How do I choose a niche for an AI consulting business?
Short answer
Pick one trade, one level deeper than a category, where you can reuse 90% of what you build. Look for fragmented, lightly regulated businesses with recurring revenue. "Texas business owners" is too broad, and so is "home services." Pool service or pest control is a niche. It helps a lot if you already know the industry's problems.
"Texas business owners" isn't a niche. I made that call about my own AI concierge offer: it's a location, and it isn't niche enough to get enough interest. A niche tells an owner you already understand their problems.
How narrow is narrow enough?
One level deeper than the category you first think of. "Home services" is too broad. Pest control is a niche. Pool service is a niche. The test: can you template 90% or more of the solution so each new customer is close to copy-and-paste?
A pest control owner I talked to said the same thing from the buyer's side. Templatize one vertical to around 80% reusability and sell it by peer referral, because owners in the same trade talk to each other.
What makes an industry a good AI niche?
| Look for | Why it matters |
|---|---|
| Fragmented | Lots of small owners you can sell the same thing to |
| Light regulation | Projects don't stall on compliance and carrier limits |
| Seasonal | Harder for private equity to roll up the software layer |
| Recurring revenue | The customer can carry a monthly retainer |
| Obvious ROI | Faster lead follow-up pays for itself |
Pool service checks most of those boxes. That's why I told a generalist AI automation founder to go all in on it, ideally with dedicated branding and its own YouTube channel.
Which industries look good but aren't?
Roofing. I spent eight years as an insurance adjuster working with roofers. Big ticket per job, effectively no recurring revenue, and a huge number of tiny operators, a lot like realtors. It only works if you bundle AI with marketing, a website and lead generation.
Insurance, with a caveat. I have the background and I know how much money is there. I also don't love it, mostly because of regulation. Captive agents can't run much because their carrier controls the systems. Independent agencies are different: numerous, wealthy, still manual, and not locked into one carrier's stack. More in how insurance agents can use AI.
"Home services" as a label. It's big in Texas and faster follow-up has an obvious payoff, but it's a category. Pick one trade inside it and learn from real conversations with those owners.
Should I pick an industry I already know?
Yes, if you can. The edge is knowing the problems. I'd been doing newsletters for two years, I knew the problems, I built something to solve them, and I already had an audience of newsletter people to sell it to.
If you don't have that, borrow it. Find people who are deep in a niche, especially ones with an audience, and ask them directly:
"What problems do you have? If you could build anything, what would you want?"
Most local business owners won't touch a complex AI agent platform. It isn't for them. A simple tool shaped around their trade, sold through someone they already follow, is.
What should I bring besides AI?
Marketing. Meta ads knowledge on top of AI is rare among AI-only operators. It lets you sell the whole back office instead of one automation at a time, which is how you justify $3,000 to $5,000 a month. See why generic AI consulting doesn't work for the other half of this argument.
Answered by TJ Larkin. From peer and client calls in May and June 2026 and an October 2026 working session on TJ's own AI offer. Last updated .