#21 | Riches are in the Niches

A thought dawned on me this week that could open up my search for a business to acquire pretty dramatically.  

In the past, I have said that I am looking to acquire a small business that is complementary to ProjectionHub.  

Since ProjectionHub helps startups and small businesses create financial projections across 100+ different industries, I have been assuming that I should look for a business to acquire that is industry agnostic.  

For example, could I find a service based business that could provide a service to any type of small business?  Examples could be bookkeeping services, marketing services, tax preparation, business valuations, etc. 

But I think I need to dive down a layer. 

I think there is probably a lot more value in a services business that specializes in one industry.  

For example, we have been partnering with industry consultants who help businesses get started in a particular industry where our team can come in and just help with the projections portion.  

Based on anecdotal evidence from working with these various consultants, I think I would much rather own an:

• Agency that helps doctors start their practice
• Agency that helps nurse practitioners open a clinic in a particular state
• Agency that specializes in brewery startup operations
• Agency that provides feasibility studies to self storage developers
• Agency that handles bookkeeping and taxes for trucking companies

These are all different types of agencies that we have partnered with in the past that seem to be doing pretty well.  

I think there is some risk in industry concentration, but that is why it could make sense to acquire specialized agencies in multiple industries to help diversify. 

Purely from a sales perspective, think about how much easier it would be to sell to a dentist if you could say “I only work with dental practices and have had 100 active clients” vs. “I work with 100 different industries, 1 of which is a dentist.”

Who is going to win that sale? 

Who is going to be able to charge a higher rate per hour? 

Certainly the specialist!  

Anyway, all that to say, I think I am going to start double dipping here.  As we try to find good industry specialist consulting agencies to partner with at ProjectionHub, that also gives me an opportunity to connect with agencies that could be an acquisition target for us as well. 

I always love to hear about “riches in the niches” stories.  Do you have any good niche business stories that have been crushing it because they offer a very niche service?