4th Annual Million-Dollar Ideas We've got 11 New Year's resolutions for you. Good news: You only need to pick one--and it could just be your dream business.
It's crossed your mind at least once, how wonderful it would be to start your own business. You might have heard about someone else's compelling story or read a news clip highlighting an entrepreneur's success. Or perhaps you play the lottery and dream of a day when you won't have to answer to someone else. Well, this is your chance. We're bringing you the fourth annual "Million-Dollar Ideas," a look at the hottest business ideas that have more than just buzz factor--there's actual promise, backed by experts, statistics and industry trends pointing toward your pot of gold.
Take a moment to check out these possibilities, and hopefully you'll be inspired to get up and do something about it. After all, taking the first step to see where your potential can lead you means you might not have to count on lucky numbers to make you a winner.
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Auto Aftermarket
At $1.5 billion and growing strong, the auto aftermarket industry--like the hot rods it caters to--is appropriately showing no signs of slowing. Aside from the obvious performance benefits of adding aftermarket accessories, "a lot of people do it for the looks," says Reginald Loterina, 31, founder and CEO of Island Motorsports Inc. Loterina, who started his Buena Park, California, company in 1995, says his sales have been growing about 25 percent a year--selling everything from lighting and exhaust kits to carbon fiber-based products such as spoilers and hoods--and he expects 2003 sales to hit $2 million.
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So what are the real winners in this market? "Right now, vehicle lighting is the hottest thing going," says Jack Panzarella, 32, founder of Wayne, New Jersey-based Street Glow Inc. Panzarella's products (some of which were featured in The Fast and the Furious as well as the sequel)--neon undercar kits, glowing foot pedals, LED shift knobs, LED exhaust tips and more--have fueled Street Glow's success, with sales exceeding $100 million in 2002. More than just lighting up cars, this industry is lighting up profits--big-time.
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Bed & Breakfasts
B&Bs aren't just attracting younger guests--younger entrepreneurs are looking into the allure of innkeeping, and with good reason: A survey from BedandBreakfast.com shows an overall occupancy increase of nearly 8 percent for the B&B industry since 9/11. Bobbi Zane, editor/publisher of aspiring B&B innkeepers newsletter Yellow Brick Road who also moderates a discussion for the Professional Association of Innkeepers International, has noticed a trend of many thirtysomethings looking into innkeeping. "They have seen enough of corporate life," says Zane. Add to that the sway from frilly to more modern inns, and the new generation of innkeepers is thriving.
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With a quarter of inns run by owners under 40, Jim and Julie Degenfelder are in good company. They started Eaglenest Bed & Breakfast in Julian, California, eight years ago at 33 and 23, respectively. With 2003 projected sales of $125,000, the Degenfelders equip their rooms with amenities many older innkeepers try to avoid. "Some [innkeepers] fight the whole TV/VCR thing," Julie remarks. "However, to keep up with the evolution of travelers, it's important to make them comfortable." A stocked pantry filled with beverages and snacks is open to guests, and the Internet can be accessed through the phone line in each room.
PAII executive director Jerry Phillips echoes Zane's observation and also sees doors opening wider for minorities. Phillips adds, "We already have a lot of single ownerships, particularly single women." --April Pennington
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eBay Aftermarket
Want an idea of the opportunities for companies sellingeBay-related products and services? PayPal co-founders Peter Thieland Max Levchin launched their online payment service in October1999. It quickly became the standard way for users to consummatetheir eBay transactions. In July 2002, eBay purchased PayPal for$1.5 billion. "PayPal is the 500-pound gorilla of the eBayaftermarket phenomenon," says Adam Cohen, author of The Perfect Store: Inside eBay.
Online payment is far from the only opportunity available in theeBay aftermarket. Start-ups have blossomed offering everything fromshipping supplies for sellers to sniping software that slips inlast-second bids on behalf of bargain-hungry buyers. With 46million users and 7 million items for sale on eBay at any time,there's room for almost any conceivable product or servicesupporting electronic auctions.
AuctionWatch.com Inc. sells software that automates the processof placing items for sale on eBay. The San Bruno, California,venture has almost 100,000 users and is profitable, says RodrigoSales, co-founder and CEO. AuctionWatch is the largest of severalfirms that provide similar products and services to eBay merchants,but Sales, 28, says getting to where he's at wasn'teasy.
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AuctionWatch originally offered shoppers a single site thatbrought together some of the hundreds of auction services that werethen competing with one another. As eBay grew to dominate thespace, other online auctions disappeared or became irrelevant.AuctionWatch faced a similar fate until it found a new focusselling software to eBay merchants. Today, it sells generale-commerce software to merchants selling direct from their own Websites.
Want to succeed in the eBay aftermarket? Companies likeAuctionWatch have been successful because they've managed tomaintain their flexibility and have benefited from alertness to thechanging needs of the still-maturing online auction business."One of the big lessons of eBay is that it gives you access tomillions of buyers," says Cohen. "They'll tell youwhat they need."
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Home Entertainment Installation
Do you have friends who dream of custom-built home theaters withsurround sound, automatic lights and a big-screen digital TV? Wethought so--according to the Custom Electronic Design andInstallation Association (CEDIA), 86 percent of U.S. adults wanthome entertainment systems. And they're creating a tidal waveof demand for expert installers.
David Harwell and Greg Hill, founders of Audio Video Unpluggedin Farmers Branch, Texas, are meeting that need. Offeringcustom-designed systems that start at about $20,000 and go wellinto the six figures, the pair expects sales to top $2 million thisyear. Business is so robust, in fact, that the partners work onlyon referrals and have had to turn customers away.
The government's recent mandate that all TVs larger than 13inches be digital by July 1, 2007 is fueling industry growth."That gave a big boost to the audio-video industry," saysHill, 30. "If you're going to digital, you have to havepeople who can help you implement the technology in yourhome."
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More than just entertainment, this industry encompasseseverything from security systems to home computer networking. Rightnow, most clientele is affluent, though as the technology becomesmore affordable, it will trickle down to more modest-incomeconsumers, creating huge market potential, predicts CEDIA presidentJeff Hoover.
This business can be tough, though: Hoover notes there's ashortage of labor who can master the ever-changing technology.Harwell, 37, agrees. "We have very competent people," hesays, "[but] it requires special individuals."
In addition to finding talented employees, a key to success ismaking sure to pitch potential customers on the ease-of-use angle."Nobody buys a 'home network,'" says Hoover."What they buy is the convenience that a home networkingsystem provides."
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Instant Messaging
Internet use at U.S. companies rose 20 percent from October 2001to July 2002, according to ComScore Media Metrix Inc., a New YorkCity tracking firm. Meanwhile, instant messaging attracted 28percent more business users, and MSN's IM service grew an evenloftier 42 percent.
The IM explosion seems certain to create opportunities sellingIM-related services and products. At the top of the list are fixesfor IM's weaknesses. IM's big four--America Online, ICQ,MSN and Yahoo!--are consumer services, notes Max Kalehoff, seniormanager at ComScore. Because IM messages aren't coded,virus-protected, tracked or logged, companies can't protectsecrets, verify communications or block viruses. Some firmssell add-on software to log employees' IM messages. But manyservices employ stealth technology that is hard to detect withoutcomplex software.
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In-house IM systems with built-in security may be the mostpractical solution. Richard Bezjian, CEO and president of BoomerangSoftware Inc. in Belmont, Massachusetts, says financial and healthcompanies with regulations requiring secure client-relatedcommunications have been quick to adopt his encrypted IM system."I wouldn't say we're making money hand overfist," says Bezjian, 48. "But I think it's a matterof time."
We see similar stories in many security, marketing and otherIM-based products and services. "Is there a gold minethere?" says Kalehoff. "I don't think anyone'sfigured it out yet. But [IM] is a communications tool that'snot going away."
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Kiosks
"The cost of going into business is just really high, andkiosks offer the opportunity to get into business ownership at arelatively lower cost," notes Howard E. Van Auken, amanagement professor and academic director for the Pappajohn Centerfor Entrepreneurship at Iowa State University in Ames.
If you're testing a product or your own entrepreneurialaptitude, kiosks can provide a simpler business alternative. Notonly do they cost less than inline stores, but they also havesubstantially shorter leases, ranging from as little as one monthto just a year, as opposed to inline leases, which can run up to 10years. With this flexibility, entrepreneurs can test products anddecide whether to make the move to an inline store or to take onmore kiosks.
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When choosing products to sell at your kiosk, consider youraudience and how they might react to your product."Historically things that are demonstrated tend to do wellbecause people are touchy-feely and like that interaction,"explains Susie Grant, specialty leasing manager for the Galleria atSouth Bay in Redondo Beach, California.
And stay away from higher-end products. "Products [with] ahigher price point may not be as easy a sell as those that aremoderately priced, because the whole idea of malls having [kiosk]programs is to enhance their current tenant mix," says Grant."It's not that the cart is going to bring the customer in;they just happen to pass by you and something catches theireye."
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Maternity Clothes
By now, maternity retailers have figured out that being pregnantin the 21st century is about both comfort and style. Big names likeOld Navy and Gap have entered the growing maternity market, and allthe industry is abuzz over Target and its agreement with Liz LangeMaternity to sell very affordable and fashionable maternity pieces."Value is really important to everybody these days," saysPeg Moline, editor in chief of FitPregnancy. While she predicts activewear to continue to bea hot maternity area for 2003, Moline also notes that maternityfashions will move toward a more dressed-up look--especially sinceabout 75 percent of moms work during their pregnancies.
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Dressing up moms is what enéa maternity founder Lea Disney, 32, hasdone with her San Diego company, founded in 1999. Disney, who didtwo and a half years of research before launching her start-up,sets herself apart from the competition by playing with differentfabrics, bright colors and a cleaner line. "My stylesemphasize the sexy curves on a pregnant woman," she says.Disney also promotes the value angle--her prices range from $42 to$98.
Disney, who currently sells via her Web site and in boutiquesnationwide and in Puerto Rico, plans to take her line to her nativeGreece as well, thus growing her sales that are already into thesix figures.
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Niche Dating Service
The quest for love eternal: Technology only kicks it up a notchin the 21st century. "After college, the pool of availablepeople dwindles--time to meet people diminishes," observes LosAngeles psychotherapist Suzanne M. Lopez. "Dating serviceseliminate a lot of riffraff, and during downtime, you can look fora potential partner." And for those who want a tailoredapproach, niche dating allows people to get downrightpersnickety.
Niche dating has surfaced notably with services targetingpreferences from religion to hobbies and alternative lifestyles.Although there is no specific data available on niche dating,industry-wide dating service revenues topped $917 million in 2002and is projected to skyrocket to a whopping $1.1 billion in 2003,according to a November 2002 report, "The U.S. Dating ServicesIndustry," by market research and consulting firm MarketdataEnterprises Inc. Research director John LaRosa has seen theindustry boom after 9/11, with singles flooding the market insearch of a meaningful relationship.
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High-priced love meets its maker with services like the Millionaire's Club, where moneyed men seekattractive bachelorettes. Along with unlimited dates, the $10,000to $20,000 annual membership (depending on whether it's a stateor national search) buys the male suitors sessions with a datingcoach, a relationship counselor and an image consultant. "Themore successful the men, the pickier they are," asserts PattiStanger, 41, owner and CEO of the Marina Del Rey, California, firm."And they want the best." With projected 2003 sales ofmore than $1 million and licensing plans, Stanger and her idea area match made in heaven.
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Online Gaming
Enter a world that is enchanting, violent and full of nefariouscreatures as well as heroes and warriors, and you've enteredNorrath, a virtual country in the online game EverQuest--and the77th richest country in the world, according to economics professorEdward Castronova at California State University, Fullerton.
According to the Interactive Digital Software Association, thenumber of users of onlinegaming sites is growing 12 to 15 percent per month, and some111 million people will play online games by 2005. The opportunityfor entrepreneurs, however, is more likely in advergaming-gamescreated to help corporate clients attract users to their sites.
"An advergame has to feel like a game. If [consumers] thinkit's an advertisement, it won't fly," says DanFerguson, 35, a founding father of adver-gaming and co-founder ofDallas-based game developer Blockdot Inc.
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One way start-ups can steer clear of that roadblock is to avoidpooling talent in a single area. "You're going to have agroup that is very technology-savvy but not so creative," saysFerguson. "So they can make very solid games--with no sexappeal. It doesn't get people excited. Balance itout."
Ferguson says Blockdot's average advergame costs about$50,000. "You can even do a simple tic-tac-toe game [for about$10,000]," he says. With clients that include GM,M&M's and Volkswagen, Blockdot expects 2002 sales of $1.4million. And there's room for growth. Forrester Researchpredicts advergaming will generate $1 billion by 2005. Overall,online gaming is expected to reach $5.6 billion by 2005, accordingto research firm Jupiter Media Metrix. Perhaps by then Norrath will bein the top 50.
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Online Learning
With the dotcom funding boom at its back a few years ago,e-learning seemed like easy pickings. Now, funding has dried up,and corporate training budgets have been slashed, says Trace Urdan,senior analyst of learning companies at ThinkEquity Partners Inc.His numbers show industry growth falling from 34 percent in 2001 to7 percent in 2002. Does that mean a dour future for thisonce-bright market?
Not exactly. Online degree programs continue to grow, thegovernment spends more on training in the 9/11 aftermath, and suchcorporations as GM are shifting their training budgets toe-learning, says Urdan. "If you've got the vision, this isan area that's going to be strong," he says.
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The growth comes thanks to demand for professional developmentand vocational training, says Angela Lovett, founder ofWorldWideLearn.com, a Calgary, Alberta-based e-learning directory.The future, she says, is bright.
But business training is where the market will lie early on."It will take a few years for the mass consumer market toembrace it," Lovett says.
Beyond creating content, Urdan says, services will be a growthmarket. Help companies integrate training software or structureprograms. Better yet, outsource it for them by running thesoftware, finding talent and administering classes.
That's been the approach of Knowledge Anywhere, a Bellevue,Washington-based e-learning firm. CEO Charlie Gillette saysproviding a soup-to-nuts employee training solution makes hiscompany attractive to corporate clients like AT&T and E&JGallo Winery. The 30-employee company has been experiencing 50percent year-over-year quarterly growth by producing educationalcontent and delivering it via its software.
Skittish VCs are unlikely to fund an e-learning venture, so planon self-financing--including customer funding, as Gillette did tobootstrap. "Go after a very specific vertical market," headvises. That doesn't make e-learning easy pickings. But thereare still pickings to be had.
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Pet Products
What's too extravagant for a beloved family member?Apparently nothing, and pets reap the spoils. U.S. households willspend $30 billion on their pets in 2002, according to the AmericanPet Products Manufacturers Association Inc. (APPMA)--and not juston food bowls and the occasional chew toy. The upscale petaccessories market is where it's at, and entrepreneurs arecashing in with everything from high-end fashion to holisticfoods.
Bobby Wise, 45, owner of San Francisco-based George, knows allabout puppy love. Back in 1991, he and his partner couldn'tfind dog accessories that suited their tastes, so they decided tocreate their own line reflecting a clean modern aesthetic (thinkBanana Republic meets Petco) and found there was littlecompetition. With three store locations and projected 2002 sales of$1.5 million, Wise has seen the market grow tremendously. To stayahead of the pack, he's expanded his original line to include afull range of bedding, grooming products, clothing, treats andaccessories for dogs, cats and their owners. "I think one ofthe keys is we've stayed faithful to our style," hesays.
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So why are people spoiling their pets? "We live busy lives,and pets love us unconditionally," explains APPMA's FundaAlp. "They don't complain when we get home late or tell usabout their problems. The relationship you share isunmatched." Alp says many people--empty-nesters, singles andcouples without children--consider pets their "babies,"creating a new breed of pampered pet. For these owners, money is noobject in showing their affection. Looks like the pet business isnothing to bark at.
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Contact Sources
- Jim Spoonhower
SEMA
1575 S. Valley Vista Dr., Diamond Bar, CA 91765
(909) 396-0289
http://www.sema.org - Regi Loterina
Island Motorsports Inc.
7235 Orangethorpe Ave., Buena Park, CA 90621
(714) 522-7457
http://www.islandmotorsports.com - Jack Panzarella
StreetGlow Inc.
25 Mansard Ct., Wayne, NJ 07470
(800) 935-6366 x103
http://www.streetglow.com - Jim & Julie Degenfelder
Owners/Innkeepers
2609 D St., P.O. Box 2513, Julian, CA 92036
Toll free (888) 345-6378
P (760) 765-1252 - Bobbi Zane
Editor/Publisher
Yellow Brick Road, P.O. Box 1600, Julian, CA 92036
P (760) 765-1224
F (760) 765-0581 - Jerry Phillips
Executive Director
PAII
P.O. Box 90710, Santa Barbara, CA 93190
P (805) 569-1853
F (805) 682-1016
info@paii.org
http://www.paii.org - Patti Stanger
4712 Admiralty Wy., #234, Marina Del Rey, CA 90292
P (310) 344-3725
pattie@millionairesclub.com
http://www.millionairesclub123.com - Suzanne Lopez, MS MFCC
(888) LIMITZZ (546-4899)
P (323) 876-7149
F (323) 874-1174
info@suzannelopez.com
http://www.suzannelopez.com - John LaRosa
Marketdata Enterprises Inc.
2807 W. Busch Blvd., #110, Tampa Bay, FL 33618
Mktdata5@aol.com
www.marketdataenterprises.com - Peg Moline
Fit Pregnancy Magazine
21100 Erwin St., Woodland Hills, CA 91367
(818) 884-6800
www.fitpregnancy.com
pmoline@weiderpub.com - Lea Disney
enéa maternity
1204 Monroe Ave., San Diego, CA 92116
(619) 688-9837
www.eneamaternity.com
leadisney@cox.net - Susie Grant
Galleria at South Bay
Redondo Beach, California
(310) 214-1955
susieagrant@aol.com - Howard Van Auken
Pappajohn Center for Entrepreneurship
Iowa State University
Ames, Iowa
(515) 294-2478
vanauken@iastate.edu
