If you are worried that lack of knowledge in a specific industry will hold you back as a business owner, then you may be consoled by the fact that some of the biggest names in business own a myriad of companies in which they have no industry specialization…and it made them billions.
I recently wrote briefly about the concept of industry consolidation in a previous post. A question that arose as I was seeking feedback was 1) whether anyone can buy a business, and, 2) what type of business should they buy if there is nothing available in their industry specialization. The answer to the first question is an easy “yes, provided the buyer and seller come to an agreement on terms.” The second question took a little more time to explain.
Many people have specializations that do not necessarily translate between industries. A Soldier from the U.S. Army’s 2nd Ranger Battalion, for example, is great at jumping out of planes in the middle of the night to assault a heavily defended target, but that specialization may not translate to running a civilian business like a flower shop.
Likewise, a bartender may not have the industry specialization to work in an auto repair shop, but they can certainly own and run one effectively. This is because owning an auto repair shop is different from operating an auto repair shop.
Take Warren Buffett’s Berkshire Hathaway or Steven Schwarzman’s Blackstone as perfect examples. Ignoring differences in the business models, both firms purchase whole businesses for the purposes of creating additional value and profiting from it. It is very unlikely that Buffett knows all the ins and outs of operating a candy company (See’s Candy) or Schwarzman a theme park (Merlin Entertainments). What these two business titans do know is how to run a business.
You run a business by hiring people who know what they’re doing!
So, in the case of Joe the Bartender, purchasing an auto repair shop is a perfectly fine option as long as the terms of the deal are favorable to him. Joe doesn’t need to know how to run an auto repair shop – he only needs to be smart enough to employ people who do know how to run an auto repair shop and pay them adequately for their industry knowledge.
We say that accounting and finance are the “languages of business.” Regardless of what specific industry you are in, these foundational skills will remain the same across all firms. As long as Joe the Bartender has an understanding of accounting and finance, then the likelihood of his success after purchasing an existing business with an established customer base is far greater than if he knew how to turn a wrench but had no idea how to run a business.
Business skills can be taught to anyone and many are found online for free. In fact, a patchwork of YouTube videos can teach you everything from undergrad-level philosophy to graduate level finance. In fact, advanced mathematics and coding skills are among the most abundant (and in-demand) free courses online.
In a real-world example, take Black Rifle Coffee Company. It was founded by U.S. Veterans with various highly specialized combat skills. While the founder states that he was very good at brewing coffee, that doesn’t necessarily translate to running a coffee company. In fact, there are many an enlisted guy (myself included) who made coffee for the “higher ups” (my Master Chief preferred my blend of hose-water and tightly packed grounds).
While their coffee roasting skills are not being called into question, it is obvious that their business savvy is second to none.
(In fact, I can make a very good argument that being an enlisted Sailor taught me many of the very same business skills that I’ve learned so far in my MBA program. So much so that Supply Chain Management, Marketing, Strategy, and Organizational Leadership lessons all seemed like review, albeit with contextual differences. But, I digress…)
The bottom line is that you do not need to be an industry specialist to purchase and effectively run any business. As long as you have good instincts, a business mindset, and hire reliable, motivated people with industry knowledge, then you’ll be a success. You just need to take that step.
Christopher Padilla 
You must be logged in to post a comment.