value, or providing services.

It does not necessarily have to be a long list. It can be as few as one category if that is all that you are serving, can serve, or wish to serve. This is a case of no matter what you may think, size does not matter, accuracy of definition does. What you are trying to do is define you current or desired business model, not come up with something to brag about.

Today, you should be working to define what problems you are solving for you target market segments.

There is no reason for a client to retain you unless you are going to solve some problem for them. It may be a problem defined by analytical means, or it may be a problem defined by emotional needs. Either is valid.

A "Value Proposition" is the service, or bundle of services, that you provide to a particular market segment. It is what the client values enough to pay you for.

The "Value Proposition" you provide to your clients may be generic, or standard, or they may be new and innovative. They may have added features and benefits, or they may have reduced features and benefits. You may be duplicating a product or service that is already on the market, or providing one that you have developed specifically for your target segment.

You can define your value proposition by answering the following questions:

What value do your clients or customers receive from your product or service?
Which of your clients problems are you solving with your products or services?
What bundles of products and services are you offering to each target segment?

Your solutions may include the basic tax compliance and financial reporting requirements commonly referred to as "client writeup," where value is created for your client by solving their compliance requirements. Or, you may be extending this basic service and providing analytical solutions that answer questions about business operations through reporting of exceptions and measuring of objectives.

Another solution may be the solving of some special need, such as a tax resolution service that you provide to troubled taxpayers. The taxpayer client may see value in your ability to reduce their liability or prevent seizure and sale of assets.

In some cases, you may be providing custom solutions to unique problems that a client is facing. Your value proposition may include an audit of business operations and you may be providing solutions in the form of recommendations from your operational audit or engineering survey.

In each of these cases, your value proposition encompasses the entire set of client solution attributes, including price, the time frame in which the solution is provided, and client relations. The complete list of features in your value proposition is limited only by your imagination. You greatest task will be to refine your list of features to those that are material to solving your target segments needs and ignoring those which offer minimal value.

For example, your clients may value the fact that your services are delivered in hours instead of days, or days instead of weeks. Your clients may receive value from your timely updates and regular communication. Or, your clients may value that you are non-intrusive and do not bother them with excessive data and reports.

You may find that some clients value an association with you and your "brand," or they may value your independence and lack of branding.

Each factor in the design and structure of your service delivery is a part of your value proposition. Your task is to define what you deliver as a solution, and possibly want you want to deliver as a solution. What you are delivering as a solution to each of your target market segments helps define your current business model. What you want to deliver in the way of solutions will help define what your proposed business model is. What your desired target market segment seeks in the way of solutions is what your business model should be.

As you read this, some of it may have caused you to reach into the "duh" part of your vocabulary, but that's okay. It should be commonsense, and you should be able to understand it.

Business models are logical, and your business model should be logical to you. But, without a good intellectual understanding of the subject, what is obvious after reading about it, was unknown and might not have been a part of your vocabulary before.

Your task today is to write down your understanding of what you are delivering in the way of solutions to your clients in each target market segment. Don't spend a lot of time on the particular products or services as you start your breakdown. Instead, make a list of what solutions you are providing by answering the question, "Why did your clients hire you rather than another practitioner?"

A good understanding of why they hired you is essential to defining the value proposition you are providing.

You can continue to learn about starting your own accounting practice by visiting http://secrets-of-marketing-accounting-services.com/

Most local accountants serve a broad spectrum of clients. Maybe a small restaurant, a dry cleaner, a day care center, a trucking company, a roofing company, or some such other type of enterprise. Accountants in general consider the work they do generic and transferable from one business to another.

Your clients don't think so.

Each client you have is in an industry with unique characteristics, and they know it. They want you to understand the uniqueness of their industry, and they want to think that you are an expert in the unique tax problems, financial and operating problems, and even the marketing problems they face. They want you to know more about their industry than they do. That's why they hired you.

There is an old proverb that "A man cannot serve two masters at the same time." I modify that a bit and say "You cannot serve two masters, until you have learned to serve one well."

You must make a conscious decision about which target market segment you want to serve, first. Once you have mastered the knowledge required to serve that target market segment well, then you can move on to your next target.

Once you have decided which market segment you are going to serve first, you can begin to design your business model with a strong understanding of that segments specific needs.

Customers can be segmented if:
Their needs require and justify a distinctly different services offer
They must be approached through different marketing channels
They require different working relationships than other groups
They have substantially different contributions to your margin, and
They are willing to pay for different aspects of the services you offer.

Different types target segments CAN include the broad based market that the typical accounting practitioner serves. This is the B2B equivalent of the consumer "mass market."

In an attempt to differentiate their practice, one way of targeting customer segments that is typically to identify a niche market and target that niche. This is the approach used by folks who develop and use "Industry Segment Marketing Kits." They select one niche at a time and develop a marketing campaign specifically targeting members of that industry group.

While this is a good way of targeting a segment, it is merely a tactic to be used in the strategy you develop after designing or identifying your business model. In other words, as much as I'd like to sell you a subscription to this excellent series, I suggest you wait until you are sure you want to include it as a tactic in your marketing arsenal.

For example, another method of identifying your target segment is to identify their specific needs and problems. In this case you may want to identify prospects by their specific tax needs (need for a Cost Segregation Study), or their financing needs (Commercial Loan Packaging), or possible their need for customer lead generation (Client Mini-Site Web Hosting). This type of segmentation could conceivably wind up having you serve several different industry segments, each with a unique need.

Your business model could wind up with you serving multiple segments. For example, you could be a generic broad based practice, but you begin to identify clients with accounts receivable problems, so you develop services to aid in receivables and cash flow management. Or, you could be offering a payroll service and develop a staffing service as a means of reducing client payroll costs.

Your business model could even serve two interdependent market segments, such as a practice that needs a large base of referrers to send clients to their office, while at the same time needs a large base of clients to act as referrers. Or, a tax preparation service that needs a large base of individual tax clients, and a large base of payroll clients to aid in creating name recognition among prospects.

For each customer segment you identify, and choose to serve, you must develop a specific value proposition. You must specifically decide what you are going to offer.

And, once you have identified your target market segment, and spelled out the specific value proposition you are going to offer, then you can define how your relationship will be structured and what channels you are going to use to deliver your offer and your services.

This is going to be some heavy stuff here, so be prepared to take notes. That means print this article out and write all over it as you read it. This first part is going to seem a little obvious, and there is a lot of controversy about the difference between business models and business strategy. It's almost a which comes first, the chicken or the egg type of question. (By the way, British scientists have answered that question. It's the chicken. Look it up.)

Because Business Strategy and Business Models are so intertwined, it wasn't until the go-go days of the DotCom bubble that the term took on it's own meaning. The term was hardly heard before the web startups of the DotCom bubble began using the term to explain their operations to venture capitalists. During that time it became a catch phrase to explain all sorts of sins.

But, business models have been around since the beginning of business.

One good example is Xerox. When Xerox began leasing photocopiers in 1958 so that businesses could afford their new product, they introduced a major change in their business model and that change, along with their technical innovations, propelled them to a position of dominance in the copier industry.

Understanding business models gives us a way to understand how a business makes money. Many times this is the result of a newly developed technology. But, the technology is not nearly as important as the way it is implemented/ After all, Hero of Alexandria, invented the steam engine some 2,000 years ago.

But, it wasn't until James Watt found a new way of implementing that technology and building a new business model that the technology became commercially viable, even though technological improvements by Thomas Savery, Dennis Papin and Thoma Newcomen.

Understanding the concept first will help you understand how your firm, or any firm, defines its competitive strategy, through the products and services you offer, how you charge for them and what they cost you to deliver. Understanding your business model and comparing your model to that of other firms gives you an understanding how you are different, and helps you identify each firms competitive advantage, or unique value proposition.

Want to understand your business model?

Of course you do. That's why you've read this so far, isn't it?

Understanding the business model answers a series of questions essential to any business - who are the customers, what do they value, how that value can be delivered to the customer at an appropriate cost and how the business deploys its assets. It includes a description of the key assets, both physical and intangible such as intellectual property, governance structure and management. It consists of both a narrative of how the business works and the numbers - how it makes a profit.

The concept came into vogue when the spreadsheet provided an easy way to test the financial implications of the narrative in a financial model which contained assumptions about costs, product demand, sales revenue and profit. The financial outcome of changes to the narrative, or assumptions about product demand, etc. can be tested in the spreadsheet model.

During the DotCom bubble, investors demanded that the entire business strategy, processes and outcomes be summarized and modeled in such a way that different scenarios could be tested. Once the narrative of the business model was reduced to a spreadsheet-based financial model that encapsulated and quantified all the important features of the proposed business, potential investors could 'stress test' the business assumptions ahead of their decision to invest.

This proliferation of business plans, spreadsheet analyses, and (with apologies to General Nathan Bedford Forrest) the rush to "git thar furstest with the mostest," popularized the term to the point where it became studied and is finally being analyzed and understood.

To understand your own business model, you need to look at nine different "building blocks" of your practice.
1) Target Market Segments - What niches or industry segments do you serve?
2) Value Propositions - what problems do you solve for your clients?
3) Channels - How do you communicate with or serve your clients? How do you make sales?
4) Client Relationships - What is your relationship with each industry or client?
5) Revenue Streams - What revenues do you derive from each solution you provide?
6) Key Resources - What assets do you need to perform your services?
7) Key Activities - What services do you offer?
8) Key Partnerships - What do you outsource or acquire?
9) Cost Structure - What does it cost you to provide your services?

Start by looking at each of these building blocks, one at a time, and when you've got a good understanding of what the different parts of the generic business model are, you'll be able to take a look at your own business model as well as that of your competitors.

Once you've done that, you'll see how an understanding of your business model can lead you into developing your own business strategy, and from there, into selecting the tactics you will use to implement your strategy.

You can continue to learn about starting your own accounting practice by visiting Secrets of Marketing Accounting Services

Kirk Ward is a retired tax expert, accountant and auditor. He provides the same resources he used in building his practices to startup accountants through his Secrets of Marketing Accounting Services website and rants about the commercial finance industry on "Kirk's Blog" (Wonder where he got the idea for the name of that blog?) where he describes his career as an auditor with "Bucket Of Blood" finance companies and banks.