It's worth a thread to explore when and how you can deviate from the SMB 'gold standard' ideals:
Recurring revenue, barriers to entry, etc. give you security that the business won't drop overnight due to your customers leaving or new competition. Strong margins also give you leeway. These aren't req'd for a biz and most biz DON'T have everything. Some thoughts...
Asset light is great, but CapEx is fine too. There are downsides. Your equipment could become obsolete. But if you're buying a biz, there's a "right price" for everything (ha, the seller might not agree). Get the right multiple, NOT based on EBITDA.
Barriers to entry matter. Kind of. This is a personal choice. The PE firm I worked at owned both logistics and manufacturing. Trucking has NO barriers to entry. Yes, margins are compressed because of it. Yes, you can price that in with the right acquisition multiple.
We also owned a company that made emblems on cars, e.g. the Mustang. I'm not an expert in that technology and didn't work w/ that Co, but supposedly they were great at what they did. It's not tech in the general sense, but we had better technology. And as long as we did,
business is good. Lesson #1: the barrier to entry there is based on R&D and CapEx. You'll often see that so the SMB desire for barriers AND low CapEx usually rests on geographic barriers. That means you're limited in growth to your region and/or other similar regions. That's
OK, but a downside people don't acknowledge. All depends on your goals. Lesson #2: The emblem biz is great...until it's not. It hasn't happened yet, but someday some competitor will bake a better emblem. And then they're in big trouble. To each his own, but my personal
disposition is much better suited to trucking. Yes, anyone can compete. But I'd rather always have a fighting shot. Scrap to the end but not be drawing dead with worse technology.

So what is overlooked in SMB searches? Maybe not so much given some recent twitter threads
from @StrongpointRich and others but service is based on culture and culture is hard to change. The right culture is a barrier to entry. It's not like technology where you can rest on your laurels, but a good team will provide better service and your revenue will be sticky
because of it. Better to have recurring revenue? Of course. But a culture of service can overcome many of the SMB 'gold standards'.

It's for another thread, but the questions are: (i) how can you diligence culture and (ii) how can you drive culture continuously?
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