You want your startup to succeed, so do we. In the process of funding over 2,000 new businesses in 2011 alone, we frequently get asked for input from our clients on specific businesses or industries. While we are happy to give specific advice, here is some general information we’ve learned about some of the best startups to launch in 2012.
A recent IBIS World research study reviewed the best industries for your next startup. They based their findings on 1) projected revenue growth 2) forecast enterprise growth over five years 3) 2011 profit margins 4) the low barrier to starting such a business 5) and the amount of capital required (our specialty).
According to Brian Bueno, economic research analyst at IBIS World, the economy beginning to stabilize and other conditions such as job growth, credit conditions, and consumer spending will put “more money in the pockets of consumers and various opportunities for new businesses.”
If you’re ready to start a business and want to improve your chances of success, read the descriptions below of which are the up and coming industries of 2012:
Everyone’s heard of energy drinks, but IBIS World’s research indicates that relaxation beverages are going to be big in 2012. Marketed for their relaxation or sleep promoting capabilities, the industry of relaxation beverages had a profit margin of 6.8 percent in 2011, as well as a low barrier to entry and minor capital requirements. Add this to the fact that the business grew 68.7 percent over the last five years (totaling $73.7 million) and suddenly, relaxation drinks are something to perk up about.
Social Network Game Development:
Now that smart phones are prevalent everywhere, the demand for game-related apps has accordingly increased: projected 5-year growth is an average of 24.4 percent annually. Even if the industry has a low barrier to entry, it does have medium capital requirements.
Internet Publishing and Broadcasting:
Having been in existence for years now, the continued popularity of smart phones and tablets has made the industry of internet publishing and broadcasting more in demand than ever. Also to its advantage are the low barriers to entry and little labor input required to get the business started. The numbers for the industry are also positive; in 2011 profit margins were 17 percent, and it’s projected to have the third largest annual revenue growth at 9.9 percent.
Corporate Wellness Services:
In an effort to keep healthcare costs down, many employers are looking more and more to using corporate wellness providers. The fact that these services also improve employee productivity makes it doubly popular, which would explain why there is a projected growth for the industry of an average annual rate of 8.7 percent. Businesses in this industry are considered require a low capital costs with only a medium barrier to entry.
Online Survey Software:
With all the different types of marketing platforms available to us (especially social media), more than ever, businesses are looking for a way to track and predict their customers shopping habits. Granted, this is a fairly new industry, but the average profit margin was 60 percent in 2011, and the five-year annual revenue growth is projected to be 9.6 percent. While the barrier to entry is low, it’s capital costs are considered high.
E-Commerce and Online Auctions:
No longer the new kid on the block, e-commerce/online auctions (i.e. Ebay and Amazon) are still successful, with a five-year projected revenue growth of 9.6 percent. With almost 2,000 U.S. based e-commerce firms expected to join the industry, IBIS World, suggested that niche startups have the highest likelihood of success.
Buried among the internet and wireless technological startups are wineries, which have a five-year annual revenue growth to be projected at 4.9 percent. Particularly hot are the American wines, which are expected to increase at an annual rate of 2.3 percent. What helps make this such a promising business to start is the rising per-capita consumption of wine, and the increasing acceptance of American wines by those in overseas markets. The profit margin for wineries in 2011 was 7.6 percent, which goes to show that there is a high demand for this market.
Human Resources and Benefits Administration:
Now that the economy is recovering, many companies are looking to strengthen their human resources department by hiring outside firms to manage employees and their benefits. There is an expected annual revenue growth of 4.2 percent over the next five years, and the average profit margin in 2011 was 9.7 percent.
Scientific and Economic Consulting:
Consulting industries are also on the rise, with medium entry barriers and low capital costs, they have the highest employment growths through to 2016. IBIS World believes that the industry is expected to achieve annual revenue growth of 3.8 percent.
While fast food and food service industries experienced a decline, street vendors has steadily been increasing. IBIS World explains, “the potential for new and successful startups is particularly high in…street vendors…During the past few years, the industry surged ahead because of new consumer demand for unique and gourmet food trucks.” The industry is projected to achieve average annual revenue growth of 3.7 percent over the next five years to 2016, for a total of $1.7 billion.
Like street vendors, ethnic supermarkets are a niche market with a lot of projected growth. IBIS World predicts that these industries will continue to grow “with changing consumer tastes and demographic trends,” and even though their 2011 profit margin was only 2.8 percent, another 365 markets are expected to open in 2012.
So if the economy is recovering at too slow a pace for you, and you’re ready to determine your own future, it helps to start looking at different industries to see which ones have promise. If you find the right balance between passion and aptitude for a business, you’ll be able to count yourself among the profitable numbers in no time. But in order to make a profit, we know you need money to get started. The Business Finance Store can help, fill out the form on the right to get information on potential funding opportunities for your startup.