You know you want to start a business. You just don’t know what kind of business to start. Let’s take a brief look at five hot sectors to help you identify potential opportunities.
1. Pets & Pet Care
Key Data: U.S. pet owners are expected to spend $58.5 billion on their furry friends in 2014, according to the American Pet Products Association. And with 43 million households owning a dog, there’s a huge need for services like grooming, boarding, walking and pet food.
Owner Insights: In four years, Alex Taylor, who has the title of “Go-To-Dog” at Woofables Bakery in Coralville, IA, has grown his family-owned business from a single local retail store to a wholesale operation selling products in 38 states, fueled by dog owners wanting healthy, high-quality treats. “Everyone loves a happy dog and everyone loves spoiling dogs,” he says, which is his favorite part about crafting the gourmet biscuits.
Some pet-related businesses require special permits and licensing. For instance, selling pet treats means that Woofables needs a license from each state’s agriculture department. Even if you’re opening a dog-walking or grooming business, check with the Small Business Administration and your local government to determine the licenses required in your area.
Get Started: Understand your market. Despite the growth projections, Taylor says one of the biggest mistakes is opening or expanding without fully understanding what customers want and what they’re willing to pay. He recommends going to trade shows, farmers’ markets, working with other local merchants and talking to the Chamber of Commerce to connect with potential clients before you take the plunge. “Do your research before, and on an ongoing basis. Measure results and adjust the business to best meet the needs of customers,” he says.
Key Data: As the population continues to age and people live longer, demand continues to soar. Eldercare services are expected to generate revenue of nearly $320 billion by 2016 with home healthcare and assisted living facilities expanding the fastest.
Owner Insights: Helen Antipov, owner of Comfort Keepers in Durham, NC, opened her franchise after watching her mother struggle with a neurological disease and her father cope as the primary caregiver in his 70s. She employs mostly certified nurse’s assistants to provide in-home help and non-medical care, something she finds fulfilling because it helps people remain at home.
While the work is rewarding, Antipov cautions that new entrepreneurs should be ready to get their hands dirty doing everything from driving to housework. “If you think you can be just the owner and have caregivers do those things, you’re mistaken,” she says.
Get Started: Investigate regulatory requirements. It can be challenging to get a license because of state regulations on providing in-home care. Some states require formal training in order to work with the elderly. Consult with your state Department of Health and Human Services or the SBA to determine what’s needed in your area. Antipov recommends finding a consultant or working with a franchise to make sure you have all the right documentation and licenses.
3. Education Technology
Key Data: In 2013, the Software & Information Industry Association estimated that U.S. schools in pre-kindergarten to 12th grade would spend $8 billion on non-hardware products and services alone.
Owner Insights: Kristine Duehl, CEO of Budding Biologist in Davis, CA, was inspired to write children’s books to correct mistakes she found in those on the market. That evolved into creating games to emphasize science in the classroom. While she finds working with kids to hone the games thrilling, selling the tools can be difficult given limited resources and difficulty in reaching decision- makers.
It’s important to understand the difference between users and buyers/decision-makers. If a purchase is “larger than a classroom budget, then you go to the school or district. Getting access to those people who make the decisions isn’t an easy task,” Duehl says. The same holds true if you plan to market directly to kids, most of whom still have to ask parents for permission to buy.
Get Started: Work with industry experts. Putting together teams with a broad base of skills including developers, educators, administrators and subject experts is critical for creating tools that resonate with students, teachers and parents. It’s also crucial to partner with someone who understands how to reach educators and administrators, in addition to a consumer marketing pro.
4. Business Services
Key Data: Many firms that laid off full-time employees are looking for additional savings by outsourcing tasks like transcription, administrative duties and human resources. Employment services revenue grew 11 percent in 2013, according to SageWorks data. And according to the Bureau of Labor Statistics, office administrative services will be the seventh-highest growing industry, adding 145,000 jobs in the next decade.
Owner Insights: CarolLee Kidd, president of CLK Transcription in Tobyhanna, PA, saw an opportunity to provide higher-quality services and employ people in the U.S. by starting her own transcription company. She loves the variety of topics, which gives her an “education every day.”
Kidd built her business from a one-person shop to an 80-person network of independent contractors. And she did it without paying for advertising. She suggests using online forums such as Craigslist and medical transcription boards to build clientele. And don’t forget to ask clients to refer business to you — 95 percent of Kidd’s customers find her this way.
Get Started: Build capacity. Kidd cautions that you’ll have to do much of the work yourself, especially in the beginning as you build a client base. There are vocational programs for transcription, database management and other administrative tasks to help you polish your skills and find jobs and contractors to help with the workload.
5. Mobile App Development
Key Data: The market for mobile apps grew 115 percent in 2013, with utility and productivity apps one of the top categories, according to data from Flurry. New offerings are literally being created every day.
Owner Insights: Stephen Fishburn, who has developed more than 50 business apps for companies such as Toyota and Hyatt, is developing his own project, Get Well Cities, to help people tap into the wellness community, starting in New York. Fishburn, who lives in the Seattle area, says he loves the ability to impact people with a fresh, executable idea, but the mobile app space is crowded — and many app-makers don’t make money. Make sure you differentiate yourself from competitors by building a strong brand.
“Don’t fall blindly in love with the idea you woke up and had one morning,” Fishburn cautions. “Do your research and understand the consumer.” Then develop metrics, such as users per day, to define success and a clear revenue model that experts and investors can vet.
Get Started: Build a big budget and a strong team. Developing an app is a complicated and expensive project, typically costing upwards of $200,000, Fishburn says. Putting together the right team of people who can write the code, make it visually appealing, and create content and brand is critical. If you don’t have a background in coding, he recommends learning the basics so you know industry jargon and can ask the right questions of those you’re considering working with.
Doing Your Research Is Critical
No matter what sector you choose, our experts agree that research, including requirements and markets, is mission critical. It’s not as exciting as making the product, but it’s the best way to understand the opportunity, learn the industry and avoid an epic fail.
“You really do need to do the planning,” says Michele Markey, vice president of Kaufman FastTrac, which provides support services to entrepreneurs. “It’s time consuming, but you can avoid some really big mistakes. If the data and information are telling you to make adjustments, that’s a good thing.”
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