13 Hot Businesses for 2005

From high-tech clothes to wine making -- the only thing these opportunities need to succeed is you!

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By Entrepreneur Staff • Apr 29, 2005

eBay Drop-Off Stores

One business realm continues to flourish despite Americans'concerns over the sluggish economy--the seemingly indomitablekingdom of eBay. The auction marketplace juggernaut has more than95 million registered users worldwide who traded nearly $24 billionworth of goods in 2003. Whether you pride yourself on being aTitanium PowerSeller or have never even thought about selling oneBay, there's serious money to be made, and a crop of eBaydrop-off businesses are popping up to help with the process.

EBay drop-off stores bridge the gap between the online bazaarand people who want to sell their goods without the hassle. Ownersserve as middlemen who handle an item's sale--from photographyand description to financial transaction--netting a percentage forthe service. Though eBay set up a Trading Assistant Program in2002, which allows eBay users to help others sell their items, ithas otherwise kept its distance in this arena and has welcomedenterprising individuals as intermediaries. "We'redefinitely seeing a trend of these retail storefronts openingup," says Hani Durzy of eBay. If you don't want to build adrop-off store from the ground up, consider one of the manyfranchises getting in on the auction action, like iSold It or QuikDrop.

"It was a huge opportunity with a recession--proof model interms of coupling the consignment world with businesses, nonprofitsand retail space," says John Hawk, 39, who started Bidadoo Inc. with hisbrother Howard; both brothers have B2B backgrounds. Bidadoo, withtwo store locations in Bellevue and Seattle, Washington,incorporates fund raising into the mix by allowing sellers todonate an item's proceeds to a nonprofit. Launched in January2004, Bidadoo projects sales will top $1 million this year andexpects fivefold growth by 2005.

What's really surprising is that many existing eBay sellers,even PowerSellers, use Bidadoo. "We thought they'd be ourcompetitors, but it turns out they're some of our bestcustomers," reveals Howard, 41.

Marsha Collier, author of eBay for Dummies, suggestsfirst trying the Trading Assistant Program for a free taste of thisbusiness. Says Collier, "Why not get on-the-job trainingbefore you put out any money?"--April Y. Pennington

Kids Plus-Size Clothing

Obesity is no longer just a weighty issue for adults--childrennow make up an increasing percentage of the growing number ofoverweight Americans. According to 1999-2002 survey data from theNational Center for Health Statistics, 16 percent of children andteens aged 6 to 19 were overweight--triple what the proportion wasin 1980--with another 15 percent at risk of becoming overweight.That means there's a growing need for clothing that not onlyfits right, but also boasts the same style and attitude of itsaverage-size counterpart.

Ruth "Penny" Smith knows all too well the anguish andfrustration plus-size kids and parents feel when clothes shopping:Her own son often came home empty-handed and disappointed. Smith,44, had been sewing some of his clothing and realized she couldhelp others by designing large-size boys and girls clothing.Teaming up with her former district manager from a formalwearstore, Patti Herioux, the two started Hey Mom, "ItFits!" in Bolingbrook, Illinois, and have received anenormous response worldwide from their e-tail website.

Market research firm The NPD Group reports the kids plus-size apparelindustry has grown to about $3 billion a year--about 12 percent ofthe overall children's clothing market. Though large companieslike Dickies, Old Navy and others have joined the fray,entrepreneurs who move quickly into this arena can stand out.

"Big names like J.C. Penney and Sears are going to largersizes, but from what we've seen, their large sizes are not evenclose to where they need to be," observes Herioux, 24."And that's the market we look to cover." Serving upto 44-inch waistlines since 2003, Hey Mom, "It Fits!" isexpanding its line to keep up with requests for larger sizes. Thecompany expects sales to reach $150,000 this year.

"The advantage for entrepreneurs is creating a verycreative, specific brand identity," says Jeff Klinefelter,senior research analyst for investment firm Piper Jaffray &Co., based in Minneapolis. Offering hip attire like denimjackets and carpenter jeans, Hey Mom shouldn't have a hard timekeeping up with trends--especially now that Smith's son Cedric,13, has moved from being the company's clothes model to one ofits designers.--A.Y.P.

Search Engine Optimization

Being a rock star on stage in front of thousands of screamingfans will get the hairs on your arms to stand up. Garry Grant, 46,who used to play with the likes of Bon Jovi and Bruce Springsteen,says he got that same feeling the day he learned his company wasranked No. 1 on Google. The CEO and president of Search Engine OptimizationInc., Grant says top ranking has equaled huge revenue gains: Heexpects company sales to reach $6 million in 2004, up from $1.9million in 2003. Not bad for the multitalented computer sciencegraduate, who went from being a rock star to an internetentrepreneur.

Eighty-four percent of Americans online use search engines,according to the Pew Internet & American Life Project, whichresearches the impact of the internet, and ComScore Networks Inc.,a provider of marketing information and consulting services. Thatmeans getting a high ranking can make or break a business."You could spend a million bucks on a website, [but] ifit's not visible, it's worth nothing," says Grant.Businesses that want top rank turn to search engine optimizers,which provide the "technology, methodology and science ofincreasing your website's visibility," according toGrant.

Larry Chase, publisher of Web Digest for Marketers andSearchEngineForMarketers.com, says search engineoptimization (SEO) isn't for the faint of heart. "This isa very fast-changing marketplace," says Chase. "It'snot the kind of field where you learn it once and forget aboutit." Chase recommends constant reading of industry news tokeep up; Grant goes a step further and checks for patents filed bysearch engine companies to stay ahead of the competition.

Good niche areas for entrepreneurs include pay per click,copywriting and local searches, says Chase, who forecastspersonalized searching will be the next big search innovation. Forexample, tech geeks searching the word Apple will get results forApple Computer, not the kind of apple you sink your teeth into. Inthis niche, opportunities exist for entrepreneurs in developing thetechnology that acquires such user preferences or profiles, as wellas in optimizing websites for personalized searches.

Of course, we can't talk about SEO without mentioning theelephant in the room: Google. Chase and Grant agree that Googlegets the most SEO attention. However, Chase adds, "Youcan't please all of the search engines all of the time--youhave to figure out that middle ground." Like Grant, if youfigure that out, you, too, can be a headlining act.--SteveCooper

Performance Apparel

Today's clothing needs to offer more than just a fashionstatement--it needs to offer value and practicality. That's thethinking behind the growing industry of performance apparel.

Performance apparel is clothing with a purpose, like shirts thatoffer UV protection or sunglasses with an embedded MP3 player foractive people who love the outdoors. You may have been donningperformance threads for a couple of years without even realizingit--think wrinkle-free pants and stain-resistant shirts. Apparelthat's really pushing the envelope includes clothes that cleanthemselves; suits that monitor the body and deliver drugs likeinsulin when necessary; raincoats that receive real-time weatherforecasts, notifying the wearer of the outdoor conditions; pantsthat repel insects; washable suits; and anti-microbialunderwear.

Bill McNally, co-founder of Noble Fiber Technologies in Clarks Summit,Pennsylvania, has created X-Static, a silver-woven textile fiberthat's easily incorporated into any textile material andenables the material to kill odor and bacteria while enhancingexisting sweat-wicking systems. McNally, who has a biomedicalbackground, recognized the benefits of X-Static for the medicalcommunity and also saw applications for use in the military andconsumer markets.

"To maximize the performance of a given product, you needto be able to deliver multiple benefits--and that's what wedo," says McNally, 43, whose company has seen exponentialgrowth each year since it was founded in 1996.

David Schmida, executive director of the International Association ofClothing Designers & Executives, predicts that by 2010,some 40 percent of all garments sold will have some performanceapparel element to them. "Where I see the entrepreneur comingin is in nontraditional uses of fabrics or technologies inapparel," says Schmida. For example, Schmida saysentrepreneurs might develop a new fabric for the military but finda use for it in golfwear. Schmida adds that fitness andleisure-time clothing are the hottest segment of the performanceapparel market today.

McNally can attest to that: His product was used by 61 countriesduring the Athens Olympics; Johnson & Johnson and NASA are alsoon his client roster. One success secret is pretty simple, he says:"Value is a recession-proof asset."--S.C.

Functional Food

Water isn't just water anymore--it can now be fortified withvitamins and minerals to enhance your health. And the same goes fornutrition bars, shakes, snacks, cookies--you name it, and companiesare adding nutrients like calcium and soy protein to enhance it.Such "functional foods" experienced an average of 9percent growth year-over-year, accounting for $22.8 billion in U.S.sales in 2003, growing from$13.7 billion in 1997, according to theNutrition Business Journal.

Promising benefits that range from defeating dehydration toalleviating joint pain, functional foods are marketed to play uptheir health and wellness benefits. It was, in fact, a search forsomething to relieve his mother's menopause discomfort that ledDr. Aaron Tabor to create his company, Revival Soy.Founding the company in 1998 while he was in medical school, Taborwanted to create a line of shakes, bars, snacks and such that wouldharness the positive health effects of soy but taste good, too.Tabor patented the process he'd found for isolating the mostbeneficial elements of soy and, adding them to his products, beganputting the Revival Soy products through clinical trials. To date,the company has 20 such trials completed or underway, offeringevidence of the products' health benefits. "I've beenable to touch hundreds of thousands of people now, [compared to] ifI'd just gone into clinical practice," says Tabor, 34.Selling direct to consumers via a toll-free number and theinternet, Kernersville, North Carolina-based Revival Soy has annualsales of more than $20 million.

Patrick Rea, research director with Nutrition BusinessJournal, notes that nutrition bars remain one of the mostpopular functional food items, while drinks and snack foods alsoshow a strong market presence. Still, he notes that it's achallenge to get noticed among all the competition--especiallybecause you'll want to get your product on the shelf besidethose from huge companies. To get started, check out Functional Foods &Nutraceuticals magazine, not only to find out what's goingon in the market, but also to see the listing of functional foodtechnologies and innovations to possibly license and put into foodproducts.--Nichole L. Torres

Financial Planning

Now entering their retirement years, 77 million baby boomers arefinding themselves forced to deal with financial planning and assetmanagement if they want to live comfortably well into retirement.From the wealth boomers are expected to inherit in the next fewyears to management of the money they've earned in longcareers, there's a need for good financial planning. Still,according to a 2003 survey by financial services company ING, 62percent of baby boomers spend one hour or less on retirementplanning activities per month, while 32 percent say they don'tspend any time on it at all.

And therein lies a huge market--or plethora of markets."Even within the baby boomer demographic, find a niche--atarget group," advises Michael Kitces, director of financialplanning for Pinnacle Advisory Group Inc., a wealth managementcompany based in Columbia, Maryland. There's opportunity, henotes, for financial planners to target boomers within a specificasset level, for example, or even boomers getting ready to retirefrom a specific profession or industry.

Bruce Fenton started wealth managment and private banking firmAtlanticFinancial Inc., now based in Boston, in 1994. He targetsboomers as his main clients and warns that they are a particularlydemanding group. "Boomers tend to be savvy consumers,"says Fenton, 32. He has built his business to more than $1 millionin annual sales by meeting those demands as well as being highlycommunicative with his clientele.

While the boomer market is highly competitive, forward-thinkingentrepreneurs can also target Gen X and Gen Y consumers. JonathanGuyton, principal with Cornerstone Wealth Advisors Inc. in Minneapolis, notesthat financial planners can get into the business today by managingthe assets of slightly younger consumers--who often don't havethe same large net worth as boomers--and build a long-term trustwith those clients over the years. But whatever niche youultimately choose, Guyton sees a trend of more service-oriented vs.product-oriented financial planners--those who are paid a fee toprovide ongoing advice on all relevant financialmatters.--N.L.T.

Concierge Physician Services

As doctors become frustrated with paperwork, red tape andstifling patient loads, some are taking matters into their ownhands and starting a new kind of doctor's office, often withthe help of a dedicated businessperson. "Concierge physicianservices" is a term that covers patient-financed health care.This has many variations, but most often, the patient pays a yearlyor monthly fee for services like premium access, more personalizedvisits, even house calls.

Dr. John Blanchard, 34, is a founder and managing partner ofPremier PrivatePhysicians in Clarkston, Michigan, as well as president of theAmerican Society of Concierge Physicians. "We were unhappywith the service we were able to provide and the quality of healthcare we were able to deliver to patients in the traditionalhealth-care setting," he says. In a regular practicesituation, doctors have 3,000 to 4,000 patients; with his3-year-old business, each has about 600. "It restores theintegrity of the physician-patient relationship," saysBlanchard.

Because these companies don't bill insurance, they can havea smaller ancillary staff and lower overheard costs. Experts sayfamily practice and internal medicine physicians are typically theones who shift to a concierge model.

Katherine Harmer, 33, is founder and president of Higher Care inDenver. She came from a technology industry background and waspropelled into starting a concierge physicians business due to theloss of her father and a desire to do something that reallymattered. "You really have to do your research, and you haveto have good attorneys," she says of starting this business.She handles all the year-old practice's business matters, whilephysician James Benoist handles the patients. Higher Care is aboutto earn a profit, and Harmer expects they will have a full patientload by the end of their second year.--Amanda C. Kooser

Hispanic Marketing

The Hispanic market is sizzling--Hispanic purchasing power isexpected to hit $1.2 trillion in 2010. "This has become ahighly desirable market for mainstream Americans," says Elenadel Valle, president of the Hispanic Marketing & CommunicationAssociation.

But over the past three years, leading U.S. advertisers budgetedan average of just 2.4 percent of their resources to targetHispanic consumers, according to the Association of HispanicAdvertising Agencies. The time is ripe to help these companiesdecipher the vast Hispanic market and target their marketingdollars to reach this prized demographic.

One possible niche is teaching companies how to communicate inHispanic-oriented media and how to be sensitive to this market whenmass marketing. Advertisers are seeking specific, up-to-dateinformation on the Hispanic market--even down to the size andpurchasing habits of Hispanics in a certain ZIP code. Becoming anexpert on the types of segmentation is key--for example, you mustknow how the Los Angeles Hispanic population differs from that ofMiami or New York City.

Tony Moreno founded Huellas.com, a provider of multimedia and marketingservices for the Hispanic market, in Pembroke Pines, Florida, in1998. "Hispanics are very proud of their culture and generallylike to be catered to in their own language and according to theircultural heritage," says Moreno, 38. He's built hisinternational company into a six-figure business by coordinatingand producing events such as a pageant and fashion show in Floridaaimed at the Hispanic market.

"It's hard to find an industry today that shouldn'thave a Hispanic marketing strategy," says Luis Garcia,president and founder of Garcia 360°, a Hispanic advertising firm in SanAntonio, Texas. Use that to your advantage when marketing yourservices: Show companies examples of other businesses whose saleshave grown after targeting the Hispanic market. Just about anyindustry is worth a look--food retailing, clothing, financialservices, travel, manufacturing. Simply determine which industriesand companies are a good match for your skills.--N.L.T.

Technology Security Consulting

Raise your hand if you have security concerns when it comes toyour hardware, software and network. With spam, spim, securitybreaches, software patches, viruses, worms and hackers to worryabout, many businesses are turning to technology securityconsultants for help. While some will use their regular IT vendors,there's an increasing demand for specialized consultants whoare up-to-date and knowledgeable about all aspects of technologysecurity.

Mike Ryder, founder and president of Franklin, New Jersey-basedSafelinkNetworks LLC, found his focus in IT consulting. Ryder, 33,serves the needs of small businesses and schools, with the maintask of securing their networks and internet connections.Self-funded Safelink isn't yet a year old, but Ryder has builta comfortable client base, and his sales have been doubling everymonth. He attributes some of his success to his ability to explaintechnical issues in a nontechnical way. "My backgroundwasn't technical. I'm more like a regular person than atech geek," says Ryder, whose history degree went on the shelfin 1993 when he joined the data communication equipment businesswhere his brother worked. Ryder has also found a smart way to keephis costs down. Rather than stocking up on employees, he uses aloose federation of trusted independent contractors to fill out hisservice offerings.

According to IT and telecom research firm IDC, Ryder is workingin a strong area. Small and midsize businesses are a fast-growingmarket for IT services, especially in the areas of network andsecurity consulting. "During the next five years, the share ofservices spending by small and midsize companies will grow from 22percent to 28 percent of the market in the U.S.," says RebeccaSegal, vice president of Worldwide Services at IDC, based inFramingham, Massachusetts.

Ryder's advice for prospective tech security entrepreneurs:Invest some time in human networking, and build solid relationshipswith customers and colleagues. "What's important for me isfor this company to focus on taking care of a core group ofcustomers," he says. Entrepreneurs with the technical know-howand desire to keep up on the latest in security can do well servingthis market.--A.C.K.

Peer Support Groups

The lyric goes "Everybody needs somebodysometime"--and it couldn't be truer if you consider theproliferation of peer-to-peer business support groups. Popping upall around the country, these groups bring together like-mindedindividuals to discuss current business challenges or help takebusinesses or careers to the next level. Groups exist for businessowners, female executives, young businesspeople and people inspecific business areas, such as marketing. They can be for-profitor nonprofit endeavors, independently run or a franchise. But onething's certain: You'll need a clear vision to create asuccessful peer-to-peer support group.

Find your niche, and provide valuable services and guidance forthat group. Ted Sun, an executive coach and organizational designerwith Columbus, Ohio, business coaching firm ExecutiveBalance, has facilitated and advised such peer support groups.He recommends that entrepreneurs hoping to start a for-profit groupcome in with a ton of research, expert speakers, hot topics, greatfacilitators and members-only benefits. "You can charge a bitmore for that," he says. Membership can range from a fewhundred dollars to a few thousand dollars, usually paid annually orquarterly.

Key to the success of peer support groups is a hands-onapproach--groups need a strong facilitator who is knowledgeableabout group dynamics and a limited number of members so everyonegets the attention they need. Ray Silverstein, founder of thePresident'sResource Organization (PRO), a peer advisory board franchisor,caps group memberships at about 13 and assigns people to groupsbased on their companies' number of employees.

Author and marketing consultant Marcia Yudkin, 49, focuses onproviding value to members with her online mentoring and supportgroup, Marketing for More. Yudkin provides members-onlyweekly articles, a monthly teleclass with an expert guest, anonline forum for questions and discussion, and even a conferencecall each week to discuss in real time each entrepreneur'smarketing needs. "People have been very excited about theopportunity to get feedback when they need it," says Yudkin,who started the Goshen, Massachusetts-based company in September2003. Through monthly membership fees, Yudkin has built her salescomfortably into the six figures.-N.L.T.

Wine Businesses

It's the nectar of the gods--and the nectar of Americans,too, apparently. The number of Americans who drank wine at leastonce a week increased from 19.2 million in 2000 to 25.4 million in2003, according to the Wine Market Council. And it seems thatAmerican consumers have also developed a serious affection for allthings wine-related.

While starting a winery is one way to get into the winebusiness, you'll wait at least seven years before producingyour first bottle. Creating a business peripheral to wineries couldprovide a quicker path to success. From wine educators and winegame inventors to wine accessory manufacturers and builders whodesign wine cellars, entrepreneurs are entering this market fromall sides.

With a background in the restaurant industry, focusing on wine,Kyl Cabbage got into the peripheral side of the wine business byopening The Wine Experience in Des Moines, Iowa, in 1995.Cabbage wanted to create an environment that would draw everyonefrom knowledgeable wine enthusiasts to newbies. "We had todispel the thought that wine is only for the rich," saysCabbage, 44. The Wine Experience provides a forum for wine tastingand wine education, while offering a selection of over 2,800 labelsfor sale--the company even coordinates wine-tasting trips to NapaValley. With two locations in the Des Moines area, The WineExperience is slated to gross $3 million this year.

Targeting baby boomers is a no-brainer in this industry, butwine consumption is also growing steadily among Millennials intheir early 20s, says Vic Motto, chairman and CEO of Global Wine Partners, aglobal wine investment bank in St. Helena, California. He alsonotes that the market is starting to shift: An overabundance ofgrapes in the past few years had lowered the price of wine, but asmaller harvest in coming years will raise wine prices a bit inthis cyclical industry. "It's a highly competitiveindustry," says Motto, but he notes there is still room forpeople to carve out a market niche.--N.L.T.

Staffing Services

While the economy continues on its twisting path, one businessis booming. Demand for temporary and permanent staffing serviceshas risen as we continue to head out of the post-dotcom-boomrecession. Barry Cohen, co-founder and chief planning anddevelopment officer of The Response Companies, a staffing business, has seenthe tide shift over the 15 years he's been in business."Our hottest areas right now are our temp staffing business,our financial services group, our marketing group--and our neweststartup area is legal," he says of the New York City-basedbusiness with $45 million in estimated sales for 2004.

The Sarbanes-Oxley Act--which forces companies to comply withstrict accounting procedures--has been a major contributor to thisindustry's growth. Companies, particularly in financial andhealthcare fields, are turning to businesses like Cohen's toprovide the personnel to help them comply. "There's a realincrease in the need for qualified senior accounting and auditingprofessionals," says Glenn Walsh, vice president of interimstaffing with The Response Companies. That demand is starting tocross into all business fields as the effects of Sarbanes-Oxleyspread out.

Richard Wahlquist, president and CEO of the American StaffingAssociation, says the Bureau of Labor Statistics predicts a 54percent increase in the employment services industry over the next10 years. That includes almost all areas of staffing. "Youcould almost close your eyes and throw a dart at the wall, andyou'd be hard-pressed to miss out," he says.

Even so, getting your business off the ground won't becheap. "The startup costs are higher than they've everbeen because of the insurance costs," says Cohen, 48.

Wahlquist suggests getting a solid grounding in employment andlabor law before entering the field. It's also important toinvest upfront in quality hardware and software. Staffing is acompetitive market where new entrepreneurs are well-advised to finda specialty to focus on. "If they're looking to go intothis business, they should go into it on the permanent side andpick a niche that is hot in their specific geographic area,"says Cohen. Maintaining a temp service may be more difficult than apermanent one where you just place someone once. Plan well, and youcan take advantage of one of the fastest-growing industries in thecountry.-A.C.K.

Niche Health and Fitness

Where do you go when your dog is stressed out? Or your wholefamily needs some exercise? Or you're looking for a gym thatisn't a meat market? If you can answer any of these questions,you've already had a glimpse into the world of niche health andfitness businesses. This is a hot niche in a country full of peopleincreasingly looking to alternative medicine. A report by researchfirm Mintel International Group Ltd. says, "The U.S. healthand fitness club industry is on a revival trend, with new clubbrands, club openings and new memberships increasing--similar tothe mid-1980s--after a decade of flat growth."

In this business, the more specific you can be, the better. Justlook at Curves, the fitness franchise catering to women with30-minute workouts. It's exploded to more than 8,000 locationsworldwide. Clubs aimed at kids and families are also showing up. Arecent report from market research company American Sports DataInc. says that more than 39 million Americans belong to healthclubs and that Pilates, yoga and tai chi are all growing areas.Simplifying workouts and providing comfortable surroundings are bigtrends in the fitness industry.

Fitness is just one part of a growing overall health industry.Besides yoga, health practices like acupuncture and massage aregoing mainstream. In this area, you can't get more niche thanKathleen Prasad. Founder of the Animal ReikiSource in San Rafael, California, Prasad, 35, applies thetechniques of the Japanese energy-healing art to animals."It's just on the cusp of being understood andaccepted," says Prasad. "I'm a pioneer in a newfield, so I can really do anything I want to do with it." Sofar, Prasad has worked with everything from elephants to horses andexpects a 200 percent increase in business in2005.--A.C.K.

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