3rd Annual Million-Dollar Ideas

This story appears in the January 2002 issue of Startups. Subscribe »

It doesn't happen every day, and it doesn't make much noise when it does. The moment when you get the itch to start a business often happens quietly and without warning--you could be sitting in cafe enjoying a latte or zipping along on the freeway when inspiration strikes. And typically, it's accompanied by nothing more than a smile creeping across your face--because you know you're on to something, and you know you want to keep it to yourself for a while. That's what we hope happens when you read this year's "Million-Dollar Ideas," our 3rd annual look at some of the hottest business ideas around. Pull up a chair, or simply pull over on the side of the road, because you're going to want to take this one in good.

Staffing Firms

Companies always need staff. And the people providing that staff, staffing firms, have been doing well--to the tune of about $63.6 billion in sales. But the downturn of the economy has brought some new challenges to the market.

Deborah Wainstein, 28, founder of Priority Staffing Solutions Inc. in New York City, has been placing fewer permanent workers but more temporary workers in recent months: "Right now we're reinforcing the relationships we have [with clients] and keeping things positive."

The challenges are many--more people looking for jobs, competition from online job boards, company layoffs, to name a few. But opportunities abound, too. Cooper Moo, director of product management at Salary.com, sees strength, in the short term, in the staffing firms that provide security workers as well as those that have a sophisticated screening process for job seekers.

In the long term, good staffing firms will be vital, say experts--especially since some economists are predicting an upswing in mid- to late 2002. "Long term, the outlook for the staffing industry will be very rosy," says Joyce L. Gioia, a workplace trends futurist at the Herman Group. "This is a time for people who run staffing companies to regroup-to prepare for the onslaught that takes place in four to eight months." --Nichole L. Torres

Security

September 11 has put the need for security at the forefront of business concerns, and a broad range of opportunities exist within the security industry. The need for security guards across the nation overwhelmed many of the major security companies immediately after the attacks, and there is still a need for trained guards, armed and unarmed, especially in providing higher-end, more qualified personnel, though the demand has dropped as companies plan longer-term solutions.

According to Marc Bradshaw, president of the International Association of Professional Security Consultants, those long-term solutions include the installation of closed-circuit monitoring systems and biometrics systems as well as background checks on personnel in sensitive areas.

"People do not have comfort and peace of mind," says Anthony Dohrmann, 35, founder, chairman and CEO of Lasershield Systems Inc., a manufacturer of security appliances in Carlsbad, California. "Attacks on American soil have created a kind of disease and fear that we've never had, and I think its going to have a tremendous impact [on the security industry]." -Gisela M. Pedroza

Yoga Studio

As our 21st century lifestyles become increasingly complicated, people are getting back to basics. Enter yoga, a 5,000-year-old practice seeking physical and spiritual enlightenment and drawing widespread devotees. IDEA Health & Fitness Association's Trendwatch 2001 highlights yoga as one fitness program showing the greatest increase in participation, and its proven benefits in health prevention and healing has many flocking to the yoga studios.

Mark and Kim Morrison, owners of Yoga Studio in Costa Mesa, California, left their respective jobs as attorney and teacher in 1995 to open up their studio with $25,000. Specializing in Bikram yoga, their 2001 revenue reached $250,000, with business increasing 20 percent annually. "People's whole perspective on life is shifting toward more authentic lifestyles," says Mark. "They're looking for a little peace."

Larry Payne, co-founder and director of the International Association of Yoga Therapists, says $100,000 is ideal for starting your own studio and points to "yoga therapy," teaching yoga to people with special needs, as the future of the yoga industry. And he's not the only one convinced of yoga's appeal: According to Yoga Journal, there are approximately 20 million practitioners in the United States alone. -April Pennington

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

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

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 maternitywear." 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

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

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

Franchising

"One of the most important tasks of the franchisor is to eliminate the franchisee's excuse for failure, [which] is accomplished through constant testing and refinement of the products and services to know exactly what succeeds and what does not," notes Jerry Wilkerson, president of Crete, Illinois-based consulting firm Franchise Recruiters Inc. And that's really the beauty of franchising: Someone else does your dirty work.

That wasn't immediately evident to Steven Wise when he and his college buddies decided to start a business two years ago. "We didn't necessarily look into franchising; what we were looking for was to get into our own business," says Steven Wise, vice president and co-founder of eCo3 Ventures Corp., an Orlando, Florida, company he founded with Benjamin Staat, 31, and Keith Tanner, 33, to operate their Hangers Cleaners franchises.

But Wise, whose company has yet to open for business (the company plans to have four units in operation by spring 2002), has already seen the advantages of franchising. "The biggest benefit is the ability to share your knowledge with a group of people who are doing very similar things in terms of creating a business and following the same guidelines [you are]," says Wise, 30. "You have the ability to tap in to a number of people throughout the country and ask them what their experiences are, what their knowledge is, and we have the ability to share that with them as well."

Consulting Service

Consulting is one of those businesses that most people aren't too familiar with. They know the term, but really, what do consultants do all day long? What do you consult about? We'll clear up the confusion: According to Merriam-Webster's Collegiate Dictionary, a consultant is one who gives professional advice or services, an expert. It's one more thing, too, according to us: a damn good industry to get in on.

"Consultants offer a fresh, objective point of view when an organization is looking for answers to questions it never had in the past," says Elaine Biech, author of The Business of Consulting. And this is a particularly salient point right now with a recession lingering and layoffs occurring in all industries. "Layoffs don't signal less work for consultants," says Biech. "In fact, it's often just the opposite. The employees go away, but the work may not. Consultants can provide temporary people-power to complete projects that still remain."

To get a start in consulting, you will need solid experience and expertise. John Hrastar began his McLean, Virginia, consulting firm, InterSource, after building a $25 million business. "My expertise comes from being a real-world, serial entrepreneur, having an interest in a wide variety of industries, an understanding of the underlying processes that drive business growth, and the ability to quickly learn, distill and communicate a situation when working with a client," say Hrastar, who offers CEO advisory services; interim CEO services, where he becomes the CEO of a company for a brief period of time; and CEO roundtable discussion moderation.

"The key is to determine where your brilliance lies and then offer it to clients," advises Biech. "Do a thorough self-assessment: Explore your experiences, inventory your competencies and assess your consulting aptitude." Also, talk to other practicing consultants to get a feel for the business, the day-to-day operations and the challenges. "The third step is to determine how much money you'll need to make and begin to establish your business plan," says Biech.

Start-up costs for consulting practices are minimal: A desk, computer equipment and high-quality marketing materials. "You can get by with few expenses to start a consulting business," says Biech. "However, don't cut costs on your marketing supplies. Do not shortchange your image."

Patriotic Products

After September 11, you saw them everywhere: Flags on car antennae or attached to windows. Flags on lawns. Flags on shirts. Many were given away in exchange for charity donations. But many, many were sold at the local convenience store, the grocery store, the department store--hopefully with a chunk of change still going to charity.

While marketing patriotic products during a time of national turmoil can be a risky venture, it can also turn out to be a business opportunity that can nourish both your entrepreneurial spirit and your conscience--if you go about it in the right way. John Landrum and Bill Russell both work in the film industry, but just days after September 11, they were struck with a thought that changed both their lives: How can you show your patriotism while also supporting the peace movement? Hours later, Peaceflags.org was born.

But don't let the quick start fool you: The business partners struggled to find flag manufacturers that would take a chance on their small company and surprisingly controversial product: an American flag with stars in the shape of a peace sign. In fact, CNN pulled a segment on Peaceflags as a result of advertiser pressure. "It's controversial in that the peace movement is marginalized right now," says Landrum, who worked with Russell to keep the flags completely U.S.-produced. "Because we're providing the symbol of that [movement], we definitely became the chew toy of that battle."

They also struggled to find a way to get the word out about their product. They first focused on nonprofit organizations like National Public Radio, but were shut out because Peaceflags.org isn't nonprofit. (They explored the option, but Landrum says it was a "bureaucratic nightmare.") With a scarce advertising budget, they lucked out: Both Mother Jones and The Nation offered online ad space for next to nothing, and their ad got the highest click-through rate--4 percent--in history on both sites. They've since received 3,000 orders and donated one-third of proceeds to charity, and they plan to keep the business alive in hopes of finding a nonprofit purchaser for Peaceflags.org.

The moral of this story is, while the nation's attitude is ripe for new patriotic products, it's not necessarily an easy sell. Like any "hot" trend, getting started quick is crucial--and getting started quick requires long, long hours. But is it worth it when the trend will peter out? The current 50 million flag market (according to the National Flag Foundation) will undoubtedly diminish over time, but 20 million flags are still sold every year. So regardless where current events are headed, customers will still be looking for flags come Flag Day and Fourth of July.

Tech Consulting

IT spending is down this year--it's true. But after increasing year after year for the past decade, there's still a huge market for tech consultants. IDC estimated that worldwide corporate spending on online initiatives would reach $700 billion in 2001, with U.S. companies spending $260 billion on Web infrastructure in 2000.

Who's the market for tech consulting? "Any firm using IT systems. In other words, almost any firm," says Don McLaurin, CEO of the National Association of Computer Consultant Businesses, an organization that represents IT services firms.

As far as choosing a specialty, let your imagination and your skills determine that. Computer consultants can focus on software development, network engineers, security, programming, Web designers...the list goes on and on. "People specialize [within these areas] as well," explains Gloria Metrick, owner of GeoMetrick Enterprises, a Cincinnati-based computer consulting firm that specializes in managing laboratory data. "For example, there are many programming languages a consultant might specialize in. Another twist is, some consultants specialize in a functional area or a subset of a functional area. For example, I work with a specific type of laboratory system known as LIMS (Laboratory Information Management Systems), and I perform all tasks within the type of system I work with."

To get started, you need a good amount of experience in the area you're specializing in. Before striking out on her own, Metrick had worked for a LIMS end-user and a LIMS vendor as well as subcontracted at a LIMS consulting firm. "Consultants cannot be 'run-of-the-mill' talent," says McLaurin. "They usually need at least three years of practical experience. [And,] unless they are in some really esoteric technology, they need good soft skills, i.e., communications and relational skills. More than 80 percent of consultants are asked off of assignment because of nontechnical reasons."