From the December 2005 issue of Entrepreneur

Editor's note: The view a comprehensive list of our hot listings--plus our online exclusive on still-hot businesses from last year, past archives and even more information--visit our Hot Center .

Tea
Organic teas, latte mixes, herbs, fruits and spices--however you stir it, teas are exotic, enticing and steeping in opportunity. In fact, the $6.8 billion tea industry is one of the strongest beverage markets, on track to reach $10 billion by 2010, according to Don Montuori, acquisitions editor at Packaged Facts , a Rockville, Maryland, publisher of consumer market research.

Especially hot right now are ready-to-drink red, green and white specialty teas, which boast certain health properties. And they can be healthy for your bottom line, too, as Andy Schamisso, 42, discovered when he founded Inko's White Tea in 2002. Spying a niche, he developed a line of bottled white teas and enjoyed virtually zero competition for the first two years. The head start helped, and he recently introduced four new flavors: apricot, cherry vanilla, litchi and unsweetened honeysuckle. Now the only color this New York City-based white tea manufacturer sees is green, with projected 2005 sales of $2 million to $3 million. "Tea is a very exciting business," says Schamisso.

If a tea shop is more your style, Montuori advises setting up in a densely populated, youthful area and offering a wide variety of specialty teas. And if you're wondering whether tea shops are hip, consider Moby: The popular musician sent tea's cool factor sky-high when he opened trendy New York City tea cafe Teany in 2002.

Online Specialty Foods
Don't expect American consumers to settle for french fries and hamburgers anymore. Their taste buds--especially those of 25- to 34-year-olds--are becoming as specialized as their lifestyles are high-tech. As a result, they're increasingly turning to the internet for specialty foods ranging from gourmet cheeses and fine wines to gluten-free and diabetic-friendly products. "Younger generations are more likely to treat themselves every day, and that has fueled a lot of increase in specialty food," says Ron Tanner, vice president of communications and education at the National Association for the Specialty Food Trade Inc. in New York City.

According to Tanner, the retail specialty food business is a $24.7 billion industry that grew 17.9 percent between 2002 and 2004. Enjoying that growth are Sean Sullivan, 43, and Bill Fox, 46, who founded 1-800-Gourmet , a Cleveland-based online wholesaler and retailer of specialty foods, in 1999. The demand for their more than 3,000 items, from black truffles and pure saffron to Fair Trade jams, is best illustrated by their six-digit 2005 sales figures. Surprisingly, the majority of their current clients are men.

Perhaps even more surprising than men doing the grocery shopping, though, were the Supreme Court rulings earlier this year allowing interstate wine shipments. Let's drink to this new development, which should keep consumers clicking.

Do-It-Yourself Meal Preparation
Let's face it--we like things good, fast and easy. Hectic schedules barely leave enough time to eat, let alone cook. According to a 2005 national survey commissioned by ConAgra Foods Inc., an Omaha, Nebraska, packaged-food company, more than 70 percent of parents experience some type of stress associated with dinnertime.

The SOS hasn't gone unnoticed. Entrepreneurs are bringing a new concept to the table: DIY meal preparation. Customers attend sessions where, in just a couple of hours, they whip up enough meals to last a month. Once frozen, those meals become no-hassle dinners at a later date. Offering fun, stress-free cooking, this business idea has reached a boiling point, with franchises like Dinner By Design and Dream Dinners helping to spur growth.

Ron Paul, president of Technomic Inc. , a Chicago-based consulting and research firm for the food industry, believes the secret ingredient for success is the menu. "Offer a variety of choices so you're not turning off a consumer who wants fish, red meat or a vegetarian meal," he advises. "Offer all those alternatives to make sure you have the widest possible appeal." If your dishes are diverse, you should have no trouble finding your way straight to customers' hearts (and stomachs).

One-Product Restaurants
Specialization is the next stage of evolution in the restaurant industry, says Aaron Allen, founder and CEO of Orlando, Florida-based Quantified Marketing Group , a strategic marketing and PR firm for the restaurant industry. So bring on the restaurants selling only cream puffs, soup or cereal. Americans are hungry for them.

Jodene Jensen, 39, Ken Hall, 36, and Keri Barney, 36, gambled big when they opened P.B.Loco, a restaurant in St. Paul, Minnesota, in 2003. Some thought their idea for a restaurant specializing in peanut butter was nuts, but these former lawyers were confident they could strike it rich by giving a classic commodity a modern taste. They opened their first cafe in Minnesota's Mall of America, featuring low-carb wraps and unique sandwiches like "The Wacko," which combines Asian Curry Spice Peanut Butter with pickles, coconut and potato chips. Sound good? It's tasty enough that P.B.Loco has since become a multimillion-dollar business, with franchises selling faster than peanuts at a baseball game. Says Hall, "People feel very passionately about peanut butter."

Choose an adaptable product, find a niche, and get to know as much about the product as possible. "You have to be an expert in a particular area," says Allen. Do this, and you'll certainly stand out in the restaurant world, which has become, according to Allen, a $430 billion-per-year industry.

Chocolate Cafes
What's hot? Chocolate. What's not? Obsessing over calories. Just when Americans are about to make their New Year's resolutions, a sweet concept is tempting the nation. "People have wanted to indulge in having a little chocolate treat for a while, and [chocolate cafes] are an extension of that," says Susan Smith, senior vice president of public affairs for the Chocolate Manufacturers Association . Basing its numbers on Department of Commerce statistics, the Vienna, Virginia, association reports sales for chocolate candy products increased 5.6 percent last year to $15.3 billion.

America has a sweet tooth--leaving entrepreneurs with an opportunity to satisfy it. Mary and Norman Love, both 46, founded Norman Love Confections , a Fort Myers, Florida, confectionary manufacturer, in 2001. They gave customers more reason to indulge with the Chocolate Salon in 2004. Customers flock to experience ultrapremium handmade chocolates, pastries and hot cocoa featuring grated chocolate from faraway European lands. Says Norman, "People will drive one hour to sit down and eat a pastry that's an absolute artistic masterpiece."

For those thinking of joining the craze, Norman divulges a tantalizing secret: Make the goods on-site. The Chocolate Salon features a five-foot-long window through which customers can watch the chocolatiers in motion. With plans to open two more Salons by 2007 and $3 million in sales projected for this year, the Loves are having a sweet time. So step aside, Starbucks: Caffeine buzzes may be no match for sugar highs.--Sara Wilson

Security Businesses

Shredding
With identity theft on the rise, shredding personal information is de rigueur if companies are serious about protecting clients. And since the Fair and Accurate Credit Transaction Act went into effect in July--requiring businesses that possess records with consumer information to properly store and dispose of them--companies small and large have increasingly been outsourcing shredding.

There's so much interest, the National Association for Information Destruction has grown from 170 to 700 members in less than four years. And the need for quality shredding services will likely increase in the near future, according to Robert Johnson, executive director of NAID--especially if Senate bill S.1408 passes in 2006. That's the Identity Theft Protection Act, which would mandate document destruction for even more businesses. "With detection, apprehension and prosecution [of thieves] being so difficult, prevention is one of the only ways to fight [identity theft]," says Johnson.

Setting her company apart from the crowd is Michele Moody, 47, founder of DocuGuides Secure Shredding in San Antonio. Moody, who launched her business in 2002, focuses on security with high-quality shredding equipment that essentially pulverizes materials, which she then recycles. She's built yearly revenues to $400,000 by promoting not only the security she offers, but also her environmental commitment--she plants a tree for every client who shreds and recycles 100,000 pounds of paper.--Nichole L. Torres

ID-Theft Prevention and Recovery
Identity theft has become a clear and present danger to consumers, and now they're looking for ways to fight back. A June survey by Privacy & American Business and Deloitte & Touche estimates that 44 million American adults have been victims of identity fraud or theft, up from 33 million victims in 2003.

One of the first companies to take a proactive approach to identity theft is Identity Cops Inc. in Westbrook, Maine. The startup offers automated recovery services as well as proprietary web-based software that alerts subscribers to any suspicious activity. "This is not only a market that is ripe, but there are [also] a lot of people that need our help," says co-founder and vice president of technology Justin Page, 38. The company just launched its initial offering, a subscription service starting at $10 per month.

This market is still very young, but the demand is there, so expect it to grow quickly. Rebecca Weinstein, 38, president and co-founder of Identity Cops, says of the company's reception, "People are anxious to get their hands on a subscription because there has been so much publicity around the issue." Now's the time to get in on this untapped market.--Amanda C. Kooser

Hosted Security Provider
Businesses are outsourcing their websites, building security and power lunches, so why not outsource their IT security, too? Not many owners have time to monitor their networks for hackers, worms, viruses, or Trojans. They're looking for someone to do it for them. The market for hosted security providers is about to emerge.

Anil Miglani, senior vice president of research group AMI-Partners in New York City, has been keeping an eye on this growing market. She says there's plenty of room for new startups to provide technology security services. "Outsourced IT security is particularly attractive to smaller businesses, which often lack adequate IT savvy and don't have any full-time IT staff."

The internet may make you a global company, but sometimes your best prospects are close to home. "Most organizations prefer to outsource their IT security to local providers," says Miglani. "New startups can also focus on specific verticals like legal, health care and professional business services, as well as e-commerce businesses, which are very security-conscious."--A.C.K.

Data Backup
Whoops. There went six months of business data, all lost in the fickle failings of a dying hard drive. It would be poetic if it weren't so detrimental. A recent Gartner Inc. study showed that the worldwide storage-management software market alone was set for double-digit growth in 2005. Still, many companies either lack a backup solution or rely on outdated and ineffective methods. With laws like Sarbanes-Oxley in effect, data storage is more important than ever.

Many businesses are looking for a better way to back up. Lasso Logic in San Francisco has a simple message: Tape sucks. Their Lasso CDP (continuous data protection) backup appliance is proving to be a big hit with growing businesses, especially since it covers both on-site and remote backup in real time. With 2005 sales nearing $1 million, they're tapping into an underserved marketplace that's growing fast.

"Accounting, legal, medical, health-care and financial services--those are the types of businesses that seem to really have an acute awareness of how valuable their data is," says Anna Yen, 36, co-founder of Lasso Logic , along with Steve Goodman, 38, Dave Bernat, 40, and Sal Sferlazza, 31. For companies offering simpler, more reliable, real-time data backup systems, plenty of opportunities exist in hardware and software development as well as online backup options.--A.C.K.

Surveillance Cameras
With recent events like 9/11 and the London bombings fueling terrorism fears nationwide, we're seeing an increased interest in security and surveillance products. Video surveillance cameras are a huge part of that trend: Consulting firm Frost & Sullivan estimates surveillance cameras will be a $4.09 billion market by 2010.

Simon Harris, senior analyst at IMS Research in Wellingborough, England, believes much of the opportunity lies in software, particularly video content analysis software, a projected $839 million market by 2009. The applications, while widespread, include the ability to analyze live or recorded video streams to detect suspicious activities, events or behavior patterns. One market leader is ObjectVideo in Reston, Virginia. The multimillion-dollar firm creates security software products currently in use by several airports, the Marine Corps in Fallujah, and at U.S./Canada and U.S./Mexico border checkpoints.

IMS Research predicts that residential users, too, will be a huge market. Paul Brewer, co-founder of ObjectVideo, concurs, adding that installation and maintenance of the systems will be a hot opportunity. "As the technology gets out into the mass market, the opportunity is there for somebody to act as a channel for [manufacturers]," says Brewer, 38. Learn more by visiting the Securities Industry Association website .--April Y. Pennington

Tech and Home

Mobile Add-Ons
The mobile market is big--really big. A report by CTIA, an international association for the wireless telecommunications industry, estimates there are more than 180 million wireless customers in the U.S.--that's a lot of tiny screens. From business applications to software, digital content and more, the sky's the limit for innovative entrepreneurs. KidsOK in the United Kingdom, for one, has developed software that allows parents to track their children by pinging their cell phones with a text message.

Paul Scanlan, co-founder of MobiTV, a Berkeley, California, TV and radio service provider for mobile phones, says opportunities abound because many carriers are giving away phones with advanced capabilities, like watching TV. And as Scanlan, 35, points out: "In the internet market, most services [are] free, but in mobile, everybody is conditioned to pay for it."

At some point, though, consumers won't be able to afford all those cool services, right? Scanlan, whose business has grown from 15 to 115 employees in just two years, observes that increased data plans have been accompanied by cheaper voice plans, so consumers spend about the same amount. Huge market, better hardware and stable pricing--maybe it's time for you to get mobile, too.

Aftermarket Accessories
Consumers are embracing individuality: iPods don't need to be white, cell phones don't have to be silver, and it's OK for a game console to have flames on it--unless it's on fire. Thanks to skins, speakers, holders and more, our digital gadgets can now be our own.

One entrepreneur jumping on the trend is SkinIt co-founder Mike Stemple, 35, who launched his Golden, Colorado, company a year ago with his brothers Tom, 40, and Chris, 33. SkinIt creates personalized peel-and-stick skins for more than 1,000 different devices, from TiVo remotes to XM radios. "The accessory of choice has always been the content you put on your iPod or the game or ring tone you put on your phone," says Mike. "Now we're seeing a renaissance in the actual physical accessory market."

In this resurgence, customization, which lets consumers select from a limited set of options, has given way to personalization, which allows consumers infinite possibilities--to use their own image, for example. That's what SkinIt offers--and it has reaped the rewards, with sales exceeding $3 million in 2005.

Customization isn't dead, however. Opportunities range from adding functionality to changing the form factor of a product. Wrap an iPod in a case that resembles a porcupine or dock it in external speakers, and you've made it more appealing to a new demographic or changed the way it's used.--Steve Cooper

Home Improvement

Home Staging
When shows like HGTV's Designed to Sell and A&E's Sell This House become the water-cooler topics of choice, it's safe to say there's something to this home-staging brouhaha. And according to a 2003 HomeGain nation-wide survey of 2,000 real estate agents, home improvements in the $80 to $2,800 range made before a sale yielded the highest returns later.

Not surprisingly, staging--showcasing a property so it appeals to buyers--has become big business. That means decluttering, furnishing whole houses to look spectacular or creating vignettes for walk-throughs. Some entrepreneurs even diversify with services like consulting, junk hauling, move-in arranging, color consultation and personal shopping.

According to stagers we spoke with, you can get started with as little as $500 to $1,000 for a home office and marketing materials. Teresa Hagaman, president and founder of StagedRight Inc. in Berryville, Virginia, says you can expect to reinvest income into the business for the first three years. The 38-year-old has had to hire four employees, as sales have tripled each year since she began in early 2003.

But how will this business fare if the real estate bubble bursts? Trish Boyle, 40, founder of Stage Right Design in Westport, Connecticut, is optimistic: "There will still be people needing to buy and sell homes, and sellers will be at risk of losing equity, so they will need stagers even more."

 

Senior Retrofitting
According to AARP, 82 percent of midlife and older Americans wish to remain in their homes forever. With the oldest boomers turning 60 next year, this means you can expect to hear a lot more about retrofitting homes for senior living.

The National Association of Home Builders in Washington, DC, predicts that the aging-in-place remodeling market will comprise anywhere from $20 billion to $25 billion of the more than $214 billion remodeling market in the coming years. But "boomers don't want to see themselves as getting frail," says Jim Lapides of the NAHB Remodelors Council. Making stairs easier to climb or lowering light switches may ease the aging process, but many seniors won't seek out such retrofits.

So the NAHB encourages remodelers to cross-sell subtle retrofitting for aging in place when doing routine jobs in seniors' homes.

Networking is key to reaching this demo-graphic. Get started by targeting local clubs, insurance outfits and health-care professionals.--Michelle Prather

B2B Services

Technology Consulting
Check your MAC address; set up wireless WEP encryption; enable a VPN for half a dozen remote workers--you're not the only one wallowing in technology alphabet soup. That's why we're pegging technology consulting as a steamy growth area for 2006.

Businesses without in-house IT departments need experts to hook them up with everything from printers to internet security to wireless networks. But you can't just rush in with a computer toolkit and a few pieces of software. "One of the key requirements nowadays is to be able to deliver complete solutions to the customer," says Anil Miglani, senior vice president of research group AMI-Partners in New York City. If necessary, startups "should be open to partnering with others who can complement their own skill sets."

With the release of Windows Vista next year, look for more opportunities to open up. "The new Windows OS will create a new market as businesses upgrade and transition their existing applications," says Miglani. She also points to RFID consulting as an area set for growth. And in 2007, extended daylight-saving time goes into effect, which means all sorts of digital devices will need adjustments to handle the change. So polish up your technology expertise--lots of businesses are going to need your help.--A.C.K.

Staffing
As we've been saying for years, staffing is hot. According to data from the American Staffing Association, temporary and contract staffing services had combined sales totaling $16.9 billion in the second quarter of 2005, a 7.3 percent increase over the same period in 2004.

"The trend shaping the staffing industry is a growing shortage of skilled workers," says Roger E. Herman, CEO of The Herman Group, a work force consulting company in Greensboro, North Carolina. He points to shortages in almost all employment sectors: medical, retail, business services and hospitality, to name a few. Some fiery niches: supplying workers to help businesses meet Sarbanes-Oxley requirements, as well as placements for returning veterans.

Guiding companies into the red-hot medical staffing business is Dr. Jason Meyer, founder of Medical Staffing Consultants Inc. in Rockville Centre, New York. He advises entrepreneurs on challenges such as recruiting, licensing, malpractice insurance and securing the upfront capital to meet payroll before contracts are due.

Derek L. Riley and Jason C. Bleacher, 32-year-old co-founders of Immediate Care Option Network in York, Pennsylvania, have found success in the medical staffing arena. Started in 2001, their company supplies highly trained nurses to local hospitals, nursing homes and the like. Thanks to a second office recently opened in Florida, 2005 sales are projected to exceed $2.5 million.--N.L.T.

Tech Recycling
It's the digital age, and we've got a ton of technological gadgets to dispose of--from old laptops and monitors to cell phones and broken TV sets. "It's an issue that a lot more people are aware of, and more people are searching out their options [of how to] dispose of their old electronics equipment," says Jason Linnell, executive director of the National Center for Electronics Recycling.

Enter the technology-recycling (or "e-cycling") business. According to the International Association of Electronics Recyclers, there are 1.5 billion pounds of electronic equipment processed annually, and it estimates that in the next decade, about 3 billion units of consumer goods will be scrapped.

To enter this market, start by finding your niche. Possibilities include recycling and refurbishing cell phones for sale overseas, disposing of large companies' defunct tech equipment, and specializing in data destruction for old computer gear. And with states like California enacting programs to help fund tech recycling on the state level, expect even more entrepreneurial prospects in the near future.

The logistics of transporting and recycling e-waste can be challenging for startups, but don't let that stop you, says David DeMulle, director of OSS-Spectrum , an e-waste specialist in Tujunga, California, that publishes information for e-cycling startups on its site. For more on this red-hot industry, see "Wiping the Slate Clean" .--N.L.T.

Kids

You don't have to be under 18 to appreciate the fact that children's businesses are exploding. From educational products and services to tech gear and accessories just for kids, the markets are virtually wide open.

According to the Bureau of Labor Statistics, there were 35.4 million families with children under age 18 in 2004. Of these, more than 90 percent had at least one parent employed, and more than 70 percent of mothers were working moms. That's as strong an indicator as any that there's a huge need for products and services that make kids' lives educational, safe and enjoyable--and help ease the burden on parents.

And don't forget, those kids are going to grow up. Today's 18-year-olds will be 23 by 2011, and that's the makings of another baby boom-or as we like to think of it, the makings of an even greater need for children's products and services. In fact, we're pretty sure you're not getting any younger reading this. The time is now-and the opportunities are plenty.

Kids' Party/Activity Centers
Edutainment centers are just what they sound like: places where kids can take a class, play a sport or have a party--on someone else's turf. What parent wouldn't love it?

Today's savvy parents aren't looking for just a playground, however. Vicki Gersten was looking for quality educational programs for her sons, Jonah, 3, and Gabriel, 2. When Jonah was born, she took him "to every child enrichment class under the sun," says Gersten, founder of Jonah's Treehouse , a children's play and movement center in Washington, DC. When Gabriel was born, though, she "became a bit more discerning about which programs were top-notch and why."

So Gersten, 36, designed the kind of classes she knew she'd want for her own children, integrating movement, music, fantasy and developmentally appropriate curriculum. Jonah's Treehouse, which opened for business in September, is on track to hit $250,000 in gross revenue for 2006--and Gersten plans to open six more centers in the DC area over the next three years.

"Edutainment centers are both nourishing and fun for children," says Randy White, CEO of White Hutchinson Leisure & Learning Group Inc. in Kansas City, Missouri. White predicts the greatest growth with programs for children 8 and younger, and with centers targeting at-home moms with preschoolers.

Startup isn't cheap--"$100,000 and counting" for Gersten, who has thus far self-financed the venture. But all the dollars and cents are in the right place, it seems. After all, Jonah has a birthday coming up in February. Says Gersten, "Guess where he wants to hold his party?"

Child Care
These days, a baby-sitter just won't do. "Parents have seen the research," says Mark R. Ginsberg, executive director of the National Association for the Education of Young Children in Washington, DC. "They know that the early years are the learning years, and they're looking for programs that support all aspects of their children's development." Consider these figures from the Census Bureau: Nursery school enrollment increased from half a million 3- and 4-year-olds in 1964 to about 5 million in 2003. And more working parents means a greater need for quality child care.

So what are parents looking for? Enrichment activities are a big hit--such as on-site music, dance, sports and crafts. Parents also like the idea of giving their kids an early advantage via second-language and computer instruction. In many cases, these activities are taught by teachers or companies that partner with preschools and come in a few times a week for on-site instruction.

At Carpe Diem Private Preschool LLC in Richardson, Texas, founder Ashley Murphree offers much of what today's parents want--low child-teacher ratios, Spanish and music teachers, a computer lab--"everything you would expect" from a quality program, says Murphree, 32, who started Carpe Diem in 2001 with $2 million in loans. She opened a second location in Frisco, Texas, in August and expects combined sales of $2.5 million for 2005-up from $1.5 million last year.

Most important, says Murphree, is investing in a safe and comfortable facility, a professional staff and a great curriculum. At Carpe Diem, all the teachers hold degrees, are experienced and are given generous benefits--which makes for not only a high retention rate, but also happy children. "Our kids love to come to school," says Murphree. "They're not just doing work sheets."

Teaching Toys
The thing about educational toys is you can't let on that they're educational. Just let kids think they're playing. And in fact, if the toy is made right, that's exactly what they're doing--and learning, too. "You don't necessarily have to be playing with a true 'educational toy' to get educated," says Mark Carson, co-founder with his wife, Karen, of Fat Brain Toys, an online retailer, distributor and developer of educational toys. Since starting in 2001, the Carsons have zeroed in on a hot market that's only getting hotter: Teaching toys like the ones sold on the Fat Brain site are a big hit among parents.

Fat Brain has found its niche quietly and inexpensively with nonmainstream European specialty toys, games and gifts, and with "legacy toys"--things like Lincoln Logs, which require planning and decision making on the part of the kids using them. "Our only startup expenses were the products themselves," says Mark, 37, who expects sales of $2.8 million in 2005 for the Elkhorn, Nebraska, company. "We bought $600 worth of product, and it grew exponentially from there."

What's hot in this market won't necessarily have dozens of electronic bells and whistles (though there's a place for electronic toys that offer, say, math or phonics instruction). A simple Geomag building set, for instance, has just two components, yet "a 3-year-old can intuitively build three-dimensional structures [with it]," says Mark.

Another option, albeit more expensive: Create a product from scratch that's clearly educational, and put it in a package that sells in an instant. If you go this route, industry veteran Susan Rives recommends immersing yourself in your specialty market--through trade shows, product research, a well-thought-out business plan and prototypes--and preparing to spend over half a million dollars during startup.

"Come up with mock-up packaging," says Rives, co-founder with husband Bill of Seattle-based Scientific Explorer, a creator of science products that expects $5 million in sales for 2005. "[Make] prototypes, and take them to a regional show to get reactions."

Education & Tutoring Products & Services
Tutoring is a $4 billion market that's expected to grow up to 15 percent over the next few years, according to educational market research and consulting firm Eduventures. And with the No Child Left Behind Act on everyone's minds--from parents to school district officials--it's no wonder.

Among other things, the act requires public schools that aren't meeting performance standards to provide tutoring services to students. What's more, "parents are really aware of how demanding it is out there," says Francie Alexander, senior vice president and chief academic officer at children's publisher and media company Scholastic Inc. in New York City. "You can't start [preparing children] too early," she says--even if it's in preschool. Products and services designed to help students, teachers and school districts meet the requirements of NCLB are hotter than ever, including everything from tutoring centers to software and homework websites.

SchoolNet Inc. CEO Jonathan Harber is bringing in more than $16 million annually and expects 100 percent growth this year from providing K-12 educational institutions with software that tracks and monitors students' educational progress. According to Harber, who started New York City-based SchoolNet Inc. in 2001 out of a spare bedroom for less than $1,000, it's that kind of technology-based individualized attention that will be huge. "When I was a student, the 'one size fits all' approach was standard in education," says Harber, 41. "In the future . . . learning environments and experiences will be tailored to the needs . . . of each student."

Homework help is a hot area, too. Scholastic created Homework Hub, a website designed to help kids--and their busy parents--with things like book reports, math homework, test prep and study skills.

Cooking for Kids
In many homes, the mere suggestion of cooking is usually enough to get the little ones dragging a chair over to the counter, begging to help. Products like the Crafty Cooking Kits created by Jimmy and Andrea Zeilinger make the activity even more appealing. "Everything is included except one ingredient [that varies by kit]," says Andrea, 41, co-founder of Brand Castle LLC in Beachwood, Ohio.

"It's very rewarding to create a business where you're helping families spend time together," says Jimmy, 41, who started the company with Andrea in June 2004. The couple spent more than $1 million of their own and private investor money getting started. But all the preparation impressed Crayola, which decided to license its trademark to the Zeilingers. Now the kits are sold in select grocery stores and by mail order nationwide, and the couple expects 2006 sales of $10 million.

Cooking classes and camps are another great way to get kids into the chef's hat. Joanne Cogan, 48, and Anne Lawson, 47, launched Eurostoves Inc. , The Culinary Centre in 2004 and started offering classes for kids soon after. Now, half the Beverly, Massachusetts-based store's business is related to children and teens. "What is amazing is that children's activities were never part of the original business plan," says Cogan, who self-financed the venture with Lawson for $1.2 million. The company earned $100,000 in its first nine months of operation and is on track to earn $830,000 in 2005.

Keep in mind, you'll need lots of staff on hand to help--and it's not a tidy endeavor. Says Cogan, "Our kitchen is quite a sight after a teen baking class!"

Kids' Hair Salons
Walk into an average hair salon with an average toddler, and things can either go very right, or very wrong. So it's no surprise that parents--and kids--are grateful for places that make snipping fun.

At Karla Vandenberg's Boise, Idaho-based Monkey Dooz LLC , for instance, the haircut becomes secondary to everything else in the rain forest-themed hair salon, spa and party place: the monkeys dangling from the ceiling, the Hummer- and Mercedes-Benz-shaped chairs, and the myriad salon and spa services available to tots, tweens and teens alike. Offering everything from chocolate shampoos to personalized parties, Monkey Dooz has something for everyone.

And what about the ones footing the bill? "[Parents] get used to coming to Monkey Dooz and don't want to go anywhere else," says Vandenberg, 38, who opened her first location in Yakima, Washington, in 2001, and now has two others in the Northwest. With the addition of her new Boise location--launched in January for $110,000--she expects 2005 sales to reach $570,000, more than double last year's $230,000.

And while the National Cosmetology Association doesn't currently maintain data on children's hair salons, we think this market is hot--particularly places that include tweens and teens in the mix. After all, no matter what the age, kids like feeling good about themselves. "It's a self-esteem booster," says Vandenberg. "It makes [kids] feel special."

E-Tail for Kids
"Teens of all ages are more likely to report online shopping than they were in the past," says Amanda Lenhart, senior research specialist with the Pew Internet and American Life Project in Washington, DC, and co-author of the organization's recent "Teens and Technology" report. According to the report, 87 percent of Americans ages 12 to 17 used the net in 2004, up from 73 percent in 2000. Forty-three percent of them have purchased something online, and some 81 percent of wired teens play games online.

Things like concert tickets, ring tones and downloadable music will likely see the greatest growth over the coming years, according to Joseph Anthony, CEO of Vital Marketing , a New York City-based youth and multicultural marketing firm. It's these content- and entertainment-based products and services that are popular in the online space--because, simply put, kids still like to shop in real time. "They like the convenience of buying individual songs and personalizing their own phones," says Anthony. Hard-to-find items are likely to succeed, too--like video games and collectibles from Japan.

Above all, make sure your site isn't boring. Use good visuals targeting a young audience, teen-driven content, maybe even special contests and prizes.

And don't forget the parents: "It is important to remember that while teens have better access to credit or other repositories of digital cash," notes Lenhart, "many still have to ask a parent's permission and have them involved in an online purchase."

Tween Tech
From stripped-down keyboards and digital video cameras to two-way radios, cell phones, iPod cases and other aftermarket accessories, technology is no stranger to today's kids--and vice versa. According to the "2005 Tween Report" from Nickelodeon and Youth Intelligence, 9- to 14-year-olds are saving their allowances for more significant purchases-like technology--and spending an average of $27 on each shopping trip.

Not surprisingly, parents are looking for ways to maintain control, particularly when it comes to tweens. "Today's parents are constantly on the go to or from home, work, school and after-school activities," says Mark Weinzierl, 41, founder of Plano, Texas-based Enfora, which recently came out with TicTalk, a parent-controlled cell phone for tweens and teens. Enfora expects sales to reach $25 million this year. "TicTalk was designed as a result of parents requesting a safe and reliable way to stay connected with their children." Firefly Mobile Inc. offers a similarly downsized phone, and large toy companies like Hasbro and Mattel have recently come up with their own iterations as well.

But when it comes to tech, "you always have to be looking a generation ahead," says Joseph Anthony, CEO of youth and multicultural marketing firm Vital Marketing in New York City. Instant- and phone-text messaging are the new e-mail. Expect buddy icons or otherwise customized IM communications to be hot, along with IM tools that let kids post personal profiles, away messages and other customized communications.

You can expect tremendous growth among tweens, an as-yet-unsaturated market--but again, remember the parents. "Only 32 percent of younger teens have a cell phone, vs. 57 percent of older teens," says Amanda Lenhart of the Pew Internet and American Life Project. "Pure and simple, there is a lower level of market penetration with younger teens than older ones, so potentially larger opportunities exist. However, it is important to remember that issues of disposable income and parental control are greater in this age group than with older teens." --Karen E. Spaeder

 

Miscellaneous Businesses

Travel With a Purpose
For many consumers today, travel is more than just a change of scenery--it's a journey with a sense of purpose, whether it's eco-tourism, cultural immersion or adventure. Creating an experience for jet-setters can be your ticket to success in this $600 billion industry.

Baby boomers are the biggest market, with the highest volume of travel, says Cathy Keefe of the Travel Industry Association of America. They took a staggering 268.9 million trips in the U.S. in 2003, according to TIA's "2004 Domestic Travel Market Report." They not only have the time and disposable income to travel, but their sense of youth and yen for exploration is also spurring opportunity in the adventure-travel niche. While this segment can include extreme adventures like rappelling or white-water rafting, boomers typically seek out "soft" adventures like safaris, bird-watching and sailing. Keefe also notes a rise in luxury adventure tours, where days might be spent roughing it, but nights are spent in cozy quarters.

Other sizzling markets include women (think culinary tours and spa getaways) and adults who want to learn a new skill, sport or hobby--30.2 million adults, in fact, took an educational trip in the past three years, according to the same TIA report. Millennials (those born after 1982) hold tremendous opportunity for entrepreneurs as well. Millennials are an adventurous bunch and will go online to research and book trips. To learn more about offering travel services to any generation, Keefe suggests attending adventure and travel expos and industry conferences.

eBay Aftermarket
Few are unaware of the magic that is eBay. Since eBay's inception in 1995, an explosion of products, services and software has sprung forth to facilitate the millions of transactions that take place daily. The number of third-party applications to help users succeed on eBay has doubled over the past year, says Jim "Griff" Griffith, dean of eBay Education. It's not too late to jump in.

According to Griff, hot categories include management tools--software and services that help users launch and manage auctions, or track e-mails and contact information-as well as image hosting for the photos in listings. And with 724,000 businesses using eBay as a primary or secondary business channel, market analysis services are also in demand.

Millions of consumers who are reluctant or too busy to sell on eBay enlist the help of eBay drop-off stores, which handle everything from listings to shipping to customer service. In a new twist on the concept, San Francisco-based FoundValue has independent contractors make house calls to find eBay-appropriate merchandise to sell on their customers' behalf. Stella Kleiman launched FoundValue in 2003 after decluttering her apartment and selling the items on eBay. This year's sales are in the six-figure range, and Kleiman, 36, has impressed both customers and contractors with the ease of her service and low overhead.

With so many feeder business opportunities to explore, there's more than just a little nibbling going on. Consider this a feeding frenzy.

Patient Advocacy
Navigating the dizzying medical-care map can be both time-consuming and confusing. Add in long waits and runarounds, and you've got a lot of discouraged people aching for a solution. Though not a cure, patient advocacy services aim to facilitate the relationship between individuals and their health care--from locating the best doctors and specialists to researching treatment options and handling insurance claims.

Dr. Abbie Leibowitz launched one of the first patient advocacy businesses in 2001 with four other former Aetna U.S. Healthcare employees. Initially, they planned to offer their services as high-end perks for executives, but the business leaders they spoke to shared the same sentiment: All employees would benefit from such a service. "[It reinforced] the idea that this was a product for the masses," says Leibowitz, 58. Now expecting $8 million in 2005 sales, Health Advocate in Plymouth Meeting, Pennsylvania, counts both Fortune 1000 companies and small businesses as clients.

Of course, some entrepreneurs cater exclusively to affluent individuals and their families. But as Jack London, director of health-care consulting firm Apex Management Group's patient advocacy program, points out, opportunity is everywhere: "[Health] crises don't financially discriminate."

To get started, you'll need a thorough understanding of the health-care system--and a sense of compassion. "This field of medicine requires more than just a system," says London. "It needs a human touch."

Niche Exercise Accessories
Americans' desire to lose weight and get fit isn't slowing down. In fact, calorie-burners present a healthy opportunity for entrepreneurs. Whether they're hitting treadmills, health clubs or the local biking path, you can bet they want equipment, apparel, multimedia products and other aftermarket accessories to help them achieve a better workout.

The secret lies in finding the right niche. Yoga, Pilates and tai chi have all reached mainstream status--boasting nearly 23 million enthusiasts in the U.S. in 2004, according to the Sporting Goods Manufacturers Association. Lance Camisasca, trade-show director for the Health & Fitness Business Expo and Conference, says opportunity abounds in creating and selling related products such as mats, resistance bands, instructional videos and clothing: "It takes very little space in retail stores, but is very profitable."

Targeting groups, such as aging boomers or pregnant women, is another way to carve your niche. Pregnant women, for instance, have found maternal bliss with PiYo, a fusion of Pilates and yoga--and smart businesses are responding to the special needs of this group. Bess Hilpert, felt uncomfortable pressure under her belly while staying active during her pregnancy, but found nothing on the market to offer comfort and support. After nearly four years of R&D, Hilpert, 50, who previously owned an exercise physiology business, created a support piece that's built directly into exercise apparel. Mothers in Motion Inc., her Round Rock, Texas, business, is seeing healthy returns today, with 2006 sales projected to exceed $2.5 million.--A.Y.P.

Trailer Chic
The phrase "trailer trash" is not only just a wee bit rude--it also doesn't truly reflect the trailers of today, which are far more fabulous than preconceived notions would allow you to imagine. Consider the Loftcube, a transportable, modular "personalized living unit" designed by Studio Aisslinger in Berlin. Those who can afford to pay about $107,000 for a 420- or 635-square-foot pod (hitting the States early next year) will enjoy a change of scenery with a little space-age design. With trailer park residents, too, wanting to transform their double-wides into happening cribs a la MTV's Trailer Fabulous, this style of urban living is becoming increasingly acceptable and upping the demand for space-conscious products and services. Think interior design consulting for limited spaces, inventive ways to prevent clutter, even smaller electronics and modular furnishings that are hip and convenient.--M.P.

 

Emerging Industries and Business Trends

  • Robots: Roomba, the puck-shaped vacuum, has become a smash hit, with more than 1.2 million units sold since its launch in 2002. This holiday season, the makers of Roomba, iRobot, are offering Scooba, a new puck-bot that will mop your floors. While the all-in-one robot is still far away, domestic-chore robots continue to hit store shelves, such as Friendly Robotics' Robomow, an automatic lawn mower that cuts grass when you program it to, much like a sprinkler system. It's not too late for entrepreneurs to jump in--consumers are still waiting for practical robot solutions to tackle chores like window washing, pool cleaning and security.
  • Nanotech: Some say nanotechnology--the creation of materials at the molecular level, enhancing their capabilities--is this generation's "Plastics." Ecology Coatings of Akron, Ohio, for example, is already warping what's possible with the creation of "liquid solid" coatings, which flow like liquid and stay "wet" without drying or evaporating until they're hit with ultraviolet light--then they dry in just three seconds. There are other applications: Apollo Diamond cultures real diamonds one atom at a time. Clothing, lotion, diapers and medicine are all on the same path. What, you thought your wrinkle-free pants were magic?
  • Batteries: What do BlackBerries, iPods, PowerBooks, PSPs and Razrs all have in common? Batteries--which need to be docked, plugged in, charged or worst of all, replaced. As our world grows digital, opportunities bloom for businesses like A123Systems in Watertown, Massachusetts. A123Systems is working to improve today's batteries--shrinking them, increasing their run time, improving their power and making them charge faster. CEO David Vieau, 56, says, "Any new battery company will require bleeding-edge technology, high-quality and scalable manufacturing processes, environmentally friendly materials and financial backing to get good ideas off the ground."

--S.C.

Always on Your Mind
The burning issues business owners are thinking about:

The Viral Economy: To many, it seems like Google cornered the search engine market and dominated the lexicon of searching overnight. How did it happen? It wasn't through a huge ad campaign--Google profited from a superior product and today's viral economy.

The viral economy efficiently distributes opinions and experiences for the benefit of others. Buzz getting spread through word-of-mouth isn't a new phenomenon-what is new is how quickly the message is sent, thanks to the internet. With very little effort, friends can shoot acquaintances an e-mail or IM telling them of their favorable--or not so favorable--encounter with a business. The phrase "internet community" is highly appropriate when describing the viral economy because of the word community. In a traditional community, businesses flourish based on reputation. Now, the internet has paved Main Street to wrap around the world, allowing the little guy to compete with Goliath. In a viral economy, all businesses are equipped with the same slingshot.

Social Entrepreneurship: In 2004, Gap Inc. severed relationships with 70 overseas factories. Why? Because it was the right thing to do. The factories violated a code of conduct regarding child labor and ignored their social responsibility. American businesses are taking a hands-on approach to social responsibility in addition to their regular financial contributions to charities--in 2004, they donated an all-time high $3.6 billion, according to The Foundation Center. Last year, Home Depot alone contributed 50,000 employees and 2 million hours to community service. And today, more than 30 business schools, including the one at Harvard University, offer courses on social responsibility. Is your business solving social problems?

Building Green: Our nation's dependence on natural resources has never been more evident than during the aftermath of Hurricane Katrina. Within 24 hours of the storm making landfall, the price of gasoline shot through the stratosphere. But even before this tragedy, there were plenty of forward-thinking businesses building and operating green--using eco-friendly materials and processes along with sustainable alternate energy sources, such as solar power, to improve environmental, economic, health and productivity performance. Participation doesn't require you to construct a windmill in your parking lot-changes can be as simple as using more efficient light bulbs or adding motion sensors to save electricity when no one's in the office.

Letting Consumers Vote: In the words of Diddy, "Vote or die!" Well, it was P. Diddy back when he said it, but the message has stayed the same. For businesses, the interpretation could be literal, since the web has made it very easy for businesses to allow consumers to vote on their favorite products--sometimes without a business's involvement, as is the case with sites like Epinions.com. Aside from your standard grading, proactive businesses can ask consumers to vote on their next product, just as Mars Inc. did when deciding on a new M&M color. Getting consumers involved in the decision-making process gives them a vested interest in your business.

Fractional Ownership: Not all of us can afford our own jets or vacation homes. In fact, hardly any of us can; that's precisely why there's fractional ownership. But why stop at jets and vacation homes? Why not expand the fractional ownership model to other expensive products and services? Tour GCX Partners, for example, offers fractional membership to private golf courses nationwide. Club Sportiva lets you turn the key on 15 different exotic sports cars, from a 1969 Jaguar E-type roadster to a 2003 Porsche Boxster. In the gotta-have-it social world we live in today, offering consumers a piece of the pie could be a sweet deal for you.--S.C.

Where It's At
The housing market explosion--coupled with the nation's growing population--has pushed the development of new communities outside metropolitan areas. Those moving to new communities, however, still require the luxuries and conveniences they're used to-such as restaurants, housecleaning services and dry cleaners. That means opportunities for entrepreneurs. Here are the top 10 areas of the country seeing growth:

1. Daytona Beach, Florida
2. Greater Chicago
3. Washington, DC/Baltimore
4. Mitchell, South Dakota
5. Sioux Falls, South Dakota
6. Austin, Texas
7. Reno, Nevada
8. Elizabeth City, North Carolina
9. St. Johns County, Florida
10. Des Moines, Iowa

Source: U.S. Census Bureau, based on growth percentage

Consumer Trends

Consumers are thinking about this stuff--and you should be, too.

Environment: From driving hybrid cars and building with earth-friendly materials to recycling electronics like cell phones and computers, consumers are becoming steadily more interested in all things green. In a recent poll of American parents from The Center for a New American Dream, nearly 88 percent of respondents said they would likely purchase environmentally friendly products if they were avail-able at local stores. And Consumer Reports recently launched a website to educate consumers on environmental issues: www.greenerchoices.org.

Outsourcing everything: Not just for corporate back-office duties anymore, outsourcing is now a consumer prerogative for personal duties, too. Parents, for example, can now outsource traditional parenting chores--like potty-training or teaching kids to ride a bicycle--to professional service firms. Paul Parkin, a marketing and consumer-behavior expert and creative director of Salt Branding in San Francisco, notes this trend likely stems from time demands on working parents. Parkin notes that savvy marketing will help you convince parents you're providing the very best service--and win customers. --N.L.T.

Turn On and Tune In
Already have a business? You need to be aware of these trends.

1. Interactive self-service: Self-service kiosk purchases accounted for $247 billion in transactions in 2003, while self-checkout racked up nearly $124 billion. Bob Robicheaux, chairman of the department of management, marketing and industrial distribution at the University of Alabama, says that while some decry the lack of personalization, convenience is a good thing. But in cases where salesperson interaction is part of the experience, like the antiques biz, self-service isn't a good option.

2. Radio frequency identification: Wal-Mart has driven the biggest retail-industry change since stores started supersizing: RFID chips. Experts fantasize about the possibilities of RFID, from interactive mirrors that turn into point-of-sale displays to checkout-free shopping. Patrick J. Sweeney II, author of RFID for Dummies, says today's applications are more about inventory management. And Lauren Scott California has developed children's RFID-embedded sleepwear, which will allow consumers to track the locations of their little ones.

3. D é cor-conscious college students: The Trading Spaces generation is off to college--all 16.7 million of them--and they aren't content with cinder-block dorm walls. According to the National Retail Federation, young adults spent a whopping $3.6 billion on dorm furnishings in 2005. The craze is fueled by pop culture, says Ellen Tolley Davis of the NRF: "Students have been watching [home makeover] shows and got the message that it's good to spend money to make your space more comfy." Think affordable desks, beds, chairs and accessories.

4. Biometric payment: Touch here, and your debit card is charged. It may sound like sci-fi, but it's happening in retail now, says Mike Friedman of the Mercator Advisory Group, a payment industry research firm in Waltham, Massachusetts. With biometric payments, funds are usually drawn from the customer's bank account, lowering transaction fees. But acceptance might be an issue, says Friedman: "About 30 percent of people are OK with using their fingerprints, and 30 percent say 'No way.'" Long term, he predicts widespread adoption in some segments like grocery stores.

5. Empty nesters: According to the Census Bureau, the number of U.S. families with no children under 18 will increase by 28 percent, to 46 million, by 2010. They've got cash to spend, and they don't want to cook, says Jim Gilmartin, who heads Coming of Age Inc., a Lombard, Illinois, firm that helps businesses target the boomer market. Bring them in by making your restaurant friendly to aging eyes with good lighting and bigger font sizes on your menu, nixing booths for easier-to-maneuver tables and chairs, and offering healthy options.

6. Mediated shopping: Freedom of choice is getting to us. Sociologists even call our World Wide Web of options "tyranny," so there's opportunity in whittling down the uber-market, says Girish Punj, associate professor of marketing at the University of Connecticut. Mediated shopping--using customization or customer profiles to provide product or service recommendations--is one way to cash in. Use cookies, codes or cards to integrate customer profiles onto your site and in your store. Give customers deals on what they like to buy, says Punj, and you have a winner.

7. Online advertising: Web searches for local info doubled last year, as search engines become the new Yellow Pages. David Hallerman, senior analyst with eMarketer in New York City, says it's important to catch local customers online, either through search engines or links with local sites. No cash to hire a professional? Boost your rank with reciprocal links and on-site repetition of words.--Gwen Moran

Steve Cooper, Amanda C. Kooser, Nichole L. Torres and Sara Wilson are editorial staff members for Entrepreneur magazine. Gwen Moran, Michelle Prather and Karen E. Spaeder are freelance writers. Additional research by Genevieve Jenkins, Sharon Tang-Quan and Jeran Wittenstein.