I’ve been thinking a lot recently about niches to buy businesses and software projects and can’t get a lecture out of my head from a guest speaker in my graduate school program.
It was titled “Don’t Create an SLB“.
Wait, what is he talking about? This sounds interesting…
And it was, his core message was “Do not invest in a Shitty Little Business, ever.”
My Attempt at an SLB
When I was working at my second company, I wanted to start a T- Shirt printing company on the side. I got together with a college friend and we had these great plans of creating funny T-Shirts and selling them online (Hey, I know, original huh? Give me a break, this was in 2003).
We had all the designs in our mind and could easily see how quickly we’d become millionaires simply by wearing our own T-Shirts around Chicago as advertisements.
So we started getting into the specifics of exactly what we needed to do to start printing T-Shirts. Certainly, this couldn’t be too hard, right? Create design, add shirt, press, sell, repeat…retire in luxury.
Well, we came to realize that the business had massive upfront costs and that each shirt would only net us about a dime in profit. That would mean we’d need to sell something like 10,000 shirts a month to break even.
Hmmmm…maybe this wasn’t a good idea what all. But what was our problem? Millions of people wear T-Shirts, we loved funny ones, how could this not work?
Isn’t this a valuable niche that somebody has to fill?
Yes, it was. However, that business is what I would later learn to call an “SLB”.
What is an SLB?
An SLB is a business that’s too small, hard to scale, and many times start off as an activity of passion, like a hobby.
An SLB likely has huge upfront costs to sell items that retail for less than $10.00, requiring massive advertising, sales, and distribution networks to make any money. An SLB likely caters to a small niche that will never provide the opportunity for the business to grow or scale outside of an immediate area.
SLB’s have :
– High Start-Up Costs
– Low Price Points
– Low Barriers to Entry (No Way To Preserve Your Unique Selling Value)
– High Volume, Low Margins
Want some SLB examples?
- T-Shirt Companies
- Coffee and/or Tea Shops
- Ad-based websites
- Most importantly, “Fad Businesses”
What Are Fad Businesses?
Fad businesses are topics that some companies are quick enough to create (Atkins, P90-X, etc.) and are trendy for about 12-18 months.
The problem is people mistake the 12 months of interest as a market change they should try and create a long-term business around.
Some recent examples of fad businesses that people are pouring their life savings into and will soon leave them bankrupt or in legal hot water.
- Curves Studios
- Crossfit Boxes
- Diet-based products
- Cupcake Shops
- Secure Tokens and other shitcoins
- Tattoo Parlors
- Vaping stores
- I’m even going to put Dropshipping in this list, even though it’s not a business, but manufacturing and logistical methodology. Let’s look back in 2025 to see if I was right.
Pro Tip: Anytime you see a lot of one niche for sale on Flippa.com, that’s an SLB. It means the owners know they need to cash out fast because the ship is sinking. In 2020, that’s vaping stores, alt-coin sites, and anything to do with coronavirus.
Yes, many of you may swear that these are wonderful philosophies and great business ideas. If you lived in the 80’s, you’d say the same thing about Jazzercise and Rice Cakes. If you lived in the 90’s you’d say the same thing about Beanie Babies, pagers, and No Fear clothing. If you lived in the 2000’s, it was Virtual Reality and E-Bay stores.
Laugh now, but back then, they were the Crossfit Boxes and Cupcake stores you see today. People build entire businesses targeting these fads and lose a ton of money on them.
And every one that back then swore would be the new thing. And they were, for a few minutes.
Do not be that person. You’re too smart for that. If it’s a fad, enjoy it, but look for stable niches to focus your future talents and efforts into for your business.
So, be honest with yourself when you’re choosing your niches. Is this business niche a fad? Is this idea an SLB?
Real businesses can grow, scale, and make money for a long time. Make sure the niche you’re choosing isn’t an SLB or fad niche.
Want to learn more about my journey acquiring and operating online companies, including other failed acquisition lessons learned? Check out Online Business Ride Along, a monthly deep dive into my journey, with actual online investments and monthly P&L’s for each businesses.