Hot Stuff

Ready to make your move in '99? First check out our predictions for the hottest businesses of the year.

Magazine Contributor

January 1, 1999 15 min read

This story appears in the January 1999 issue of Entrepreneur. Subscribe »

Concierge Services

In the past, concierge services were available only to guests at posh hotels. Today, just about anyone can pick up the phone and have their personal concierge buy tickets to the theater, shop for and send gifts to a long list of valued clients, or plan an elaborate party. With the results of a recent survey by The Families and Work Institute showing the average worker spends 44 hours a week on the job (an increase of 3.5 hours from 1977), the concept of a personal assistant begins to look very attractive for those who can afford it. "Downsizing has really put pressure on the white-collar work force in terms of longer hours and less free time," says Jim Proser, founder and president of Los Angeles-based Elite Concierges. "And these individuals are truly feeling the need for daily assistance."

While there is little information on the growth of this industry as a whole (the National Concierge Association was founded only last year), several concierge companies, including Capitol Concierge in Washington, DC, and LesConcierges in San Francisco, are now doing more than $1 million in sales per year.

Personal Chef

Fast food, takeout or TV dinner? Busy families, working couples and culinarily-challenged singles-with stomachs turning at the thought of eating one more hamburger or slice of pizza-are paying personal chefs to come into their homes to prepare gourmet dinners that can be frozen and reheated for quick, easily prepared meals.

"People are just too tired to cook when they come home from a long day at work," says Becky Trowbridge, 38, who started Marvelous Meals, a personal chef service in Dana Point, California, in 1996.

"When we do all the planning, shopping, preparation and cleanup, clients don't have to do anything except approve the menu, come home and heat it up," says David MacKay, founder of the U.S. Personal Chef Association (USPCA). There are currently about 1,800 personal chefs nationwide, and the USPCA projects their ranks will grow to more than 5,000 over the next five years. Chefs most often work alone, serving between 15 and 20 clients, but some bring in additional help to increase sales. With the USPCA predicting industry sales to reach $100 million by 2000, it smells like something is really cooking in this industry.

Virtual Human Resources

Human resources management is a minefield. One tiny misstep in setting up a benefits program can get a small business in deep trouble with the IRS. Big businesses have substantial staffs handling these intricacies, but at smaller companies, it's usually an overworked secretary or the owner who does this job in his or her spare time. This makes the probability of serious mistakes escalate.

Enter "virtual human resources" consulting firms, which have turned the problems small companies face into their own business opportunity. A case in point: Rochester, New York-based Paychex Inc. "Our typical client, a small business with between 15 and 200 employees, doesn't have the internal expertise to perform human resources functions effectively," says Paychex's founder and CEO Tom Golisano, 57.

Core small-business human resources needs involve everything from employee handbooks and personnel forms to setting up and administering retirement programs. For the companies that tackle these duties on an outsourced basis, these tasks are a potential gold mine. "Outsourced human resources is a $50 million business for us," says Golisano. "It's very profitable. And it's been growing 25 to 30 percent per year."

What's more, this niche is relatively uncrowded. The biggest hurdles? Having the meager customer base that goes with being an industry newcomer means economies of scale are a struggle to achieve. What's worse, the very complexities in human resources that prompt small-business owners to outsource those functions can prove maddening as laws continually change. But meet the requirements, and the payoff just may be rich: Predicts Golisano, "The outsourced human resources industry is going to be a very big business."

Y2K Consultant

For the 2,000th time . . . With less than a year to go before the January 1, 2000, deadline, businesses of all sizes are scrambling to com-plete their Y2K compliance projects-and failing. A recent survey by La Jolla, California-based ZD Market Intelligence of 2,400 businesses on their Y2K readiness indicates that while 80 percent of the businesses are committed to addressing the issue, only 17 percent have actually completed a Y2K project. The problem? There are simply not enough qualified people available to audit and fix all the computer hardware and software products that may be vulnerable to the bug.

What's worse, many non-Y2K-compliant systems were designed using older programming languages like COBOL, and many programmers skilled in the older languages have long since retired, leaving behind a potentially catastrophic knowledge gap.

If your IT experience doesn't include dealing with the Y2K bug, take heart. It's never too late to learn, and the recent avalanche of Y2K-related software packages, books, pub-lications, Web sites and conventions inspired by the impending crisis can help.

While no one can accurately predict the full effect the Y2K bug will have on the computer systems of the world, those who have the right skills can expect to see their value in the marketplace spiral ever upward in the coming months.

Job Training Services

Quick-change artist. That's what your company must be to provide job training services to businesses. Indeed, keeping pace with technological changes is one of the primary challenges facing training companies, according to a 1998 survey by the American Society for Training and Development (ASTD).

Computer and teamwork are expected to be among the top skills employees will need in the coming years, according to ASTD. A recent Price-waterhouseCoopers LLP survey of CEOs of the fastest-growing U.S. firms bears this out. These companies are offering upgraded training in basic skills such as math and reading; advanced computer education in areas such as customer serv-ice, mar-keting, sales and internal communications; as well as in-struction in accounting, fi-nance and cash management. Other hot training areas include customer serv-ice and creative problem-solving.

The good news for entrepreneurs, at least in the area of technical training, is that at the typical company, less than 40 percent of computer courses are taught by in-house employees. And the picture continues to look bright: Expenditures on out-sourced training are expected to more than triple, reaching a whop-ping $318 billion by 2001.

We said it last year, and we'll say it again: Entrepreneurs who are poised to move at the speed of change will likely enjoy lon-gevity and prosperity in this booming industry.

Employee Leasing

Fifteen years ago, there were approximately 10,000 leased employees in the United States. By 2000, the best guesses say there will be 10 million. That surge points to a flood of opportunities in the employee leasing field that hasn't stopped since we first named it a hot business in 1995-and it shows no signs of slowing.

"We believe our industry has achieved only a 2 to 3 percent penetration of the potential market," says Carlos Saladrigas, 50, co-founder and CEO of The Vincam Group Inc. in Coral Gables, Florida, which places employees with some 2,000 businesses nationwide. According to recently released figures in Investor's Business Daily, the industry has grown from $5 billion in 1991 to $18 billion in 1996. "This industry will enjoy exponential growth for the next 20 years," predicts Saladrigas.

Why so much new optimism for a business we've touted for at least four years? "The explosion of small business," says Perry Solomon, founder and chairman of HR Logic, a Newton, Massachusetts, employee leasing firm, or professional employer organization (PEO), as these companies are known.

By the reckoning of the SBA, 65 million Americans (about half the labor force) work for companies with fewer than 500 employees. That's ideal for PEOs because being a boss has become complicated. "There are [countless] federal regulations you have to comply with," says Saladrigas. "You have to watch what you do and what you don't do. It's gotten complex."

Enter PEOs, which lift the hassles off the shoulders of business owners by providing clients with qualified staff and handling all the details-payroll, benefits, and compliance with laws and regulations. "By outsourcing noncore functions such as human resources, the business owner has more time to focus on profit-making functions," says Solomon.

Sound good? Fledgling entrepreneurs should know that as fast as the PEO industry is growing, there are still steep barriers to entry. The PEOs that are thriving have invested heavily in computer systems, lawyers, accountants and human resources professionals.

There's no doubt, however, that industrious entrepreneurs with a clear vision of how to create even greater efficiencies in employment will prosper as more companies wise up to the benefits of contracting with PEOs.

Upscale Drive-Thrus

This isn't your father's fast food. Forget about burgers and fries, and tune in to the latest trend to emerge from the quick-service restaurant sector. Upscale drive-thrus are targeting time-challenged commuters by offering an appealing blend of fine dining and convenience.

Among this trend's leaders is Autobistro Inc., launched last year in Newport Beach, California, by partners Jonathan Rodriguez-Atkatz, 42, Mark McNeely, 48, and Gordon Bowker, 55. "As a society, we're working harder and playing harder," says Rodriguez-Atkatz. "We want great food, but we don't want to spend our time cooking." Industry estimates support Rodriguez-Atkatz's claim. A recent Restaurants and Institutions survey reveals 44 percent of consumers eat at fast-food restaurants at least once a week.

Featuring three "drive-under" lanes, Autobistro sets itself apart with tech-driven efficiency and a distinctive architectural design reminiscent of "The Jetsons." Culinary delights such as sesame peanut noodle salad and grilled chicken and artichoke focaccia arrive by elevator from the kitchen overhead.

A superior product, stay-in-your-car simplicity and hungry professionals (or harried soccer moms) with upscale tastes? Sounds like a winning combination for creative, forward-thinking entrepreneurs-as long as they don't go too far, cautions restaurant marketing consultant Raymond Coen.

"Although Americans are upgrading their tastes, that doesn't mean they'll [adopt a different] food category. You still have to serve something people really want," says Coen. "You've got to have a following to support your investment."

Pool Supplies

If you want to make a big splash in business, maybe you should consider diving into the growing swimming pool aftermarket. According to The National Spa and Pool Institute, recent demand has pushed the number of pool installations well above the high-water mark. The institute found in-ground pool installations increased by 20 percent last year. This follows increases of 15 percent from 1995 to 1996 and an estimated 15 to 20 percent increase from 1996 to 1997. This growth translated into an estimated $40 million in swimming pool industry sales in 1996, with aftermarket sales reaching $2.5 billion.

"Consumer confidence [in the economy] is high," says the institute's Jack Cergol. "[This] makes people feel like they can spend discretionary income."

What's in it for entrepreneurs? More pools mean more sales of chemicals, maintenance supplies, covers, fences and other accessories. It could also spur a higher demand for swimming instructors, swimsuits, pool toys and the like. In short, the retailer who adds a swimming pool section to an existing store would definitely not be considered a wet blanket.

Children's Photo Studios

Children represent a big business opportunity when it comes to professional photography. Angela Carson, 36, chair of the children and family specialty advisory group of the Professional Photographers of Ameri-ca, knows plenty about this lucrative market. In the 12 years she has run Angela Carson Photography in Northville, Michigan, Carson has gone from photographing children as a sideline to concentrating on this niche market almost exclusively.

Industry watchers say a number of factors are driving the trend's growth: Australian photographer Anne Geddes, whose shots of cherubic babes have consumers desiring more original settings for Junior's photos, and the increased marketing of children's images.

Recording children's growth also translates into repeat business, says Jim Nichols, director of marketing for Candid Color Systems, the company that developed the Glamour Shots retail photography studios. Nichols' company recently entered the market with a children's concept-The Picture Park in Oklahoma City.

Industry newsletter Photofinishing News says birth-through-age-5 photography was a $1.1 billion market in 1996 and a $1.2 billion market in 1997. While the dominant players are chains like Olan Mills and Wal-Mart, small companies offering a unique touch are taking on these giants-and succeeding.

Juice Bars

Drink up, America. As an increasingly health-conscious nation sips away, the juice bar industry is ripening into the kind of entrepreneurial opportunity that's far more pulp than fiction. Put it this way: Juices and smoothies whipped up revenues in excess of $500 million last year. Juice bars have been hot for a while in areas like California, but there are still parts of the country where the juice market is wide open; franchising is often a good way to get in on the opportunity. Who can doubt there's a whole lot of blending going on? Certainly not the editors here at Entrepreneur-we first predicted the juice boom in 1994.

And definitely not 32-year-old Susan Hibbs, who founded Minneapolis-based Sola Squeeze two years ago. "We get everyone from teenagers to small kids coming in with their parents to executives and retired people," says Hibbs, explaining her three juice bars' wide appeal.

"What you're selling with a juice bar is convenience and health," observes Dan Titus of Juice Gallery, a Chino Hills, California, consulting firm specializing in juice bars. "The main thing driving [the popularity of juices and smoothies] is that they're a healthy meal replacement."

Well, yes . . . and no. Although many people consider smoothies bona fide meals, others think of the fruity, vitamin-enriched concoctions as either a dessert or an accompaniment to, say, a wrap or an energy bar. For its part, industry giant Jamba Juice stirred up plenty of attention by adding breads and soups to its menu last year.

Predicting the juice bar industry will hit the $1 billion mark in 2000, Juice Gallery's Titus is equally confident there's ample profit left to be squeezed out of the nation's love of smoothies. Especially ripe for the picking, it seems, is the great expanse of territory between the West and East coasts.

Webzines/Communities

Here's a riddle: What smoothly blends original content (like that found in magazines) with interactive features such as live chats, message boards and links to online retail sponsors (like those found in an online community)? It's not easy to answer. Don't call it an e-zine-that doesn't sound professional enough. Don't call it a community-that doesn't reflect the original content of editors and writers. So what's the word? How about Webzine/community.

What makes the newest incarnation of the magazine (part of the $1.19 billion Web publishing industry) so successful is the opportunity for editors to know what readers are thinking almost instantaneously-and to target content, new interactive features and advertising accordingly. "We're in touch with our audience on a daily basis," says Esther Drill, 29, who started gURL.com, an enormous site for teen girls that offers editorial content, live chats, message boards and more, in 1996. "We know what they're interested in, and we use that knowledge to grow and improve our site."

Steve Silberman, senior culture writer at Wired News (Wired mag-azine's Internet news service), says the relationship between readers and advertisers is the key to the success of many sites. "Salon [a Webzine] does various sponsorship deals where they'll do an article about an album, and at the bottom, it will say, 'Buy this album at Borders,' " says Sil-berman. "That's a good idea, because one of the great things about the Web is that you can market directly."

Silberman warns, however, not to assume that just because it's the Web, a Webzine/community will be a huge success after, say, six months. "With print magazines, it's understood that it takes about five years to get off the ground," says Sil-berman. "It feels different because it's the Web and everything feels so accelerated, but the patience to hang out down there in the red while the readership builds is really important."

While Webzines/communities may earn as little as $1,000 to more than $1 million a year, according to research group Activ-Media, these sites projected a 283 percent increase in sales between 1997 and 1998.

Tech/Specialized Staffing Services

For the fifth year running, specialized staffing services reign supreme as a perpetually hot business. With low unemployment rates and the creation of more jobs requiring technically skilled and highly educated workers, job seekers are finding they can pick and choose from a variety of great opportunities, and companies are seeking help in hiring these workers.

"Companies are recognizing they don't have the expertise to recruit and evaluate people with specialized skills," says Bruce Steinberg, associate editor at Staffing Industry Report. "[Additionally,] the new business model that's developing is to concentrate on your core strategy. Anything that's not your core strategy is probably best done by someone on the outside." Which means that companies are going to staffing services to find even more outside help in areas like legal services, accounting and marketing.

According to Staffing Industry Report, both professional/special and technical/IT staffing services increased by an estimated 25 percent between 1997 and 1998. And what are some of the hotter areas boosting this $26.3 billion industry? Technical employees, which can include anything from software programmers to IT integration specialists and Web site developers; creative talent like graphic artists and copywriters; and consultants.

Contact Sources

Angela Carson Photography, 117 N. Wing St., Northville, MI 48167, acarsonpho@aol.com

Autobistro Inc., (949) 833-1408, ext. 104, fax: (949) 833-1409

Candid Color Systems, 1300 Metropolitan Ave., Oklahoma City, OK 73108, (405) 951-6839

Raymond Coen, (310) 459-8843

Elite Concierges, (800) ASSISTANT, jp@leconcierge.com

gURL, gURLstaff@gURL.com, http://www.gURL.com

HR Logic, (617) 558-8600, http://www.hrlogic.com

International Data Corp., (508) 872-8200, http://www.idc.com

Juice Gallery, (909) 597-0791, http://www.juicegallery.com

Marvelous Meals, (949) 488-8160, mmeals@athome.com

National Spa and Pool Institute, (703) 838-0083