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We've got the hots for you: Hot businesses, hot opportunities, hot markets, hot trends. Grab a cold drink, because 2002 is gonna be a scorcher.
December 1, 2001
URL: http://www.entrepreneur.com/article/46366

After the ups and downs of 2001, do we want to even attempt to predict what'll be hot in 2002? Of course we do. We asked the questions, tracked the numbers, greased our elbows...and what we came up with are so many hot trends, we couldn't fit them all in this, our annual collection of predictions for the coming year. Listen to us, listen to the experts or listen to the entrepreneurs who've done it-but in the end, these trends will speak for themselves.

 
  Hot Trends: Personalization, Ethnic Foods and Boomburbs
  Hot Trends: Anything India, Boomer Menopause and Luxury Trickle-Down
  Hot Businesses
  Marketing in 2002
 

 

Hot Trends: Personalization, Ethnic Foods and Boomburbs

Personalization
From theme funerals to theme weddings, from customized charm bracelets to design-it-yourself shoes, consumers are seeking services and products with a personal touch. In fact, 85 percent of 18- to 24-year-olds wish more products and services were customized, according to a July study from American Demographics and Harris Interactive.

"We're becoming a society of experience junkies," says Joyce Gioia, a business futurist with the Herman Group, a consulting firm in Greensboro, North Carolina. "If we can have it our way, it's a better experience for us." Gioia sees a future complete with "experience designers," who will custom-tailor products to customers.

The Net is tailor-made for personalization. General Mills' Mycereal.com lets users create their own cereals, and Mcycles.com's software helps people design their own motorcycles. But you don't need the Internet; you just have to think creatively. Restaurants like Boston's Fire+Ice and New York City's Craft are eschewing menus and letting customers create their own meals. So let your mind wander, and get personal.

Ethnic foods
Only a few years ago, Thai and Korean dishes were mysterious to most Americans. Today, they're mainstream. In fact, according to the National Restaurant Association, Caribbean and Middle Eastern dishes are now more popular than more traditional alternative cuisine, like French and soul food. Welcome to the age of the ethnic eater, where anything exotic gets some space on the plate.

So what will pique consumers' palates in 2002? Apparently, anything that goes beyond your run-of-the-mill ethnic dish. "[Americans] want to take it to the next level," says Stoneybrook, New York, food writer Ramin Ganeshram.

That means targeting regions within regions and creating new fusion dishes. Argentinian, Cambodian, Chilean, Cuban-Chinese and Malaysian: All of these types of cuisines will grow in popularity. Another business opportunity: ethnic groceries specializing in ingredients from all over the world, all offered in one convenient place. It's a market yet to be cornered.

Boomburbs
Pop quiz: What do you get when you combine the words "boomtown" and "suburb"? The answer is "boomburb," an outlying area that's big and growing fast, with consistent double-digit population increases over the past few decades. A boomburb is home to between 100,000 and 400,000 residents yet still feels distinctly suburban. According to a June Fannie Mae Foundation study, there are at least 53 boomburbs, and the list is expanding, particularly in the West.

These places are booming with opportunities, says Robert E. Lang, director of urban and metropolitan research for the Fannie Mae Foundation in Washington, DC, and co-author of the study. Interior decorating, landscaping, building suppliers, baby products stores, day care-anything to do with servicing or constructing new households is hot. The outlying subdivisions of these boomburbs still need the basics, Lang says, making franchises or locally owned fast-food joints a big deal. Lang says many of the commercial strips near these residences haven't filled out yet, so they'll make great places to set up shop.

-Chris Penttila

What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Personalization

Hot Trends: Anything India, Boomer Menopause and Luxury Trickle-Down

Anything India
Highly educated Indian immigrants are changing the face of U.S. cities. In last year's U.S. Census, the South Asian population was nearly 2 million. Today, Indian food is mainstream, Indian jewelry and fabrics are wildly popular, and yoga and ayurvedic medicine are the latest health fads.

How do you cash in? Anything related to Indian wedding planning or matchmaking is hot, says Suvarna Rajguru, executive director for the Indian CEO High Tech Council of the Washington, DC, chapter of The IndUS Entrepreneurs, a networking group for young Indian professionals. Another not-so-romantic, but creative, business idea: running background checks on potential spouses. "People are sending their girls over here to get married to H1-B visa workers who are in high-tech," Rajguru says. "They're looking for someone here to do background profiles."

Other opportunities range from Indian fast food and classes teaching Americanized English to importing Indian movies and other media. One Web site launched last year, Challo.com, specializes in news and entertainment aimed at relocated Indians. "They want the things they are used to in India," Rajguru says. "They're trying to stay in touch with their cultural roots."

Boomer Menopause
Tens of millions of baby-boomer women will be sweating out menopause over the next decade. In fact, it's estimated that at least 4,900 boomer women start menopause every day.

The demand for menopause-related products and services is sure to increase as boomers take their health into their own hands. "This is a very educated demographic, and [these women] want to know their options," says Sharon MacFarland, 39, owner of Transitions for Health Inc., a women's health and wellness company in Portland, Oregon, that pulls in more than $10 million annually. Among other products, Transitions for Health markets a cooling mist and towelettes for hot flashes, and Pro-Gest, a natural progesterone cream.

Support groups, spas, diet and exercise plans, books and videos will be emerging markets built around menopausal women. Natural supplements and soy products in lieu of controversial hormone replacement therapy will also be popular. "The trick is [reaching] these women on the go," MacFarland says. "You have to meet them where they are. They're busy."

Luxury Trickle-Down
Products and services once considered luxuries fit only for the rich-manicures, gardeners and housekeepers, for example-have trickled down and become affordable to middle-income consumers. Even Mercedes-Benz is marketing luxury cars in the $30,000 range. More than ever, it's possible to live the good life.

Attribute this luxury trickle-down trend to the economic boom of the late 1990s that created a middle-class consumer with more wealth and a sense of entitlement. Despite an economic slowdown, consumers are still looking for affordable ways to feel like a million bucks. One luxury market with lots of potential is the house call, says Gregory J. Furman, executive director of the Luxury Marketing Association. Industries suited for house calls range from auto mechanics and caterers to concierge services, hairdressers and personal trainers.

To grab a tiny piece of this trickle-down market, however, you just need to think like a butler and brainstorm. "Think of the things you'd like to have someone else do for you, all the dirty jobs," says Arnold Brown, chairman of Weiner, Edrich, Brown Inc., a trend analysis firm in New York City. "There's enormous potential here for entrepreneurs with imagination."

-Chris Penttila
Anything India


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think .

Online Learning

You can teach an old concept new tricks. While many online companies appear pale under the economic spotlight, e-learning businesses are looking rosy. Employee training, Internet college courses and classes catering to the fresh legions of home-schoolers are booming areas. IDC expects the corporate e-learning market alone to top $18 billion by 2005, up from $2.3 billion in 2000.

Stephan Thieringer, 35-year-old CEO and co-founder of Danvers, Massachusetts, business training company GTF Systems, is familiar with what it takes to successfully launch a virtual education company. "The market is huge," says Thieringer. "The mistake a lot of companies make is they get very broad-ranged. We are very specialized." GTF Systems' focus on state- and federal-mandated compliance training and human resources solutions keeps it plenty busy in its niche market.

Thieringer explains one of the key factors poised to make 2002 a good year for e-learning entrepreneurs: "The community has come to the point where distance learning isn't necessarily considered an inferior education." The arrival of accredited online-only universities like Capella University of Minneapolis is proof positive of this growing trend. Look for business opportunities not only in providing courses and continuing education programs, but also in servicing the peripheral supply and material needs of distance learners.

While there is a high awareness of online college-level classes, there are also interesting e-learning developments a little closer to home. According to the National Home Education Research Institute, 1.3 million to 1.7 million children were home-schooled in 1999 and 2000. No exact figures are available for 2001, but the home-schooling movement has gained significant steam during the past few years, making K-12 education a hot area for entrepreneurs. Fronted by William J. Bennett, former Secretary of Education under former President Reagan, K12 in McLean, Virginia, has made a high-profile entry into this area by offering curricula and supplies geared toward the elementary market. But there is still plenty of room on the chalkboard for small companies to make their mark.

Thieringer sees a wide landscape for e-learning start-ups, but he emphasizes that the basics of customer service and specialization are required for success. "It's about content," he says. "It's about the scalability of the product. It's about the bandwidth requirements. It's about ease of use." Virtual learning entrepreneurs prepared to balance the knowledge with the technology will move to the head of the class in 2002.

-Amanda C. Kooser


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Kiosks

Dolls, T-shirts, cell-phone deals, weight-loss plans, calendars, toy helicopters that whirl into the sky, rings, watches, bracelets, baseball caps and bonsai trees. Kiosks sell it all. And you could be earning it all. Also known as booths or shopping carts, kiosks located in shopping malls or outdoor shopping districts provide a potential gold mine for both established entrepreneurs and up-and-comers trying to gain a retail foothold.

Specialty retail, including kiosks and temporary in-line stores, is a $10 billion business, according to Patricia Norins, publisher of trade magazine Specialty Retail Report. "It's definitely still on the upswing," says Norins. "A lot of malls are clearing out planters and benches and making room for kiosk operators, recognizing the real benefits to consumers and to their own bottom line."

"It's a very strong business," concurs Kathleen Ruesche, director of specialty leasing and sales at the Mall of America in Bloomington, Minnesota. A single kiosk can bring in as much as $200,000 annually, and many kiosk owners own more than one.

During the off-season, a kiosk entrepreneur might pay $500 to $2,500 to lease space; some malls also collect a percentage of sales. Prices between October and January in Mall of America-size malls could run as high as $10,000 a month. Most operators think the benefits outweigh these costs. One perk: You don't have to keep your store open year-round-you can reap profits during busy months and shut down during slow ones. Kiosks also offer great exposure. "People are likely to practically trip over your store," says Ruesche.

But one warning: Don't create an atmosphere that encourages loitering and looky-loos. The highest-performing kiosk retailers, says Ruesche, are those who provide "impulse buys."

-Geoff Williams


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Online Games

When Tina Louise Feldman, 27, and Alan Balode, 25, began creating online games for Internet sites a few years ago, everyone thought their idea sounded like a sure thing. Now, Feldman says, when people hear that Ultimate Arcade Inc. develops games for dotcoms, they say, "'Oh, I'm so sorry.' But we're doing great."

So is the online game industry as a whole. It's expected to grow to $5.6 billion by 2005, according to market research firm Jupiter Media Metrix.

Feldman and Balode's Calabasas, California-based company has seen business double in just the past six months. Their clients are small (insurance companies, nursing homes) and big (Disney, Levi Strauss and Warner Bros.). Eventually, Feldman says, they'll branch out into doing online games people will pay to download. But for now, they're sticking to where the big money is: gaming sites offered by businesses with something else to sell.

"We're going to see more and more companies (using) online games," says Glenn Platt, professor of economics at Miami University in Oxford, Ohio, and director of its Center for Interactive Media Studies. "Companies want to give consumers a reason to come to their site, to stay at their site and to come back to their site," says Platt. "And online games is the ideal medium for that, if you've done a good job. [Games] create a sense of community, and the users feel like they're part of a special club, which can be valuable for any organization." Platt created an online hockey game with his students a few years ago to help Procter & Gamble promote its Febreze fabric freshener. P&G was trying to improve its sales with college students, says Platt, adding, "They figured college kids would have smelly clothes."

To gain the kind of following Ultimate Arcade enjoys, your games will need to stand out. "With all the competition," says Platt, "companies need to keep making these games better, more interesting and more sophisticated."

-Geoff Williams


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Bartering

Wanna trade? Bartering among corporate giants has been around for years, but small business is diving into the action in great numbers-creating a booming opportunity for the entrepreneurs who broker their deals.

In recent years, bartering among companies has grown by 15 percent annually, translating into more than $9 billion in sales in North America for 2001. And the International Reciprocal Trade Association expects the industry to grow by more than 300 percent by the time the decade closes, increasing from roughly 300,000 participating companies today to 1.2 million.

Bartering is a good business in good times, and a great business in bad. "Bartering always booms in times of recession," says Debbie Arcabascio, a bartering consultant in Lafayette, Colorado. People barter when they're trying to hold on to their cash, she says. Indeed, in 1990, smack in the middle of a recession, bartering saw 13 percent growth over the previous year.

Informal barter between businesses happens all the time-for instance, a landscaper may do some free work for a dentist in exchange for a root canal. Barter exchanges formalize this system. Every time they provide free products or services to other members, barter exchange members earn points they can exchange for products or services from someone else later.

The buyer and seller determine the fair market value for each service or product-but that doesn't mean it's a cushy ride for you or your staff. You (or your brokers) are busy bringing in new members as well as collecting membership fees and commissions-usually 5 to 6 percent of the transaction amount. You also keep track of bartering purchases and provide your clients with Form 1099-B for tax record-keeping purposes. And you have to be quick to kick out the dishonest barterers and make sure your cheated barterers come out of bad transactions happy.

If you can manage all that, there's money to be made: Arcabascio used to run a bartering exchange that made $750,000 annually-and that was considered a small operation.

-Geoff Williams


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Alternative Health for Pets

Acupuncture, spas, nutrition bars-if you can use it for better health and well-being, so can your dog or cat. Americans were expected to spend $28.5 billion on their pets in 2001, according to the American Pet Product Manufacturers Association. And signs show much of that is being spent on alternative health: The American Veterinary Medical Association recently started encouraging its members to use herbs, chiropractic, homeopathy and other natural healing methods to treat chronic illness in all kinds of pets, from lizards to Labrador retrievers.

Don't limit yourself to treatments when considering this market. Other successful ideas include greeting cards for sick dogs, vibrating pagers for deaf and hard-of-hearing dogs, and natural pet food stores.

Still skeptical about the market? Then consider that there are some 115 million pets nationwide-and many people treat them as family members. Pet entrepreneur Kristen Leigh Bell has a theory: "[Many people] are too busy with their careers to start a family, and pets become their children. That's how it is for me," says Bell, 31, an animal lover who is president of Aromaleigh Inc., a Rochester, New York, canine and feline aromatherapy company. Her catalog carries everything from Canine Calming Synergy Spritz to a moisturizer for cats. Even a shaky economy hasn't stopped parents from buying for their "babies," says Bell.

-Geoff Williams


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Managing Outsourcing

It's not surprising in super-cost-conscious 2001 that outsourcing has become a way of life. In fact, outsourcing in smaller companies is rapidly increasing-it's up 25 percent from 1999, adding to the $400 billion outsourcing marketplace. And 36 percent of larger companies (those with sales of more than $50 million) use outsourcing, according to The Outsourcing Institute. With so many companies embracing it, a growing business has emerged: outsourcing management and consulting.

"The use of outsourcing consultants is hot," says Jose E.V. Cunningham, managing director of The Outsourcing Institute. "There have been outsourcing consultants for years, but now, more than ever, the business world is looking for neutral consultants"-meaning third parties who evaluate a company's outsourcing needs, help construct an RFP and help negotiate and manage outsourcing contracts.

Robert Mattern's outsourcing management company, Wilmington, Delaware-based Mattern & Associates LLC, is testament to the demand: His sales are well into the six figures, and he expects sales to double in the next year.

Before starting in 1997, Mattern, 40, sold outsourcing contracts for two support services companies. Many of his clients had outsourcing problems-some outsourced services they'd be better off doing in-house, while others committed to bad contracts. Mattern says his business these days is half evaluating companies' support services systems and half representing companies in the outsourcing process. "We sit on the client's side of the table," he says. "People are so used to being sold things, no one is looking out for their interests. We are."

-Nichole L. Torres


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Maternity Clothes

Celebrity moms like Cindy Crawford and Kelly Ripa aren't the only ones who know that muumuu-style maternity clothes are so last century. Today, pregnant women are all about celebrating their style and looking sexy. From high-end maternity designers like Liz Lange and A Pea in the Pod to midpriced maternitywear newcomers The Gap and Old Navy, clothing designers are on to the potential of this growing market. With more than 4 million babies born annually, it's easy to see why the maternity clothing market is buzzing.

Peg Moline, editor in chief of Shape's Fit Pregnancy magazine, has seen a boom in sexy and hip maternity clothing as well as in athletic maternitywear. And with more pregnant women on the job, maternitywear has to provide workplace comfort and style. "[Clothes] have to be really comfortable, really sharp-looking and also very hip," says Moline.

Enter LSR Maternity. Specializing in lingerie, LSR founder Laura S. Rudolph describes her products as the "Victoria's Secret of maternity-wear." Founded in 1996, Aurora, Colorado-based LSR was born out of Rudolph's frustration with the dearth of sexy, well-made and affordable maternity fashions on the market.

Rudolph filled the void with lingerie the average woman could afford. "It's not about income levels and social status," says Rudolph, 36. "It's about who wants to feel beautiful and sexy during pregnancy." Rudolph's prices range from $48 to $84, and she plans to release a lower-priced line through her online store and specialty boutiques nationwide.

Need more proof this market is worth a look? LSR Maternity's revenues have increased 300 percent over the past six months, and Rudolph is projecting sales of up to half a million dollars in 2002.

-Nichole L. Torres


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Life Coaches

Business coaches have been around for years, but today many are morphing into life coaches. After all, life and business are intertwined, and many people need help in both areas.

Life coaches generally charge between $300 and $500 a month for a weekly 30-minute phone call, in which they help their clients set goals and motivate them to achieve those goals. Life coach Karen Childress, 42, in Peterborough, New Hampshire, says, "[Clients] tend to stay with coaching for a few months to a few years; if it didn't work, the industry wouldn't be growing."

And it's definitely growing. Bobette Reeder, president of the International Coach Federation (ICF) in Washington, DC, notes that when she received her coach training in 1995, there were possibly two credible coaching colleges. Today, 42 recognized schools offer coaching education and training, 10 of them accredited by ICF. And ICF, which boasts 4,500 members, is growing by some 200 members each month.

Childress says you can make more money if you recruit corporate clients and offer additional services. For instance, she recently added a Web site, www.ihavegoals.com, to offer her own brand of do-it-yourself life coaching for cash-strapped clients. Members pay $12.95 a month to set, organize and monitor goals online. Combining the dual consumer demands of coaching and convenience is just one way entrepreneurs can use their fertile imaginations to fuel opportunity as a life coach.

-Geoff Williams


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Alternative Energy

When the sky is charcoal-black and the Atlantic Ocean is lapping the shores of Ohio, your alternative energy company may be spared from mobs seeking revenge against environmentally unfriendly companies.

But alternative energy is more than a feel-good industry; it's a chance to make money. A recent study by Clean Edge, a green-technology consulting firm, suggests the alternative energy industry will generate $82 billion worth of electrical power by 2010, up from $7 billion today.

"There is quite a bit of opportunity in this market," says Gary Markowitz of Kilojolts Consulting Group, an energy business consulting firm. But he warns that entrepreneurs entering this market should be "highly educated [in energy] and have been in this field for a while. They need to really understand the marketplace."

For instance, wind power is a growing energy source, but you wouldn't want to operate a wind energy company in Florida, where the winds are typically mild. In Chicago, it's another story: Within the next five years, the city plans to buy 20 percent of its electricity for its streetlights, subways and public buildings from wind power and solar power sources. Since 1998, wind power as an alternative energy source in the world has expanded by about 30 percent a year.

Solar energy is no slouch either, with sales of photovoltaic panels (solar cells) having grown 37 percent in 2000.

Markowitz says some areas ripe for the plucking are in "distributive generation," which involves smaller, electric-generating units using alternative energy sources-like biomass, natural gas, diesel, wind, solar fuel cells-in close proximity to the end-users of the electricity.

Alternative energy is paying off for entrepreneurs like Paul Szilagyi, 45-year-old CEO of TransTeq, an 80-employee company with a fleet of 19 hybrid buses (run on gas and electric power) in Denver; it's the world's largest fleet of its kind. By the end of 2001, TransTeq was expected to clear $15 million.

Observes Szilagyi: "The three primary drivers in the transportation sector-better fuel economy, lower pollution and less congestion-are now Main Street issues throughout the world. This was not the case a decade ago."

-Geoff Williams


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

e-Books

The next chapter of e-books will have less to do with Stephen King and more to do with chemistry and history. Despite hype and high hopes, dedicated hardware e-book readers and downloadable novels have been slow to catch on. But that doesn't mean e-books won't be a hot trend in 2002. Andres Nannetti, CEO and co-founder of e-book platform company Rovia Inc., points to textbooks and self-publishing as areas ripe for growth.

Located in Boston, Rovia was founded in early 2000 around an e-textbook platform that allows customers to rent access to material from any machine with a Web connection. "The real activity for e-books is in active reading, which is what you do with textbooks, research and reference materials," says Nannetti, 25. Forrester Research predicts that digitally delivered textbooks and custom-printed books will make up the majority of what will be a $7.8 billion market within five years.

"Publishing in general is in for a big surprise as the Internet really takes over, because a lot of the physical barriers to entry are removed," says Nannetti. Marketing-savvy entrepreneurs can find big opportunities in releasing e-books to niche markets that are underserved by volume-oriented traditional publishers. "There are a lot of things out there that can sell less than 50,000 copies," Nannetti says. "For a small business, you can make a living off of that."

-Amanda C. Kooser


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Plus-Size Clothes

You dream of having a slim supermodel show off your clothing designs. But did you know that the retail clothes market for plus-sized women is $26 billion?

"[Plus-size] is a great market," says Phyllis Borcherding, assistant professor of fashion design at the University of Cincinnati. "There are all sorts of niche markets in the plus-size industry, [such as] high-end [clothes]. I think the retail world is starting to realize that just because you're larger doesn't mean you [can't afford nice clothes]." Think plus-size businesswomen's clothes as well as loungewear and activewear, says Borcherding.

Susan Weber applauds that sort of thinking. But the president of Grand Style Women's Club, an online club for women who wear size 14 and up, offers an interesting conundrum: She thinks entrepreneurs should be wary of selling exclusively to the plus-size market. Most plus-sized women don't think of themselves as plus-sized, says Weber. She believes entrepreneurs would be wiser to offer clothing to everybody, from the smallest size to the largest.

Borcherding, however, contends the plus-size stigma is waning: "Plus-size doesn't mean you're necessarily overweight," she says. "Sometimes you're just larger." She notes that some brands offer what they call "alternative sizing," or don't bill themselves as plus-size lines-they just offer outfits in sizes 12 to 20, "which gets the point across," she says.

In any case, ignore the market at your own peril: Weber says 50 percent of American women are size 14 or larger.

-Geoff Williams


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Marketing

Trends are as capricious as fashion-woe to the entrepreneur who's caught using the marketing equivalent of last year's fad. Here, experts weigh in on trends that will keep your marketing efforts fabulously in vogue for 2002:

"I see a strong return to basics throughout American life as we seek to bring our complicated and suddenly more dangerous world under control. In an overcommunicated society, it's harder to develop a message that penetrates and sticks. Powerful brands are simple messages that get through and provide comfort-an assurance of a company that has been and will be around."

-Harry Beckwith, author ofThe Invisible Touch: The Four Keys to Modern Marketing(Warner Books), and strategic director for Beckwith Partners, a Minneapolis marketing firm

While chances are remote that entrepreneurs will get their products featured in a blockbuster movie, smaller-scale collaborations are viable. Try working with a PR agency that specializes in product placement-Los Angeles- and New York City-based agencies are a good bet. Keep in mind, the terrorist attacks of September 11 may make consumers less interested in celebrity endorsements.

-Kimberly L. McCall


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Management

We've been through the valley of re-engineering, and the mountains of Total Quality Management still loom in the rearview mirror. What's over the next hill? The overall management trend for 2002 is "Back to Basics," according to management fad trackers. "There will be a focus on things that directly improve cost and performance," says Matthew Meacham, managing director of the Dallas office of management consulting firm Bain & Co. "It might be called Web enablement, supply chain integration or outsourcing. All those are different names for a renewed focus on cost and process."

Meacham bases his forecast on Bain's "Management Tools 2001," the latest in a series of seven annual studies. In this edition, researchers interviewed managers at 245 firms and found businesses were placing renewed emphasis on strategic planning, mission and vision statements, and benchmarking.

EXPERTS SAY... "I see a reaffirmation of two things. One is a return to the basics, with the understanding that the primary base is having the right people. Stuff doesn't bubble up from the bottom and get oxygen unless you have the right people at the top. The other is people will realize that a company's strategy is more and more determined by its information technology. The IT function sets the capabilities of the organization and, on the flip side, dictates the things the organization can't do."
-Eileen Shapiro, president of the Hillcrest Group in Cambridge, Massachusetts, and author of Fad Surfing in the Boardroom (Perseus)

On the other hand, management themes built around core competencies, strategic alliances and customer retention saw decreased usage in 2001. Fads in customer relationship management, scenario planning and cycle time reduction are also expected to wane next year, according to Meacham.

The cost focus found in the survey may be explained by answers to questions about the economy and company goals. Sixty-one percent of respondents were concerned about the 2001 slowdown, and 64 percent said financial performance was their top priority.

Cost-cutters' top priority will be reducing head counts, predicts Charles Wendel, president of New York City management consulting firm Financial Institutions Consulting and co-author of Business Buzzwords (Amacom), a guide to 1990s management trends. This strategy resembles that used in previous downturns, but one difference is in nomenclature. "Last time there were cost reductions, it was called 're-engineering,'" notes Wendel.

Wendel expects companies will cut superfluous personnel more quickly than in the last recession. But by 2003, he believes, many will return to expansion. "The ups and downs are faster than they used to be," he says. "So unless we're in [a downturn like] we've never been in before, by next year management will be dealing with growth and how to get employees again."

There's one thing Meacham doesn't expect to change. "I don't think any of these tools will dig you out of a fundamentally flawed strategic position," he says, cautioning against over-reliance on the latest thing. Instead, focus on a handful of tried-and-true techniques. "Pick a few," he says. "Don't try to do 12 different things."

-Mark Henricks


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Technology

It's not about how fast computer processors will go or how cheap inkjet printers will get. Hot tech trends for growing businesses will run the gamut in 2002, from wireless networks to Web demographics to biometrics. You may not be logged on to these technologies just yet, but by next December you'll be wondering how you ever got along without them.

"[There will be] an increased push by established companies to get small businesses to do more online-payroll, human resources and marketing, all via an online interface. As viruses become more prevalent, small businesses will become more alert to their needs for virus prevention and detection software. DSL competitive local exchange carriers are having a very tough time financially, and small businesses can expect their choices for broadband and possibly telecommunications overall [to be] more limited."

-Ramon Ray, analyst/consultant at Smallbiztechnology.com in Brooklyn, New York
-Amanda C. Kooser


What Do You Think?
Are our picks for what's hot in 2002 on target or way off base? Tell us what you think.

Money

Ask the experts what's up in business financing for 2002, and they'll agree on three things. First, there's a lot of money out there. Second, only truly innovative technologies and companies will attract capital. Third, investors are already taking advantage of companies' lower valuations and are bottom-fishing for good deals.

"There is a huge amount of uncommitted capital that has been raised and is available for venture-stage businesses," says Dave Wanders, executive vice president at Transamerica Technology Finance in Rosemont, Illinois, which provides debt financing to emerging-growth businesses. "But since neither the IPO nor the M&A markets appear to be opening up anytime soon, investors will be much more selective."

Businesses with cutting-edge products and services will net the lion's share of capital. According to Stephan Mallenbaum, a tech attorney for legal powerhouse Jones Day Reavis & Pogue in New York City, "Entrepreneurial companies that drive innovation will continue to succeed and will find there is no shortage of risk-based capital."

EXPERTS SAY...
Ken Dolan: "There is always capital available for good ideas that can make money."
Daria Dolan: "Entrepreneurs will have to bring fresh thinking about where they look for capital and new ideas about their businesses. How? They can partner with other businesses or form strategic alliances that will deliver the sales and earnings that will be so important in 2002. Business owners who can figure this out will find capital quicker."

-Ken and Daria Dolan, financial experts and hosts of nationally syndicated radio show The Dolans

That's the good news. The bad news is that some capital sources might try to take advantage of entrepreneurs in what promises to be a tepid fund-raising environment. Ora Smith, president of Science and Technology Campus Corp., the research park and venture capital affiliate of Ohio State University in Columbus, predicts that "canny investors will take advantage of the economic slowdown and public market retrenchment to lock up novel technologies and business opportunities by taking positions at attractive valuations." In other words, investors will want more of your company for fewer investment dollars.

Unfortunately, experts predict that some sources of capital will stay on the sidelines in 2002. According to Tony Warren, director of the Farrell Center for Entrepreneurship at Penn State University in University Park, angels are likely to be quiet. "Their net worth is probably hit by the stock market downturn, their own personal businesses may be suffering, and their interaction with the VC sector feeds them with negative vibes to hold off," he says. Warren, who is also a partner with venture firm Adams Capital, adds, "All the angel groups I am working with are not making investments."

Ditto for the banking institutions, it seems. "Lenders are still reeling from massive losses incurred as their clients have gone belly up," says William Del Biaggio, president of Menlo Park, California-based Sand Hill Capital.

As Transamerica's Wanders says, "2002 will be the best of times and the worst of times for raising capital."

-David R. Evanson

Chris Penttila is Entrepreneur's "Staff Smarts" columnist. Geoff Williams is Entrepreneur's "Hot Seat" columnist. Kimberly L. McCall is Entrepreneur magazine's "Sales Force" columnist. David R. Evanson is Entrepreneur magazine's "Raising Money" columnist. Mark Henricks is Entrepreneur magazine's "Smart Moves" columnist. Amanda C. Kooser is Entrepreneur magazine's assistant technology editor and Nichole L. Torres is an Entrepreneur magazine staff writer.

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