By Peter J. Burns III

Over the past 48 years, I’ve had the privilege of starting and running over 150 businesses across a wide range of industries. I’ve never been one to follow the herd, and that’s been a key reason for my success. Instead of competing in saturated markets, I’ve spent my career identifying niche opportunities in fragmented industries—areas where others either don’t see the potential or consider them too risky. These overlooked sectors often hold the greatest promise for entrepreneurial success if you know how to approach them.

In this blog, I want to share my insights into how I’ve consistently been able to spot and capitalize on these opportunities. While it might seem daunting to step into a niche market, understanding how to assess and navigate fragmented industries can lead to rewarding business ventures that others might never even consider.

What is a Fragmented Industry?

A fragmented industry is one where no single company holds a dominant market share. Think of industries where thousands of small businesses are competing, but none control a significant piece of the pie. Examples might include things like boutique travel services, small-scale construction, or even niche segments of retail. These industries are ripe for entrepreneurs because they lack a clear leader, meaning the barriers to entry are relatively low, and there is room for innovation.

But here’s the catch: fragmented industries often don’t get a lot of attention. They can be hard to spot because they don’t generate the kind of buzz that major sectors like tech or finance do. This is why most people miss the opportunity. But for those of us who are willing to look a little deeper, these industries can be gold mines.

Recognizing Potential in Niche Markets

So, how do you go about finding these fragmented markets? The first thing I always recommend is to pay attention to inefficiencies. Fragmented industries are often riddled with inefficiencies, such as outdated technology, poor customer service, or a lack of coordination between suppliers and customers. Wherever you see inefficiency, there’s a chance for disruption.

For example, one of my ventures involved exotic auto rentals. When I entered the market, there was no major player offering a streamlined, luxury experience. The industry was fragmented, with many small operators offering cars, but none doing it at scale or with a luxury service in mind. By recognizing that inefficiency and focusing on creating a better experience for the customer, I was able to carve out a niche and establish a profitable business.

In addition to inefficiencies, look for industries where demand is growing but supply hasn’t caught up. These can be industries where consumer preferences are shifting, but the market hasn’t fully adapted yet. The luxury lifestyle sector is a perfect example of this. As people’s tastes have become more refined, there has been an increased demand for high-end, curated experiences—whether it’s in travel, dining, or retail. Yet, many industries are still operating with a mass-market mindset. This creates space for entrepreneurs who can offer a more personalized, premium service.

Building a Strategy Around Fragmentation

Once you’ve identified a fragmented industry, the next step is to build a strategy around it. This is where a lot of entrepreneurs make mistakes. They see a niche market and think they can simply copy what’s already being done, but that won’t get you far. To succeed, you need to offer something truly different.

I always start by asking myself how I can address the inefficiencies in the industry. Can I introduce new technology to streamline processes? Can I offer a higher level of service that sets my business apart? Can I create partnerships that no one else in the industry has thought of? These are the types of questions you should be asking if you want to build a sustainable business in a fragmented market.

When I moved to Africa in 2013 to volunteer with an international NGO, I not only learned about the challenges facing local businesses, but I also identified tremendous opportunities in fragmented markets. By collaborating with African partners, local governments, and even the U.S. Embassy, I was able to create bilateral ventures that bridged the gap between U.S. businesses and African markets. This is another key aspect of capitalizing on fragmentation: creating strategic alliances. By bringing in partners who complement your strengths, you can quickly scale your business in ways that would be difficult to do alone.

Creative Financing is Key

Another critical aspect of succeeding in fragmented markets is financing. Because these industries are often overlooked, traditional financing options might not be readily available. Banks might be hesitant to lend to businesses in industries they don’t fully understand. This is where creative financing comes into play. I’ve built much of my career by using non-traditional financing methods, from private equity and angel investors to more innovative techniques like revenue-sharing models and tokenization.

One of the best pieces of advice I can offer here is to never let a lack of traditional funding stop you from pursuing a good idea. There are always alternative ways to finance a business if you’re willing to think outside the box. If you can prove that your business model works, investors will come—whether they’re traditional bankers or more forward-thinking partners.

The Importance of Agility

Finally, it’s important to understand that fragmented industries are often in a state of flux. This means you need to stay agile and be ready to pivot if necessary. What works in the early stages of your business might not work as the industry evolves. One of the biggest advantages of being a small business in a fragmented industry is your ability to move quickly and adapt. Larger companies can’t do this as easily, and it’s one of the reasons small businesses often succeed in these markets.

Throughout my career, I’ve seen time and time again that the entrepreneurs who succeed are the ones who aren’t afraid to change course when needed. It’s not enough to simply spot an opportunity; you need to be able to adapt and evolve as the industry changes.

If there’s one thing I’ve learned over the years, it’s that fragmented industries offer some of the best opportunities for entrepreneurs who are willing to think differently. By focusing on inefficiencies, building strategic partnerships, and staying agile, you can create a profitable business in a market where others might not even see the potential. It’s all about being willing to go where others won’t—and having the persistence to follow through.