NEW YORK – Jumping on the latest hot trend seems like a surefire way to strike entrepreneurial gold. But while yoga studios and gluten-free bakeries may be popular, investors and business consultants urge clients to take a broader view. Trends in society, including changing demographics and technology, are the best guide. Instead of joining the pack, prospective small business owners should look for a niche to fill.
Make life easier
The opportunity: Products or services that make life easier, particularly for the well-to-do.
Businesses that deliver ready-to-cook dinner ingredients or care for elderly relatives are good bets, says Brian Cohen, chairman of New York Angels, a group of investors that buy stakes in small or young companies.
Over and over again, the companies that are getting funding are serving upper-income people, Cohen says.
Why now? The economy is growing and people have more money to spend on things that aren’t necessities. As for elder care, people are living longer and are more likely to need help.
Entrepreneur beware: There’s already a lot of competition. Two companies, Blue Apron and Plated, already deliver dinner ingredients to a large part of the country. And home-care businesses abound.
Been there, doing that: Jen Collins Moore started Chicago-based Meez Meals, which delivers ready-to-cook ingredients to consumers, in 2010. She realized there was a demand for an ingredient delivery service when she worked with focus groups of women at a consumer products company. The women wanted to cook but didn’t have time to do all the work.
The opportunity: Organic, natural and gluten-free foods.
The market for gluten-free foods, estimated at $10.5 billion in 2013, is expected to grow to more than $15 billion by 2016, according to market research company Mintel. But rather than trying to come up with a product like another gluten-free muffin, consider a business that supports or services the gluten-free industry, says Dwight Richmond, a purchasing executive at Whole Foods, the grocery chain.
Why now? About 3 million people in the U.S. have celiac disease, an intolerance for gluten. Millions of others have food allergies. Many people are concerned about food additives like hormones and chemicals and foods that have been genetically modified. Others want what are called fair trade foods, produced by companies that treat their workers and the environment well.
Entrepreneur beware: By the time many would-be entrepreneurs grab hold of an idea, the field could be packed, says Dennis Ceru, adjunct professor of entrepreneurship at Babson College and a business consultant. The most hot trend is probably at least at its midpoint, he says.
See what other industries, what other business services or products support that trend. That might be an opportunity, he says.
Been there, doing that: Kelly LeDonni got the idea to sell labels and tags for gluten-free food after she was diagnosed with celiac disease. A tiny amount of gluten can make her very sick. She started Gluten Free Labels in February 2013, selling to consumers online.
Hunt and gather
The opportunity: Businesses that gather or process information.
Companies that use technology to gather information to use in all sorts of ways are valuable for websites or mobile apps that allow people and businesses to find the information they need, or to navigate daily life. Think businesses modeled after OpenTable, the online restaurant reservation service or Beauty Booked, a website that allows users to book appointments for hair and nail salons, spas and other personal care businesses.
Why now? Consumers and businesses expect to find answers to their questions online, and to accomplish tasks fast.
Entrepreneur beware: Hackers. They keep finding new ways to infiltrate computer systems and databases. Businesses must comply with laws that aim to protect consumer data.
Been there, doing that: Jalem Getz started Wantable, in 2012, selling makeup, accessories and lingerie based on information supplied by customers. Wantable first collects customers’ answers to detailed questions about their preferences for makeup, colors and clothes. Then, if they give Wantable access to their Facebook account, the Milwaukee company gathers information about their online purchases and searches.