A thread:
SMB Twitter seems to really like home services businesses (e.g., landscaping, plumbing, HVAC, etc). These can be great companies, especially when paired with strong operators, and they exist in large numbers and in every market, which is also attractive as a buyer.
SMB Twitter seems to really like home services businesses (e.g., landscaping, plumbing, HVAC, etc). These can be great companies, especially when paired with strong operators, and they exist in large numbers and in every market, which is also attractive as a buyer.
A few potential downsides to consider if you're looking at these types of companies:
- they usually involve some cap ex (vans, etc.)
- skilled labor shortages exist in most geographies
- the stickiness/brands in local markets also can make expansion to new areas challenging
- they usually involve some cap ex (vans, etc.)
- skilled labor shortages exist in most geographies
- the stickiness/brands in local markets also can make expansion to new areas challenging
I'd be eager to see more searchers focused on B2B services, which I think can be as, if not more, compelling in many cases.
Some examples:
- P&C insurance brokerages
- outsourced bookkeeping services
- managed service providers (i.e., outsourced IT)
Some examples:
- P&C insurance brokerages
- outsourced bookkeeping services
- managed service providers (i.e., outsourced IT)
Purchase multiples can be higher for these types of companies than for B2C home services, but these companies can really scale nicely, usually have great margins, and have strong recurring revenue streams.
Finally, my favorite SMBs exist in large markets where the TAM is also huge -- more rare than you might think.
Markets that foster these types of firms are also usually big: logistics, healthcare...
A niche company like this in a boring industry can be a long-term compounder
Markets that foster these types of firms are also usually big: logistics, healthcare...
A niche company like this in a boring industry can be a long-term compounder
What are your favorite examples of B2B service companies (either specific ones or by industry/market)?
Bonus points if they can grow to $50M+ in revenue without having to imagine major changes in geography, business model, or heroic execution.
Bonus points if they can grow to $50M+ in revenue without having to imagine major changes in geography, business model, or heroic execution.
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