Over the past decade, we have seen a surge in ambitious tech startups aiming to make various industries more efficient with innovative, scalable technologies. Whether it’s using data analytics to optimize the transport sector, artificial intelligence for the automotive industry, or blockchain in finance, the drive to transform and optimize industries with technology is clear. This technological advancement is not only valuable but essential to address future challenges.
While this focus on tech and innovation is commendable, the opportunities in traditional sectors are often overlooked. In the current demographic climate, where many family-owned SMEs (small and medium-sized enterprises) are led by owners without successors, there is a unique opportunity for entrepreneurs to look toward companies operating in these more conventional sectors. The potential for growth and profitability in these areas is often underestimated, yet significant opportunities exist with less competition, especially as many business owners are forced to step back due to retirement or lack of succession. Thus, the idea generation process for startups should also include attention to more traditional business ideas.
Many family businesses today are run by entrepreneurs nearing retirement. According to a report by Belgium’s Agency for Innovation and Entrepreneurship, nearly half of all family businesses will face a succession issue within the next decade. Similar trends are being observed in the Netherlands and other European countries. Many of these business leaders have no family members to take over the business, leaving them with the challenge of selling or transferring it to an external party, either through a sale or a management buy-in.
Traditionally, these businesses were passed down within families, but with more young people choosing different career paths, succession is becoming increasingly rare. This creates a large pool of successful businesses without a clear future, despite being financially sound and having a loyal customer base.
Startups often focus on disruptive technologies and new markets, driven by the allure of rapid growth and high returns. However, traditional sectors can be particularly attractive to entrepreneurs seeking stable, long-term revenue streams and less competition. While many tech startups are vying for the same investors and markets, many conventional industries remain underexplored by young entrepreneurs.
Industries such as manufacturing, logistics, transportation, agriculture, and even retail often offer well established infrastructure, loyal customers, and proven business models. Here lie opportunities to acquire businesses or scale them further with new ideas, technologies, or improved business processes. Moreover, the implementation of technologies such as data analytics, digitalization, or process optimization in these traditional businesses can often lead to significant efficiency improvements and profitability gains.
An essential part of the idea generation process for startups should be considering more conventional ideas. This doesn’t mean ignoring innovation and technology, but rather leveraging these tools to strengthen traditional businesses and sectors. This not only offers potential for profit but also helps ensure the continuity of well-established businesses, which is crucial for broader economic stability.
For example, businesses in agriculture could benefit from improved data monitoring or automation of production processes. In the logistics sector, scalable technologies can be applied to make supply chains more efficient, while in manufacturing, digital solutions can enhance product quality and reduce costs.
Another advantage of focusing on traditional sectors is that there is often less direct competition from other startups. Many young entrepreneurs are drawn to trendy technologies such as AI, fintech, or e commerce, creating saturated markets where it can be difficult to stand out. By choosing a less competitive yet equally profitable sector, startups can carve out a unique position and gain market advantage more quickly.
By thinking outside the tech related idea space and considering conventional ideas in traditional industries, startups can tap into niches that are both less competitive and highly profitable.
Yannick Dillen is a Professor of Management Practice in Entrepreneurship at Vlerick Business School. His research focuses on start-ups, SME growth and scale-ups, with a specific interest in high-growth firms. He has a number of advisory board seats. At Vlerick, Yannick coordinates the Impulse Centre Growth Management for Medium-sized Enterprises and teaches on the Masters, MBA and executive programmes.