01 - How I Pick Which Niche To Buy Companies In

01 - How I Pick Which Niche To Buy Companies In

Presenter: Alex Shozi, CEO of Acquisition.com

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Core Business Strategy & Frameworks

Alex Shozi focuses on helping companies with revenues between $3M and $10M scale and exit within 3–5 years. For businesses under $3M, the goal is to help them grow to that level first. A critical part of this strategy is selecting the right market before focusing on offers or persuasion tactics.

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Framework: Three Levers of Success (in order of importance)

1. Market Dynamics

   • Prefer markets with a strong demand-supply imbalance or at least normal growth (matching population growth).
   • Avoid shrinking or declining markets (e.g., newspapers shrinking 25% annually).
   • Markets are rated as positive, neutral, or negative; only positive or neutral markets are viable.

2. Offer Quality

   • A great offer can overcome market challenges.
   • Normal offers require stronger persuasion.
   • Terrible offers fail regardless of persuasion.

3. Persuasion Ability

   • Critical in normal markets with normal or subpar offers.
   • Exceptional persuasion can build empires but is the least important lever compared to market and offer.

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Four Variables to Evaluate When Picking a Market

• Customer Pain: Target customers with urgent, desperate needs rather than convenience or nice-to-have products.
• Purchasing Power: Customers must have the financial means to afford the product or service.
• Ease of Targeting: Ability to efficiently reach the target audience via platforms, associations, lists, or aggregated pools.
• Market Growth: The market should be growing or at least stable, not shrinking.

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Market Categorization

Alex divides markets into three main categories:

• Health (mostly B2C)
• Wealth (both B2B and B2C)
• Relationships (mostly B2C)

Within each main market, there are specific submarkets targeting unique avatars solving particular problems in unique ways.

Examples:

• Wealth B2B: Marketing services, IT services aimed at improving business revenue.
• Wealth B2C: Job training, investment education.
• Health: Nutrition, fitness, meal plans.
• Relationships: Social connection products.

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Niching Strategy: “The Riches Are in the Niches”

Narrowing down from a broad market to a very specific niche dramatically increases pricing power and conversion rates.

Example of Pricing Power Through Niching:

• Generic time management course: $19
• Time management for sales professionals: $99
• Time management for outbound B2B sales: $500
• Time management for outbound B2B power tools & gardening sales reps: $2,000

Why Niching Works:

• Creates a “category of one” with unique messaging tailored to a specific avatar’s pain points and objections.
• Justifies higher prices due to specificity and perceived expertise.
• Enables highly targeted and efficient marketing and sales messaging.

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Key Marketing & Sales Insights

• The goal of great copywriting is to make the prospect feel understood, not just informed.
• Articulating the prospect’s pain better than they can themselves builds trust and positions you as the expert.
• Targeted messaging improves ad spend efficiency and increases ROI.

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Actionable Recommendations

• Before scaling or improving offers, ensure you are in a growing, targetable market with customers who have real pain and purchasing power.
• Develop a highly specific avatar and niche to maximize pricing and conversion.
• Use the three levers of success (market, offer, persuasion) as a diagnostic tool to evaluate business viability.
• Continuously validate market growth and customer purchasing power before committing resources.
• Leverage niching to differentiate from large competitors and avoid commoditized markets.

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Metrics & Targets

• Target companies with $3M–$10M revenue aiming to scale and exit within 3–5 years.
• Avoid markets shrinking faster than 20–25% annually.
• Pricing can increase up to 100x by niching effectively.

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Additional Resources

Alex Shozi offers free trainings and courses on Acquisition.com aimed at helping entrepreneurs grow from zero to $3M+ revenue.

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Presenter: Alex Shozi, CEO of Acquisition.com