Over the past two weeks, I have been reading Plain Talk as part of my CaneKast onboarding. Ken Iverson talks about how there is only 4 layers of management between the CEO and the frontline worker, across thousands of employees at Nucor.

The strength of small, dedicated teams in managing and scaling businesses is incredible. This focus, emphasizes the power of specialization and understanding niche markets over the traditional, larger scale operations. I’m also excited about all the APIs, coding, and applications of AI that can allow for even more impactful teams.

When we delve into the world of small, closely-knit teams operating businesses, a distinctive competitive advantage emerges: the ability to penetrate industries that are fragmented, without any significant sophisticated players. A lesson we learn from the realm of search funds, as shared by Mark Yuan, co-founder of Searchfunder.com on Episode 3, is that being small and specialized can be a unique strength.

At the heart of this approach is the commitment to understand, operate, and scale businesses that might not appear 'sexy' to the conventional eye, yet hold substantial value in terms of providing essential services and generating cash.

This broad scope of investment interests reflects an important philosophy: value and opportunity can be found anywhere, even in the most overlooked places.

For small teams operating in such businesses, scalability becomes a unique advantage. The nimbleness of small teams allows for rapid adjustment to market dynamics and seizing underexplored opportunities, something that larger organizations often struggle with. In essence, it's about scaling the ability of dedicated operators to manage and grow a business successfully.

Small teams and niche market specialization in business operations signals a shift in the way we perceive scalability and efficiency. By embracing the philosophies adopted by search funds – being lean, agile, and highly adaptable – operators in various sectors can navigate the business landscape more effectively, uncover hidden opportunities, and drive their businesses to new heights. As business environments continue to evolve, these approaches could pave the way for a more flexible, adaptable, and efficient operational model.

Thanks to Everest Brady for his help, writing, and research in assembling this week’s newsletter.

This Week on Think Like an Owner

Our guest on this episode is Philip Hussey, CEO of Outerland, a landscape maintenance, new build, and snow removal business in Cape Cod, owned by Chenmark. Philip took the CEO role through Chenmark's GVP program in January 2022. A concept he spends a lot of time thinking about that we discuss in detail is their focus on their internal customer, i.e., the Outerland team.

They believe by serving and delighting their internal customers, they will do the same towards their external customers. We love the concept and think CEOs of any business can benefit from hearing their philosophy. We also talk about being the high-end service provider and what that looks like, recruiting for high-end and customer service-oriented companies that Phillip admires.

This episode Q&A features CEO August Felker of Oberle Risk Strategies, answering the question, “When I buy a business, should I generally expect my insurance costs to go up or down?”

Every CEO and entrepreneur needs support from a team of expert professionals like attorneys, bankers, and accountants like Hood & Strong. Less often mentioned, and just as important, is insurance. And August Felker at Oberle Risk Strategies are the experts that you need on your team to navigate the insurance needs of your company as dozens of past podcast guests have partnered with them to do. Oberle helps you evaluate where your current and soon to be acquired company needs for insurance today and what it might need tomorrow. please reach out to learn more about how Oberle can help with insurance due diligence at oberle-risk.com. Or reach out to the CEO, August Felker, directly at [email protected].

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Think Like an Owner is sponsored by:

Ravix Group - Ravix Group is a fraction CFO, outsourced accounting, and HR consulting firm serving small and large businesses alike. Whether you or someone you know is getting started, searching to buy a business, or building out an organization, Ravix will help on the journey. To learn more about Ravix Group, head to their website and tell them Think Like An Owner sent you.

Hood & Strong, LLP – Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected].

Oberle Risk Strategies– Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and Employee benefits programs. If you are under LOI, please reach out to learn more about how Oberle can help with insurance due diligence at oberle-risk.com. Or reach out to the CEO, August Felker, directly at [email protected].

Interested in sponsoring? Reply to this email and let’s chat.