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THE 8 BEST INDUSTRIES FOR STARTING A BUSINESS (IN DETAIL)

The 8 Best Industries for Starting a Business (In Detail)

Digital detective. Health care disrupter. Purveyor of all things organic. These are just some of the most promising ground-floor opportunities in 2014.

Some entrepreneurs are drawn to the New New Thing; they hunger for a first-mover advantage. To them we say, best of luck. Others want to enter a promising industry early on, but with some evidence that the industry actually exists and has room for new players. To them we say, welcome.

Our annual look at the best industries for starting a business is based on a range of research, interviews, and scouting reports. We’ve identified a cross section of businesses that call for a variety of skills, from technological expertise to retailing savvy to, above all, the ability to innovate. Think of these industries not as New New but as Hot Hot. They are up and running but still very much in their early days. If you have the right skills and focus, you have plenty of opportunity not only to jump on the bandwagon but to call the tune.

1

Automated Guided Vehicles (a.k.a. Robotic Forklifts)

Jeff Bezos triggered a near-meltdown in the Twittersphere when he suggested that Amazon might deliver products via drones. Closer to earth, Amazon did spend $775 million in 2012 to buy Kiva Systems, which manufactures robotic automated guided vehicles, or AGVs. These devices automate many earthbound warehousing and logistical functions, such as picking products to fill a specific order and prepping them for loading onto good ol’ trucks. Though they may lack the sci-fi sexiness of drones, AGVs such as forklifts, loaders, and towing vehicles are increasingly in demand, as companies pursue a Warehouse 2.0 strategy, using any and all technologies available to cut costs and speed up fulfillment.

Why it’s Hot: AGVs are used in numerous industries, including pharmaceuticals, chemicals, food, automotive, warehousing, and other businesses that require the movement of materials.

The Downside: Startup costs are high. We’re talking about a sophisticated manufacturing operation here, often reliant on raw materials including steel, which has been getting more expensive. The technology is also evolving fast, which means keeping up with the latest trends in laser targeting, gyroscopic, optical, and magnetic navigation systems.

Skills Needed: Experience in robotics and computer systems. If you lack the capital or partnerships to jump into manufacturing, you could focus on software or subcomponents.

Competition: There is no dominant player, but the top four companies account for half the industry revenue. Savant Automation, Dematic Group, and Bastian Solutions are among the companies that merit a look as you research this market.

2
Eco-Friendly Building

The housing industry is returning to a state of market equilibrium as supply and demand balance and prices rebound. One particularly robust sector is green construction, which emphasizes designs and materials that maximize energy-efficiency and environmental sustainability. New building codes and tax credits are helping the sector take off.

The Outlook: Demand is booming. Within the next two years, more than half of all commercial and institutional construction will have a decided tint of green, according to the U.S. Green Building Council.

Uncle Sam Wants You: At least half of all green construction projects will be funded by U.S. government agencies, as new schools, government offices, and other projects must meet more stringent standards.

Industry Buzzword: LEED, short for the Leadership in Energy and Environmental Design program. You’ll want to bone up on certification requirements.

Barriers to Entry: Skilled workers are scarce, and an established reputation really helps.

Competition Traditional builders have jumped into green building, and the number of new companies is growing by 15 percent annually.

3
Mobile Health or “mHealth”

Talk about the intersection of two hot trends: The world is going mobile, and everything regarding health care is up for a rethink. Put them together, and you have “mHealth,” as in “mobile health.” An aging population, increasing chronic illness, accelerating health costs, new regulatory reforms, and increased consumer demand for health information and self-care will have doctors, patients, and everyone in between eager to see as much health information as possible made available on every kind of mobile device.

Vital Signs: The global mHealth market is poised to surpass $10 billion by 2018.

Bone Up: Though it’s not exactly a beach read, the fine print of the Affordable Care Act can point you to opportunities in specific sectors.

Promising Niche: Remote patient monitoring. mHealth apps promise to cut the time and money spent on visits to the doctor’s office by remotely tracking measures related to many chronic illnesses.

Technical Challenge: Security. As more patient data is captured, companies risk violating rules under the Health Insurance Portability and Accountability Act, or HIPAA.

Competition: Companies specializing in everything from medical devices to exercise gear are jumping in. HealthTap, Patient Conversation Media, and Informatics Group offer some useful lessons on where things are heading.

4
Foodie Fare

As consumers awaken to the presumed health benefits of foods such as kale and quinoa, retail stores specializing in organic, gluten-free, and healthful foods are sprouting up everywhere. There has also been a parallel boom in the businesses creating the foods these stores sell. Since 2003, an average of 4,300 specialty-food products have been launched. Though we may not yet be at the “Salad: It’s What’s for Dinner” stage, we’re eating a wider variety of healthful foods than ever.

Big Appetites: Total specialty-food sales in 2012 topped $85 billion, according to the Specialty Food Association. The fastest-growing segments are energy bars and gels and shelf-stable beverages. Interested in something more indulgent? Artisanal cheeses are huge.

Promising Niches: Ninety-five percent of specialty-food stores carry all-natural products, and 88 percent are riding the locavore train, with “local” foods defined as those produced within 200 miles of where they are sold.

Startup Need: For retailers, a store. The size of the average specialty-food store is slightly more than 5,000 square feet, with room for some 1,400 products. Location is key, because you’ll need to be close to customers willing to pay for premium products. For would-be food makers, you may only need a good recipe, quality ingredients, a commercial kitchen, and a van. To start, anyway.

Competition: National chains such as Whole Foods, regional players like Mom’s Organic Market, and expanding organic offerings from traditional grocers and big-box retailers, including Walmart.

5
Buy, Buy Baby (Products)

One of the fastest-growing segments of online retailing focuses on the needs of consumers who don’t use computers (or at least, not well): babies. Products from diapers, clothing, and shoes to feeding aids, strollers, and furniture defied the recession and remained in high demand. The demand is still intense, and increasingly it is being satisfied online. Baby apparel alone will ring up $6 billion in e-tail sales this year.

Growth Spurt: Experts say demand will increase over the next five years, owing to demographic factors (primarily, an increased birthrate) and a rise in disposable income that will prompt busy parents to shop from their couches whenever they can grab a few minutes of peace.

Promising Niches: More than 40 percent of all revenue in this sector comes from the sale of diapers, so think outside the training pants. Organic skin care and branded baby clothing, however, are the kinds of things that can help you carve out a space.

Competition: Getting noticed could be tough: By 2018, it’s predicted, there will be more than 6,000 baby-product e-tailers. Look at i play, 4Moms, Babyhaven, and Happy Family Brands for inspiration.

6
Decoding the Language of Business

It may be a small world, but it certainly has a lot of languages. More than 6,700, to be semi-exact. As businesses become more global, demand for people (or companies) who can bridge the language divide is growing. An increase in foreign tourists visiting the U.S. is also a factor, as is the need to communicate with Hispanic and other non-native-English speakers now living in the U.S.

Talking Points: A big opportunity can be found in website localization. As U.S. companies look to expand into markets such as China, Brazil, Russia, Eastern Europe, and the Middle East, there will be increased demand for individuals and companies that can translate English-based sites into local languages. One recent study found that just 20 percent of the top U.S. retailing sites have information translated into a language other than English.

Promising Specialties: U.S. health care companies, which are rapidly expanding into South America, Canada, Europe, and the Asian-Pacific market. There is also high demand for translating official immigration documents, including birth and marriage certificates, and diplomas.

Big Threat: Automation. The use of artificial intelligence, as well as voice and optical character recognition, is expected to increase drastically in the next five years. And, of course, there are apps for this.

Competition: There are about 50,000 translation businesses out there, but 95 percent of them are individual operators, so the opportunity to pursue this field as a true business is grande.

7
Digital Detectives

The proliferation of smartphones, tablets, and PDAs has brought with it the very real possibility that people will have an increasing need to retrieve precious data, either because they’ve lost it (think a CFO’s laptop falling down the stairs) or because someone is trying to hide it (think computer crime). As a result, the demand for digital forensic services is booming.

Promising Niches: The crime-fighting side is where the action is. Companies that can assist investigations into phishing schemes, bank fraud, and child-exploitation cases will be in high demand. The ability to recover data from compromised machines and networks is also promising; it’s expected to account for half of all sector revenue over the next few years.

Barriers to Entry: You’ll need the technical chops to retrieve data from hard drives, networks, and the cloud, which has greatly complicated the tracking of data. You’ll also need to know about regulatory and compliance issues, and you may need certain security clearances if you pursue government work.

Competition: There are companies that specialize in this area, and traditional IT-services companies and large consulting organizations are also touting their forensic capabilities. Check out AccessData Group, D4 eDiscovery, and CaseDriven Technologies.

8
‘Appifying’ Business

As tablets become the de facto portable business device, companies want to help employees be more productive by making sure simple (but critical) functions are just an icon-press away. In this world, you are really limited only by your imagination. And coding ability.

Skill Set: The hot programming languages to know for building business apps are JavaScript and HTML5. From a software-design standpoint, think about building simple mobile apps that can be integrated to create larger applications.

Promising Niche: Corporate social software. Apps that help your employees share what (and who) they know with one another, so that one person’s connection becomes everyone’s connection. That can help with a number of things, from hiring the best people to landing new clients.

Who’s Buying?: The greatest demand is coming from financial services, manufacturing, the federal government, retail, communications, and high tech. Big companies tend to prefer big vendors, but if you have a clever app you can get their attention. Small and medium-size companies are more amenable to small businesses and even sole proprietors, but they don’t have deep pockets.

Competition: Have you visited an app store lately? It’s a crowded field, so in addition to searching out companies whose apps might be close (but not too close) to yours, also invest in social-media expertise and create a great website. Both are table stakes for getting noticed and can also highlight your tech savviness and industry knowledge.
Author Darren Dahl

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