How to Start a Kid-Focused Business

If you're a child at heart and an entrepreneur in spirit, you have what it takes to start one of these 5 fabulous kid-oriented businesses.
How to Start a Kid-Focused Business
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Do you fondly remember your favorite childhood toys? Do you have happy memories of long games of Monopoly or Risk? Do you find younger kids' perspectives interesting and often funny? When you see older kids horsing around, do you sometimes get the urge to join in?

If you answered yes to these questions, chances are you enjoy children and the way they play. Chances are also good that you'd enjoy being a part of that play time. You can achieve that by starting a kids-related business. As you'll discover in this article, now is a great time to do it.

First things first, however. No matter what your background, skills or interests might be, a solid understanding of the kids' industry is crucial before you decide where your own special niche might lie. Read on to find out whether a business catering to kids might be for you.

Kids' Industry Overview
There's no shortage of potential customers in this industry: According to the Federal Interagency Forum on Child and Family Statistics, more than 73 million children under age 18 live in America, and this number is growing every year. Birth rates in the late '80s and '90s were the highest recorded since the end of the famed baby boom in 1964. By 2020, the number of children is projected to reach 80 million and to account for approximately 24 percent of the U.S. population.

The size of the kids' population is good news. So is the fact that parents and grandparents are spending more money than ever on children. Most compelling of all, however, is the surge in kids' own purchasing power.

Because of changes in the social and family roles of children, recent decades have seen sharp increases not only in kids' direct spending but also in their influence on household spending. In the 1960s, an era when kids were largely expected to be "seen and not heard," children influenced an estimated $5 billion of their parents' purchases. Kids now influence upwards of $500 billion in household spending, including food, toiletries, and a host of other items (even the family car!) outside the traditional realm of kids' products.

So how much do kids spend on products for their own use? According to research conducted by American Demographics magazine, 4-to-12-year-olds spend more than $40 billion, while teenagers (ages 12 to 19) spend $155 billion of their own money.

There's no question children have more money of their own than ever before-and businesses know it. Children today are the subjects of an unprecedented marketing blitz, not only on TV, but also in school. According to the American Psychological Association, Madison Avenue spends more than $12 billion a year on marketing to children. Child psychologists estimate that the average child sees 40,000 advertisements each year, and that the average 3-year-old can identify 100 brand logos.

What does this mean to you? Children are savvier consumers than ever before. They know what products and toys are out there. To make sure your business will stand out in this marketplace, you have to be sure you're providing something that kids want-and that means doing lots of research. Let's start with the following overview of the five kinds of kids' businesses profiled in this book and the trends shaping each of their industries. In the next chapter, you'll find more details about how to carve out a specialized niche in one of these businesses.

Trends in Kids' Businesses
Each of the following kids' businesses-party planning, gift and bath products, educational toys and games, plus-size clothing and cooking classes-is covered in-depth in separate chapters in Kids'-Focused Businesses Startup Guide. For now, here's a quick industry analysis for each.

Kids' Party Planning
This is a booming industry, especially in the teen party sector, where coming-of-age parties are increasingly popular. In addition to the traditional birthday and graduation events, bar and bat mitzvahs and sweet 16 parties signal a trend toward increased celebration of kids' milestones. Given the significant Hispanic population, quinceñera (age 15) parties in particular can be expected to rise in popularity.

Although no numbers exist for this market, experts predict that the industry will continue to grow, as parents provide not only a greater number of parties but also more expensive ones for their children.

Kids' Gift and Bath Products
The sheer breadth of this category, which encompasses everything from books and music to fragrances, makes it a promising market.

Just to take one tiny subset of the market as an example, parents spend more than $80 million annually on baby soaps in food, drug and discount stores (and that's not even including Wal-mart), according to market research company Information Resources.

Consider, too, another small segment of the market: baby gifts. According to the U.S. Census Bureau, American births are holding steady at approximately 4 million per year. Multiply that 4 million by the number of gifts given per baby, and you get promising potential in baby gifts alone.

Since spending on and by children typically increases every year, kids' gift and bath products should be a strong market for the foreseeable future.

Kids' Educational Toys and Games
The Toy Industry Association estimates that the traditional toy industry (which doesn't include electronics such as video games and handheld electronic games) is worth an estimated $22 billion in annual sales, with nearly half those sales being generated during the holidays (see "Toy Story" on page 1.4 for a breakdown of popular toy categories). Educational games like Cranium have enjoyed huge mass appeal. In the eight years since its inception, this board game, together with its sibling titles, has sold more than 15 million games in 10 languages and 30 countries. Educational toys like the LeapFrog learning laptops have also been popular. Industry observers believe that educational toys' mass-market appeal will only continue to grow, as parents continue to search for meaningful enrichment activities for their children.

Kids' Plus-Size Clothing
Childhood obesity has become an important issue over the past decade. According to the National Health and Nutrition Examination Survey, one-third of U.S. children and teens are either obese or on the brink of becoming so. Babies are also larger than ever before, so interest in clothes and equipment for bigger babies and children can only continue to increase.

What's the size of this market? According to a new study from the Packaged Facts Division of Marketresearch.com, sales of women's/girls' plus-size apparel is $47 billion, accounting for 27 percent of all clothing sales and nearly 40 percent of all women's/girls' apparel sales. And let's not forget the boys: Men's/boys' big-and-tall sales are $29 billion, representing more than 16 percent of all clothing sales and 50 percent of all men's/boys' apparel. And there's no sign of this market slowing down any time soon.

The NPD Group estimates that in the 9-to-12 age group, 31 percent of boys and 38 percent of girls are sizing up and wearing men's, juniors' or women's sizes. Global Purchasing Co., a retail strategy planning and training firm, notes that the availability of attractive, flattering and stylish children's plus-size clothing is scarce, and that mothers and children alike are dissatisfied with the selection and styles.

Kids' Cooking Classes
Parents want their kids to be well-rounded and high-functioning adults. Yet many people either do not have time or do not feel qualified to teach their children traditional skills. Interest has grown in classes that teach cooking, sewing, carpentry and even etiquette. Cooking classes and products for kids have become especially popular.

The proliferation of cooking shows on TV and a recent educational emphasis on health and cooking in response to the childhood obesity epidemic have also added to the number of kids interested in experimenting in the kitchen. According to the Food Network, TV chefs such as Rachael Ray often draw more tween fans than 35-to-45-year-olds at public events. The Bay Area is currently leading the kids' cooking trend, with interest high in cookbooks, cooking demos and classes, but this market can be expected to keep growing nationwide.

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