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Hot Stuff

Millions of people: How do you get to them? Endless opportunities: How do you take advantage of them?
December 1, 1999
URL: http://www.entrepreneur.com/article/25962

It used to be that the ubiquitous "hot lists" were more hype than hot. But these days, who needs hype? Sure, the hype is full-blown and millennium-powered. But for once, the pure reality is many degrees hotter than the hype.

Consider one of our hottest trends, e-commerce. What can we say about e-commerce that isn't surpassed by the technological miracles we see daily? While much of the furor over the year 2000 is egocentric vapor, the Internet will prove to be our rock-solid legacy. It's our version 2.0 of the Industrial Revolution, with one major improvement: The revolutionaries aren't factory-running capitalists-they're entrepreneurs running corporations from their desktops. E-commerce isn't merely hot; it's history in the making.

Simultaneously, the eve of 2000 finds us hitting a high note in consumerism. Drunk with the fruits of a strong economy, many people have more money than ever before and are itching to spend it. To better determine what's hot to the all-important consumer, we examined this year's trends according to demographic groups. And we found these groups are more than the sum of their catchy monikers-Generation Xers, tweens and the like are savvy consumers and major economic drivers.

Consider the hottest of today's markets: teenagers. Proving the power of their opinion and their pockets, if not judgments, they handed the Backstreet Boys the highest first-week album sales by any artist . ever. Their fanatical approach to consumerism has everyone from Hollywood moguls to Madison Avenue veterans squealing like 14-year-olds at a Britney Spears concert. Today's teens have Internet access, credit card authority and an overwhelming desire to spend, spend, spend. The last time a market generated this much heat, we were just becoming acquainted with the term "baby boomers." Now cutting-edge entrepreneurs are saying goodbye, BMW; hello, WB.

In addition, we've selected a number of nonage-discriminatory markets or life situations (for example, people who are stressed for time) that hot businesses will be operating in or selling products and services to-and show that when trends and markets collide, hot businesses are born. We've pinpointed 15 hot businesses for 2000-some traditional, some futuristic, each with undeniable potential.

Sure, you may be tired of all things hot. But this is not your father's popularity contest, nor your mother's "in" and "out" list. This is the beginning of the new economy as we know it. So before you take one more step toward the future, read this, our most important "hot" list to date.

Babies/Kids

It's a small, small world, and you'd better get used to it. Anyone who's spent time around children knows the whole universe revolves around their pint-sized needs. And it isn't any different for you as an entrepreneur. An estimated 4 million babies will be born next year, and the U.S. Census Bureau projects that number will gradually increase, reaching a birth rate of 5.7 million per year by 2050. Though you may at first think your business has nothing to do with kids, think again. Kids influence parents' purchasing decisions from the time they can talk-probably even from the time they can point. That minivan is cool; that restaurant has the best kid's meals. And if you want it to be your restaurant or toy that's the coolest, read on to find out what our younger friends (and their parents) will be begging for in 2000.

Infants

Who are the new leaders of hip? You got it, baby. Parents are dressing babies in miniaturized chic brands like DKNY, Eddie Bauer and Tommy Hilfiger, and also letting the little ones indulge in upscale luxuries such as beauty products and organic baby food. And don't assume that cashmere sweater from BabyGap is out of the question because parents can't afford it--30 percent of apparel purchases for infants are gifts, and grandparents (that is, adults age 55-plus) account for $2.2 billion of the $17 billion infant market. Also be on the lookout for toddler products: Rather than continuing to treat this niche as an extension of infants or preschoolers, today's marketers are developing products specifically for toddlers, such as bridge foods.

Hot Business: Toddler Tech

Just when you thought there were no new frontiers for the computer industry . here comes lapware-software for babies and toddlers that reacts to the simplest stimuli: tapping on a mouse or the keyboard. This industry grew 18.5 percent in sales from 1997 to 1998, with units sold growing by 63 percent. Be warned, however: Much of the industry is controlled by large corporations, but true lapware-that is, for infants-is still relatively new turf. And the Web is the last frontier for the drooling set. Most pre-readers aren't yet attracted to the mostly text-based Web-that is, until your site full of interactive animation, games and photos goes live.

For examples, check out a Web portal for 3-to-7-year-olds at www.alfy.com, multimedia activities aimed at kids at www.mamamedia.com, or baby software at www.babywow.com

Preschool/gradeschool

Surrounded by character-driven marketing from an early age (can you say Nick Jr.?), kids are influencing purchases earlier than you might think. During an online chat conducted with parents of 2-to-5-year-olds, Kid Think Inc., a youth marketing consulting group, found brand-conscious kids start becoming aware of what products their parents buy between ages 2 and 3, and 75 percent of parents said their children often make specific brand requests.

"Any product or service kids ultimately use, they have great influence on," says Mark Wesling, vice president at SmallTalk, a kids marketing consultancy in Cincinnati. "The argument is: 'Hey mom-you're gonna get this for me anyway. Why not get me the one I want?'"

With the influx of working parents and highly scheduled days for kids, Rachel Geller sees parents wanting ways to connect to their independent kids, and kids wanting ways to feel even more independent. "Anything that smacks of technology and answers a parental need to protect their kids is going to be important," says Geller, chief strategic officer and founding partner of Geppetto Group, a kid and teen advertising agency and marketing consultancy in New York City. That could include anything from voice mail for kids to kid-sized electronic organizers. Products like easy-prep food or room organizers can help children feel more independent.

With kids acting more like busy adults and parents acting like kids to ease their stress, the new marketing term is "kidulthood." "Adults are acting more like teens," says Geller. "They feel they have the right to have time and money to themselves. On the other hand, you see kids acting much more mature and having stress and responsibility. It's an opportunity for family marketers to actually be able to take almost the same benefits--relaxation, entertainment and stimulus--and market it to all ages."

Tweens

As 9-to-12-year-olds approach puberty, they'll continue to aspire to teenhood, plus deal with their own fears about the changes in their lives.

"Mysticism is a way for girls to play out scary fun," says Geller, citing the growing popularity of dragons and shows like Sabrina, the Teenage Witch and Charmed. "Scary for boys has traditionally been action figures, sports and [superheroes]."

Tween girls are also finding heroes in sports figures, such as soccer star Mia Hamm, and superheroines, like the anime-style PowerPuff Girls and Marvel Media's She-Hulk and Spider Girl. "It's a new sensitivity about girls. There's no question that girls are taking on much fuller, more multidimensional personalities," says Geller.

Meanwhile, the lives of tween boys are still very much centered around sports, especially extreme sports, while computer games, video games and anime remain popular.

Hot Business: Upscale Kids' Photos

Birthdays, school graduations, lost teeth-parents can always find an excuse for a photo op, and upscale photographers ready to snap the pictures. Approximately 8,000 of the Professional Photographers of America's (PPA) 14,000 members are child- and family-portrait photographers, and according to those in the trenches, business has never been better. "Our business has absolutely gone through the roof this year. It's like a wildfire," says Angela Carson, chair of the Children and Family Special Advisory Group for the PPA and owner of Angela Carson Photography in Northville, Michigan. Photo trends she's witnessed include more black-and-white photography (which now comprises 30 to 40 percent of her business) and portraits taken on location.

"The increase [in children's photography]," says Carson, "is probably three-fold: One is just the sheer number of children. Two is that as parents get older, I think they value and understand that their children are only going to be little for a short time. And three, honestly, is just the current discretionary [income]. Everybody's got money right now."

For more information on kids' photography, check out the PPA's Web site at www.ppa-world.org

Teens

When the Backstreet Boys' Millennium album sells 1.1 million copies its first week, dusting former record-holder Garth Brooks, you know who rules the school. Teens are it.

In denial? The U.S. Census Bureau estimates that by 2010, the nation's teen population will grow from today's 31 million to 35 million, surpassing the much-hyped boomers in number. According to Teenage Research Unlimited, the typical teen spends $89 a week. And Business Week reported one in nine high school kids has a credit card co-signed by a parent. Today's favorite motion picture subjects (teens, duh) spent $141 billion in 1998-up $20 billion from 1997, according to Teenage Research Unlimited. Needless to say, they're a force to be reckoned with. And their greatest asset: They have no problem voicing their opinions.

Born after Apple IIEs were hot, teens naturally gravitate toward the Internet to entertain themselves and chat with friends. New York City-based Jupiter Communications predicts that by 2002, 16 million 13- to 19-year-olds will be online-nearly double the current total.

Aside from teens' propensity to glue themselves to their computer monitors, shopping and sports rank as popular activities. And although teens are still buying into very '90s pop culture: rave chic, Japanese hip, hip-hop cool and the Woodstock '99 "anything goes" mentality, they're about to embark on a trip to Glam 2000. TV hits like That '70s Show and upcoming movies like Charlie's Angels and a couple Battlestar Galactica remakes will bring even more glitter and blow-up furniture into the lives of teen girls going on 20. For guys, ESPN's X Games and MP3 mania have only strengthened "core" sports and music dominant interests. But don't forget-if you discount girls in regard to traditionally "boy" things, you're so out of it.

Hot Business: Teen Beauty Store

Before you turn your nose up at the originality of a beauty store, do you know how many currently cater to young girls? Michael Wood of Teenage Research Unlimited affirms the need: "Teens like to test products before purchasing them-that's part of the fun." But full-force fun can't be had in a department or drug store. Teen girls need a place just for them.

Enter Patsy and Tony Hirsch, both 43, owners of teen-targeted beauty and multimedia store Skin Market. Their 9-month-old Los Angeles favorite among young hipsters took "a lot" of start-up capital, says Tony, who notes developing a line of 1,000 beauty products is costly. But the response has been overwhelming--so much so that, by request, Skin Market now hosts after-hours birthday parties where girls can get makeovers, listen to music and read magazines, all for a minimum purchase requirement.

"We understand [from being the parents of two girls-a teen and a tween] what it's like to be a teenage girl with dysfunctional families, [loser] boyfriends, zits and insecurities," says Tony. "And we built a store around that."

So far, offerings include music, lifestyle books and beauty products-even break-up kits with voodoo dolls-in a comfy couch setting lighted by throwback lamps and TV screens. And unlike in most department stores, Britney Spears and Madonna help supply background music. Skin Market's online presence is currently in the works--a good thing, because in this day and age, an interactive Web site (think heavy content with personalized advice for using products and e-commerce capabilities) that complements your brick-and-mortar concept is a must for grabbing teens' attention. Says Wood, "You can't compete against it."

Hot Business: Niche Label Clothing

Teens will be teens, and as we know, they're a fickle lot. Their lack of long-term loyalty to any particular clothing brand has sent formerly "hot" giants like Nike and Levi's to the drawing board, thinking up youth-grabbing ad campaigns to win back the segment that Promo magazine says spent $27 billion of their own money last year. That's why niche, or indie, labels that round out specific lifestyles--be it skate, surf, punk, hip-hop or rave--are thriving, even without excessive marketing bulk.

Take twin brothers Sean and Barrett Murphy, 31, and their Santa Barbara, California, clothing company L&H Apparel Inc., makers of the Porn Star clothing line. In only their fourth year in business, they expect to gross $12 million to $15 million, and predict as much as $20 million by 2001. Never heard of them? Don't forget about teen word-of-mouth. "Now teens all over the country see or hear about cool new clothes more quickly, and they're getting access to them through direct-mail and Internet businesses, which have sprung up and been able to roll out on a national level much more quickly than specialty stores," says Hunter Heaney, president and CEO of teen-focused interactive magazine MXG in Manhattan Beach, California.

Although the Murphy brothers started with $350,000 in funding from partner Charles Logue, Sean says $250,000 would have sufficed to get the line made, do minimal advertising, hire a sales force, secure a warehouse, go to trade shows, take orders and cover travel expenses.

Targeting a lifestyle tends to be the risk. "The thing that's cool about our line is 'Porn Star' doesn't really mean anything," says Sean, whose company recently launched its less "edgy" Starlette line. "It's just so broad." Launching a too-specific lifestyle brand could be label suicide, given fleeting trends, but if you heed the advice of a pro, you should fare well. Says Sean, "[Brands] should find their identity and roll with it." Because remember: Teens can smell insincerity miles away.

Twentysomethings

In a nutshell, today's twentysomethings are generally seeking and preparing for a bright future-but they're doing it in the most modern manner. Whether by embracing "digital living," as marketing consulting firm The Zandl Group calls it, or by redefining the boundaries of love and marriage, this set of increasingly affluent consumers ranges from unsettled adults still clinging to their teenage years to heads of top Internet companies earning $1 million or more a year.

Trading stocks, shopping and meeting people online top the list of "What's Getting Cooler" in the digital living arena, according to The Zandl Group's findings. Retro fever ('80s music and cocktails rated highest in the retro category) also tickles the fancies of today's go-getters.

Although they're not a generation born into high-tech, twentysomethings find the efficiency they crave by shopping at e-commerce businesses. Content-commerce models that partner with big-name lifestyle brands-from Food & Wine magazine to J. Crew-fare well, giving users one-stop destinations for their wining and dining, clothing and travel needs.

As for domestic twentysomethings, Rutgers University's National Marriage Project study, released in July, found a 43 percent drop in the marriage rate from 1960 to 1996 due to later-in-life marriages and unmarried cohabitation. With the latter in mind, demand is increasing for traditional appliances with a new-retro feel and furnishings able to capture the essence of busy lives.

With lifestyles running the gamut from eclectic to traditional, twentysomethings aren't an easy category to peg or market to. As long as you present them with products and services so they can live in style-and affordably doesn't hurt-without trying to force-feed your concept, you'll win over this up-and-coming generation of high-end shoppers.

Hot Business: Matchmaking

No, we're not talking about video-based matchmaking here. The experts agree that Y2K twentysomethings wouldn't think of fast-forwarding through hundreds of awkward personality pitches.

Where it's at is online. What started with chat-room flirting has turned into actual entrepreneurial endeavors allowing friends and strangers to "meet" via anonymous e-mail indications of their crushes. Non-traditional, yes-but a match remains the goal. Take Clark Benson and Karen DeMars' eCrush service (http://www.ecrush.com), with offices in Los Angeles and San Francisco. DeMars, 29, sees it as an "electronic note passer," which, utilizing a proprietary database process, searches for two people who have proclaimed crushes on each other, and e-mails both users simultaneously.

It took about $100,000 of 31-year-old Benson's seed capital to start, but with increased ad sales, sponsorships and affiliate programs, eCrush is starting to see revenues.

"It's a safer way to meet people, and it's easy," says DeMars. "You could be sitting in your pajamas having a beer in front of your computer." And when you consider the emerging market-teens who've grown up doing everything online-the service seems not only more necessary, but also more lucrative.

Irma Zandl, founder and president of The Zandl Group, agrees. "People are outsourcing everything," she says, "including the dating game." But if you're attempting a more traditional matchmaking service online, Zandl says thorough evaluations of prospects will only strengthen business in these questionable times.

Don't forget real-world matchmaking ventures, however. Thirty-two-year-old Nancy Slotnick, owner of Drip, a New York City coffee, liquor and dessert bar of love connections, had so many request her house special-date arrangements-that she decided to franchise the concept.

It all makes sense, really. If twentysomethings are waiting longer to walk down the aisle or disregarding it completely, they've obviously embraced "All You Need Is Love."

Gen X

According to American Demographics, there are approximately 44 million Gen Xers in the nation. So why have they been so overshadowed by other groups for the past couple years? Obviously, because we're so caught up in teendom. That's why you, the entrepreneur, need to learn from the mistakes of many of the boomers, who completely missed their cue to market to this segment, sadly dubbing them the Slacker Generation.

Too bad for them, because now Xers are typically known as a well-educated bunch with money to spend-garnered from investments or money saved during the extended waiting period to start families.

Now that many have their nest eggs-and nests-in place, consumer categories like children's clothing, home furnishings and hip maternity wear continue to grow. Again, online appears to be the destination for Gen-X shoppers seeking an alternative to malls. We've seen everything from Euro-babywear and fashionable maternity clothing dealers (http://www.estyle.com) to online retailers touting mid-century modern furniture.

Whatever the product, it needs to enhance, not complicate, Xers lives. Remember, this recession-addled latch-key generation grew up in turbulent times of its own.

Hot Business: Instant Spa

The last thing a Gen Xer wants is to start feeling like a boomer. With such a fast-paced society, feeling older happens sooner than we would like. Thank heaven for those simple pleasures that make us feel good: a nice hair cut, a pedicure, a massage. So why not combine all the elements and offer total one-stop beautification? That's what Aspen is for, you say? Wrong.

"If it's labeled in terms of the normal spa-treatment, it's not going to fly," says Michael Blackstone, president and marketing director of marketing and research firm The Gen-X Press. "You have to put a different spin on it-make it a little more hip and fashionable."

We envision an open-air mall storefront, where consumers can make appointments just as they would for a hair salon, but receive a wider variety of feel-good services and fit it all in before their lunch breaks are over. Blackstone suggests including unusual activities on the menu-perhaps a half-hour of trampoline-jumping stimulation. And be sure to build a strong Web site where clients can schedule their appointments and get more information.

Still somewhat conscious of pesky '80s excess, Xers would have a hard time turning down a place where they could feel better without retreating from work for a week and paying thousands of dollars.

Boomers

Baby boomers are like Peter Pan: They don't want to grow up. And like that storybook character from never-never land, these 76 million people aged 35 to 53 will give new meaning to the process of aging, just as they've changed every other stage of the life cycle.

Who the boomers are and what they want depends on whom you talk to. For example, a 1999 American Demographics article described 50-something boomers as in a downshifting mode. They're taking their affluent lifestyles into semi-retirement in rural areas and savoring the slower pace. According to the report, 6 percent of boomers have already retired, and many others have cut back on work and taken part-time jobs.

On the other hand, researcher and marketer Phil Goodman of Generation Transitional Marketing, a division of Boomer Marketing, says a big portion of this population will never be empty nesters. "In 1997, there were 8 million boomer grandparents. Of that 8 million, 28 percent had children from second and third marriages who are almost the same age as grandchildren from their first marriages," points out Goodman. "According to the U.S. Census Bureau, in 2006, households headed by people 55 to 64 with children aged 12 to 17 living with them will be eight times greater than the number in 1996."

Goodman also believes most boomers won't retire early due to their debts. "Boomers spent a lot of money upfront," he says. "They're the 'now' generation; they don't wait [to make purchases] like their parents did."

These contradictions are par for the course, says Eric Kingson, a professor in the school of social work at Syracuse University in Syracuse, New York, noting the inevitable diversity in such a large group. "And I don't simply mean ethnic diversity," he explains. "They're also diverse in terms of pensions, income, culture, race, gender, health status and social class. Many will have a choice of how and when they retire; some won't."

What does this all mean for entrepreneurial businesses attempting to reach this group? Simply put, segmentation is the order of the day. Here are some of the subgroups entrepreneurs should take a close look at when they try to target boomers:

In terms of potential business bonanzas, think younger. "The key to appealing to boomers as they reach 50 is to appeal to them as if they were 35 to 40," says Goodman. "We're dealing with the adult teenage population of the '60s and '70s."

Goodman adds that Boomers will spend more time traveling with their children than previous generations and are big on holistic health care and exercise. In keeping with the Peter Pan mentality, aging boomers may come to be known as the Rogaine and Viagra generation, suspects Kingston.

Whatever business opportunities entrepreneurs use to chase this perennially prime demographic, it's critical to remember that while boomers as a group do have some similarities among them, you'll need to think small to successfully market to them.

Seniors

Getting old ain't what it used to be. And nothing illustrates the point better than a passage from the book Age Power (J.P. Tarcher), written by psychologist and gerontologist Ken Dychtwald:

"When I first met my literary agent, he told me he remembered attending his grandfather's funeral," says Dychtwald. "Although he was just a young boy, he distinctly recalled people commenting that his grandfather, who'd died at age 62, had lived a long life and died an 'old man.' As fate would have it, [the agent's] father died at the exact same age, 62. At the father's funeral, everyone lamented that he'd lived such a short life and died so young."

Why the change in attitude? Take a look:

The median net worth of the U.S. senior population in 1993 was $86,300, with only 16 percent below $10,000 and 17 percent above $250,000. "A decade or two ago, you thought of [65-year-olds] as elderly and poverty-stricken. You didn't view them as a consumer segment but as a group that needed social support and care," explains Dychtwald, who has studied seniors for 25 years.

In the recent past, this age group, shaped by the trauma of the Great Depression, tended to be very frugal. By contrast, today's 65-plus folks are more comfortable spending, more optimistic about the future, and still feeling young. "This creates a fabulous marketing opportunity," says Dychtwald.

And forget the old stigma that all older people do is knit and lawn-bowl. "There are about 10 million seniors today who are rejecting stereotypes of aging and are getting off their duffs," Dychtwald points out. "Whether it's going back to college, volunteering or learning to surf the Internet, they're breaking the mold and creating a whole new standard for aging."

Dychtwald is optimistic about the business opportunities in the senior market. He notes the following categories:

"Add to that the fact that many older adults would like to slow down the aging process to remain vital and independent as long as possible, and I think you're going see a huge growth in anti-aging products," says Dychtwald.

This, says Dychtwald, will spur a boom in areas like adult education, Internet usage, software purchases, adventure travel, senior dating services, and other programs and services that give pleasure and meaning to this group's free time.

And don't forget that 80 percent of those over age 60 are grandparents--group that spends an average of $505 apiece on their grandchildren annually. Grandparents also travel more with their grandkids, and because of the changing American family structure, many provide secondary financial support for their grandchildren.

In addition to being grandparents, younger members of the mature population may also have the responsibility of caring for aging parents, which means they may consider services such as adult daycare.

Like boomers, Gen Xers or any other generation, seniors can't be neatly packaged together and marketed to as one monolithic group. Entrepreneurs will be more successful if they identify and concentrate on smaller segments (such as seniors who travel or those in need of in-home medical services), determine this group's wants and needs, and then fill them.

Keep Your Eye On . . .

There are 34.7 million people in the United States who are 65 or older, and though many are leading healthy, active lifestyles, some need a little help, creating growing opportunities in adult day care and nonmedical home services.

While a good percentage of adult day-care centers are operated as nonprofits, more and more entrepreneurs are looking at them as business opportunities, says Patricia Schull, former chair of the National Adult Day Services Association and founder of Adult Care of Chester County in Exton and West Chester, Pennsylvania.

There are barriers to success, however, that you'll need to be aware of before jumping into this industry. "You can make a profit with a center, but it's challenging," says Schull. Day-care services alone are not highly profitable; and the looming presence of large corporations hampers small businesses' entrée into the market. By offering senior daycare in combination with such services as outpatient care and other medical and non-medical services, big businesses have found a way to profit from daycare-but leave little room for independents in the process.

"The influx of assisted living facilities is also impacting adult day care. Consequently, you really have to look to new markets or new communities to open a center," says Schull. It's crucial, therefore, to get education and experience in human services and establish the resources to find necessary medical expertise before opening a day-care service.

Nonmedical home-care services is another growth area in the seniors market. For seniors who want to live on their own but need assistance with basic activities such as going to the grocery store and preparing meals, businesses that provide these services are sorely needed.

Current obstacles for entrepreneurs include cutbacks in Medicare, which previously funded nonmedical home services; difficulties recruiting staff in light of the traditionally low pay; as well as low visibility in the market.

In Winter Park, Florida, Stephen Wolf, 33, is taking on those challenges with his company, Compassionate Companions of Central Florida. The business, which Wolf launched in 1998, now has 33 registered companions and annual revenues of $90,000.

"I did my research in 1996 to see if there was a market," says Wolf. He discovered there were only a handful of similar services in the area. Investing $3,000 of his own money and taking advantage of an additional $2,000 of in-kind services, Wolf created a company that offers home cooking, light housekeeping, transportation, shopping, walking, socialization, mental stimulation and other nonmedical assistance to seniors.

The requirements for starting a business like Compassionate Companion depend on your location, says Janet Neigh, director of the Home Care Aide Association of America (HCAAA). "Thirty-seven states require licensure of agencies and 18 require that aides be licensed," she says.

And this is another market where big corporations like Kelly Assisted Living and Nations Healthcare, as well as organizations like the Visiting Nurse Association, simply have deeper pockets than independent firms.

As the senior market continues to grow and nonmedical services create more demand, it will become crucial to choose the right location, form relationships with complementary agencies and understand exactly who your clients are.

But What About . . . Business-To-Business?

It seems everybody has discovered how lucrative selling to small businesses can be. From major banks and financial institutions like American Express to firms such as ImageCafe-one of many companies offering do-it-yourself Web sites-people are trying to sell products and services of all types to entrepreneurs.

But business-to-business opportunities aren't limited to selling to small companies. With more and more midsized and larger firms choosing to concentrate on their core businesses and outsource a good portion of the rest, entrepreneurs with expertise can step into the gap and take on the services being outsourced.

Entrepreneurs getting into business-to-business services are looking to help companies shore up weak areas or help them better deploy their financial resources. From human resources management to tech PR and beyond, companies that can help other companies do business better are coming out on top.

Hot Business: High-Tech PR

Need more proof that high-tech has the Midas touch? Check out the success that the public relations companies catering to it have enjoyed. According to a 1999 ranking of the top 50 public relations companies by the Council of Public Relations Firms, income from those firms specializing in the technology sector jumped 80 percent in 1997 and another 28 percent in 1998. And a 1998 survey by PRWeek magazine found that the top 100 high-tech PR firms earned a cumulative $498.8 million in revenues.

Even better news: According to Miller Bonner, executive vice president and general manager of technology at Edelman Public Relations in New York City, the market for tech PR firms is still far from saturated. "There are so many new fields opening up," says Bonner.

You'll need to know the market well to make a splash in this industry. As consumers become increasingly tech-savvy, the businesses trying to reach them must keep up, points out Richard George of the Public Relations Society of America.

You also must have the capacity to deal with the exploding growth of many high-tech firms. "As your clients grow, you have to grow with them or say goodbye," says Bonner. "If you don't have a global capacity or the ability to offer investor or consumer relations, you're going to lose your client."

Although the merger and acquisition frenzy in the public relations industry has created a number of huge firms that provide formidable competition to newcomers, Bonner believes there will always be room for niche players to target technology companies because public relations is not a capital-intensive business. And as cities around the nation jump on the technology bandwagon in hopes of creating their own Silicon Valleys, opportunities for tech PR firms will become more plentiful. Among the hot areas are Atlanta; Austin and San Antonio, Texas; Boston; New York City; North Carolina; Northern Virginia; Portland, Oregon; Provo, Utah; and Southern California, all of which are established or budding software hotbeds. Colorado Springs, Colorado; Dallas; and Denver are also strong markets, thanks to telecommunications activities.

Hot Business: Professional Employer Organizations

If the companies in a given industry served only about 2 to 3 percent of a market that's growing 20 to 30 percent annually, wouldn't you consider that a good business opportunity?

We thought so. That's exactly the situation for professional employer organizations (PEOs), according to Milan P. Yager of the National Association of Professional Employer Organizations. Although PEOs have made this list of hot businesses for four straight years, there are still areas of the country where entrepreneurs haven't yet picked up the ball and run with it.

While many firms in this market-revenues of which Yager estimates at $30 billion--began life as employee-leasing companies, the industry has evolved considerably. Now PEOs consider themselves co-employers with their clients for employment taxes, benefit plans and other human resources purposes. They take over the personnel administrative functions that often bog down entrepreneurs and, in some cases, are able to offer employees much better benefits that a single business owner could.

Entrepreneurs looking to get into this industry couldn't have picked a better time, particularly if they stay out of heavily saturated markets like California, Detroit, Florida, Salt Lake City, Houston and Dallas, says C. Michael Cain, president of Team America Tennessee, a PEO in Selmer, Tennessee. "Given the right geographic setting, the market is wide open," says Cain, 53.

While lack of competition in areas of the country may seem like a good thing, Cain says it also means firms opening their doors in uncharted waters spend lots of time educating potential customers about the services PEOs offer and how these differ from those provided by temporary and contract staffing agencies.

Cain estimates new ventures should have at least $250,000 in start-up capital and a solid knowledge of how the industry operates. There's also a growing body of state and federal laws and regulations to keep up with, so be prepared.

Cain points out one last, persuasive argument for staying power in this industry: "This is the type of business, if done properly, where a client will almost never go back to the old way of doing business."

Hot Business: Staffing

We've said it once-well, actually, six times-but we're going to say it again: Specialized staffing is hot. According to the American Staffing Association (ASA), revenues in this sector of the $58 billion temporary-help industry have jumped from $335 million in 1991 to about $3 billion today.

Firms supplying professional and tech workers also continue as strong players in market, a fact John Jay knows well. With hot tech start-ups growing all over the country, demand is up for the employees to staff them. Couple that with a scarcity of qualified tech workers, and plenty of companies find themselves in need of staffing services. For the past 10 years, Jay, 41, owner of Tech Central in Edina, Minnesota, has been in the thick of the specialized staffing growth wave. "I emptied out my retirement account, got loans from relatives and took out a second mortgage on my home to start my company," says Jay, recounting how he came up with the $200,000 he used to launch his business in a small rented office space in 1990.

The gamble paid off. Today, Tech Central employs 120 programmers, engineers, database managers and other IT workers, and estimates 1999 sales at about $7 million. "Although the industry continues to grow rapidly, so does the competition," warns Jay. "A lot of large corporations are getting into the market, like General Motors, which started its own staffing division."

For a start-up to succeed, Jay says there are three critical areas to watch. "It's important to understand the staffing industry [itself], but you've also got to understand the technical and professional aspects," he advises. In addition, you need to take care of your customers by offering exemplary services. And finally, you've got to treat your employees very well.

"You've got to offer top benefits," says Jay. "I give paid days off for birthdays and to do volunteer work. I give tuition reimbursement and internal training. People are fighting over technical employees, so that puts them in a position to make great wages."

Hot Business: Virtual Human Resources

Virtual human resources continues to experience explosive growth, securing its spot once again as one of the hottest businesses for the year ahead. According to a study released by the Society for Human Resource Management in July, one-third of polled employers outsource employee assistance, 17 percent hire others do their outplacement services, and another 17 percent farm out employee training.

"Human resources is becoming increasingly complex and technical, which makes it very hard for small and midsized companies to maintain a level of expertise or breadth," says Judy Clark, owner of two Tualatin, Oregon, HR consulting companies. And that means opportunities for HR outsourcing firms.

Not sure exactly what HR outsourcing encompasses? HR Today notes several areas commonly outsourced: strategic people planning, benefits administration, compensation, recruiting, policy and procedure management, compliance with government employment laws and workplace regulations, and general HR administrative functions.

Clark offers several tips for HR outsourcing companies. It's best to start with credible references as a consultant, she says. Obtaining various certifications available for HR professionals will also boost credibility. Once you start recruiting clients, get to know their businesses inside and out, and help them feel comfortable revealing employee information to you. Trust is crucial in this business.

Many companies are now providing human resources functions online. For example, KnowledgePoint in Petaluma, California, has created a Web-based service, HR Tools, that enables users to handle functions such as writing performance reviews or job descriptions, or determining whether an employee is eligible for overtime pay.

Whatever part of the industry you decide to pursue, the key to success is credibility, credibility and more credibility.

Find out more about virtual HR by logging on to the Society for Human Resource Management's site at http://www.shrm.org or by checking out HR Today at http://www.hrtoday.com

.Online Entertainment?

Forget that whole information/communication schtick: Those in the tech-know have figured out what the Net is really for-entertainment. Over the past year, entertainment capabilities on the Internet have exploded. MP3 is a household word, major players like AOL and MTV have forked over millions to acquire the newest in Internet radio technologies, and broadband Internet connections are paving the way for online films. Mouse clicks no longer equal work, and the Digital Coast (i.e., Southern California) may well be the next Silicon Valley. Here's what audiences will be clicking on next. (Note: The following information was current at press time.)

Downloadable Music

The recent scourge of the music industry may prove to be a blessing once major record labels embrace formats like MP3, Liquid Audio, a2b, MS Audio and G2. "Consumer demand is tremendous and will continue to grow as awareness grows and technologies and bandwidth improve," says Aram Sinnreich, an analyst of consumer content strategies with Internet research firm Jupiter Communications. "The majority of music from major labels, which comprise roughly 80 percent of the market, has yet to be put into a downloadable format. As soon as that happens, it's going to be a major force in the overall music economy."

Currently, digital music sales are little more than a blip on the radar screen, but Jupiter projects by 2003, digital distribution revenues will reach $147 million, or about 6 percent of online music sales. The main question is whether the majors control online sales as they do the offline industry. "It's not clear who's going to win yet," says Sinnreich. "With the online [format], you have the opportunity for everyone to become a music retailer. And everyone-from music labels to fans-is going to try and horn in on that game."

Online Films

Thus far, online films have been hampered by slow connections, but with broadband set to infiltrate 20 percent of homes by 2002, sites showing short films and animations are popping up all over the Web. You can expect to see widespread distribution of full-length features someday, but only after all the kinks are worked out.

"For the foreseeable future, short is the way it's going to go because of bandwidth and compression constraints," says Sinnreich. "It also has to do with consumer psychology. The cliche at this point is the computer is a lean-forward device, whereas the TV is a lean-back device-although clearly improvements in technology will change that core psychology."

Films are currently being shown for free, but revenue ideas in place and in the works include subscription services, pay-per-view opportunities, downloading fees, using e-commerce to sell video compilations and merchandise, offline distribution and advertising.

Internet Radio

Both basement DJs and traditional radio stations alike are becoming players in the PC-radio market. Now the most narrow-genre DJs can find an audience, and a lucrative new cache of listeners-9-to-5ers, has been born.

"Because the barriers to entry are lower online and the potential reach is broader, you can focus a lot more narrowly on a given genre and still derive revenues from it," says Sinnreich. "Advertising is actually much more accountable online than offline and therefore has the potential to be worth a lot more. [And online radio] has the capacity to integrate commerce into it."

Arbitron NewMedia, a media information services company specializing in the Internet broadcasting industry, reports that as of July, 14 percent of Internet users said they tried Net radio, more than double the number in 1998. As for the concern that listeners will return to their car radios at 5 o'clock, car units using the FCC-approved "S" band (for satellite radio) are already in the works.

.Time-Stressed Consumers?

Can't find enough time to eat, let alone pick up the dry-cleaning, take the dog to the vet, get your tires rotated, and spend quality time with your family? We didn't think so, especially when you consider everyone is working harder and longer-an extra month more per year, to be exact-and, says Juliet Schor, author of The Overworked American (Basic Books), 58.5 million workers are traveling more than 45 minutes just to get to their jobs. When 88 percent of us say we work very hard, according to the Families and Work Institute (FWI), it's no revelation our society could be pegged "time-stressed."

And, as FWI reports, we do experience a negative spillover from work. For instance, 26 percent of us feel emotionally drained by our jobs, 28 percent don't have the energy to do things with family or others, and 36 percent just feel used up at the end of the day. This reality leads consumers to welcome with weary arms business services geared toward assisting with the daily chores and errands that devilishly rob us of our so-called free time. Rather than give up completely, or hook up a caffeine IV, today's consumers call upon the personal services industry to help them reclaim their sanity. In the process, they're stoking plenty of business opportunities-from concierge services and massage therapy to personal chefs-making any business that reintroduces the forgotten concept of relaxation a sure shot for the 2000.

Hot Business: Concierge Services

Everyone is busy-whether they're in the mailroom or the big corner office. And although their salaries may define their dinner options-Top Ramen vs. chateaubriand-that doesn't mean both ends of the spectrum can't hire help to accomplish the thousands of tasks that plague them every day.

That's where concierge services come in. With the percentage of dual-income families increasing from 66 percent in 1977 to 78 percent in 1998, according to the Families and Work Institute, workers have developed bot the affluence and the lack of time for a veritable personal-servant economy. So whether it's arranging the delivery of gifts, handling theater reservations or preparing home-cooked meals, a concierge is the answer for more and more consumers today.

"It's not like it was 30 years ago," says Bonnie Seidler, 51, president of The Pampered Professional Ltd. in Hewlett, New York, whose 3-year-old company caters to more than 2,000 corporate and personal clients. "[Consumers] need these services; there is just no time."

.Food?

Hot Business: Juice Bars

Still time-pressed, nutrition-needy and savoring the self-love they achieve by opting for a fresh fruit-blended drink over a bucket of fat-dripping fries, Americans' affinity for smoothies hasn't waned since the healthy libations started getting widespread attention in 1994. With juice bar industry sales jumping to more than $647 million a year, it's clear the smoothie isn't just a fad but rather a time-tested favorite.

Although soothsayers suggest one or two major chains may eventually dominate the market, the potential for success still abounds, particularly if you look to the sea of untapped markets (think anywhere but the West Coast), augmented menus (adding food items such as baked potatoes, soup, wraps and bread), and the concept of co-branding with other retailers.

Such tactics have helped Joe Donnini, 29, president and co-founder of Juice CaBana, stay abreast of his competition. "There was a gap we thought we could fill by bringing the product to the East Coast," says Donnini. He presently has two stores in Pennsylvania and one in Florida. By looking to unsaturated territory; adding trail mix to the juice bars; and placing sister company CopaCaTana, a full-service tanning salon, right next door to two Juice CaBana locations, the two-year-old company should earn more than $1.7 million by year-end and is currently offering franchise opportunities.

"Society is becoming more aware of dietary and nutritional values, and lives are becoming more and more rushed," says Donnini. "There seems to be a connection between putting both the convenience factor and the health factor into a cup."

For more "juicy" information, visit www.juicecabana.com, www.juicegallery.com, http://www.jambajuice.com, and www.smoothieking.com

.The Internet?

What would a discussion of future trends be without a good, hard look at how the Internet has shaped our business lives?

While teens, boomers, babies and others are making their own indelible marks on today's business landscape, perhaps no other factor has had as colossal an influence in shaping the business trends of both now and the future as the Internet has. The explosive growth of e-commerce over the past few short years has forever changed the way the world does business.

The business-to-business sector will remain at the forefront of e-commerce in 2000, and probably well beyond. According to information technology research firm Forrester Research, business-to-business e- commerce will explode from $43 billion in 1998 to $1.3 trillion in 2003, accounting for 9.4 percent of total U.S. business sales. Key industries leading the way: computing and electronics, motor vehicles and petrochemicals.

Affiliate marketing services and opt-in e-mail marketing services are two leading and potentially lucrative business-to-business e-commerce opportunities popping up on our radar screen. Online auction sites, put on the map by eBay, uBid and others, are also grabbing plenty of attention. "Online auctions have unlimited [business-opportunity] potential," says Ben Isaacson, executive director of the Association for Interactive Media. It would appear so: The online auction industry is expected to reach $52 billion by 2002.

On the consumer front, e-tailers will hear ch-ching! ch-ching! as online sales jump even higher next year. According to Forrester, Web sales to consumers will surpass $143 billion in 2003, up from $7.8 billion in 1998. By then, more than 40 million households will buy at least some products or services online.

In 2000, consumers will want to buy more types of items and spend more money online, say experts. The Wal-Marts of the online world like Amazon.com, Tower Records, Egghead and, yes, Wal-Mart, will greatly expand their product categories-and influence. But it will also be a strong year for smaller e-retailers. By sinking money into online and traditional marketing and becoming savvier in the art of e-tailing, many of these niche marketers will finally see a big payoff, Isaacson says. He adds, "Anything women- and home-oriented is going to be a really big seller."

While the future looks bright for the wide world of e-commerce, we offer a few words of caution. Although many Internet businesses boast low start-up costs, especially for the tech-savvy who can do it all themselves, becoming a nationally recognized online leader requires spending a lot of money and effort on advertising, market research and customer relationship-building. As with any business, online or off, the ticket to success is bought with hard work

Hot Business: E-Learning

Teaching isn't just for the classroom anymore. These days, classes are being held virtually anywhere, any time, online-and creating an exciting business opportunity in the process. Internet- and intranet-based computer training, for instance, makes up much of the growth in the computer training industry.

Students enjoy learning online because it allows them to work at their own pace, without ever having to leave home or the office. That's just fine with online training companies, including DigitalThink and Ziff Davis University, which relish the possibility of having an entire world of eager students in fields like business management, sales and design just a mouse click away.

One potential barrier to the growth of the industry is the medium itself. Internet training companies may find the current lack of bandwidth a real barrier to effectively delivering their online courses and materials.

For a whole new generation of Internet learners and training companies, though, school's in.

Hot Sellers

What are shoppers plunking down the most money for online? According to Forrester Research, low-risk, low-cost discretionary purchases like books, general apparel and flowers lead today's market, generating $2.8 billion in 1998. Other hot-selling categories include videos, music, toys, tools and garden accessories, hardware, software, electronics and home appliances.

Hot Business: Online Classified Ads and Auctions

Sold on online classifieds and auctions? You're not alone.

"People love buying and selling online," says Ben Black, vice president of business development for market research firm Harris Interactive. "[Auctions] are becoming more like a religion than a business."

Online classified ad companies boast vast listings of items or services for sale, easily accessible to the entire world online. Increasingly popular are niche-oriented online classified ad sites specializing in everything from cars to British paraphernalia.

RestMart.com, a Boca Raton, Florida, online classified advertising business for restaurant sellers run by father-and-son Jeff and Bryan Sussman, 49 and 25 respectively, has grown 100 percent or more every month in Web site traffic and revenues since it opened in January. "For restaurant sellers, there was really no place to advertise their [businesses] other than generic advertising in local newspapers," says Bryan. "With RestMart, we're reaching out to the [restaurant] community and getting mass exposure."

Online auction companies go one step further by offering Web surfers the chance to bid on items, which is where many experts say most of the real opportunity-and money-lies. According to Harris Interactive, the average expenditure per visitor at online auction sites in April was $191.

In the coming months, niche auction sites should expect tough competition from larger auction sites with wider appeal. Online classified advertisers and auctioneers must also strive to gain the trust surfers, particularly when dealing in high-priced items such as cars and antiques.

Hot Business: Web File Storage

Hold on to your Web browsers! Just as Web-based e-mail and online calendars made a splash this year, Web file storage services are the latest wave for businesses and consumers who want their important data safe, secure and easily accessible-online.

"Businesses and workers don't want to worry about losing their information if their hard drives crash," says Spencer Reiss, vice president at the GilderGroup, a technology research and publishing company in Housatonic, Massachusetts, and editor of New Economy Watch, a monthly report for investors. "There's no reason for consumers to have their important stuff stored in little plastic boxes. The proper place for all this info is online."

FreeDrive and Briefcase.com are a few leaders in this fledgling field, but experts say there's plenty of room for newcomers. Companies are luring customers with free file storage and charging for extra services like file encryption. Reiss also says there's a healthy market of businesses who will pay extra for more capacity, added security, data backup and other services.

Entrepreneurs entering this market must possess not only tech expertise, but also the business savvy to exploit niches and provide excellent customer service along the way. Reiss cautions there's also some market education required to acquaint users with this concept. But experts say with wide-open markets and unlimited potential, there are clearly a lot of opportunities to become the world's virtual filing cabinet.

En Fuego

People like Latina magazine founder Christy Haubegger have been predicting a Latin explosion in American society for quite some time-but for some reason, it took Ricky Martin to make marketers for big corporations listen.

According to American Demographics magazine, the buying power of the Hispanic population has grown 67 percent since 1990 to $365 billion. Hispanic teens alone spent $19 million-a monthly average of $320 per teen-according to Teenage Research Unlimited.

This segment isn't just growing four times faster than the general population-it's currently redefining cool. Couples want to salsa, young men want to find the perfect guayabera (formerly a staple for only Cuban men), and Latin music-well, MTV's finally catching on.

Don't overlook this market thinking Latin fever is a passing trend. We said it was hot last year, we say it's hot this year, and at 30 million strong, to think it won't be hot next year, you'd have to be loco.

Sites To See

BABIES/KIDS

TWEENS

TEENS

TWENTYSOMETHINGS

GEN XERS

BOOMERS

SENIORS

ONLINE ENTERTAINMENT: GENERAL INFORMATION

ONLINE ENTERTAINMENT: MUSIC

ONLINE ENTERTAINMENT: MOVIES

ONLINE ENTERTAINMENT: RADIO

TIME-STRESSED CONSUMERS

E-COMMERCE

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