Small Business: Start-ups with high growth potential
Thinking of starting a new business?
You may want to consider social network game development, online shoe sales or IT security consulting. They made the list of eight hot industries for start-ups recently unveiled by IBISWorld, a market research and business intelligence firm based in Santa Monica, Calif.
Opportunities for start-ups are most prevalent in retail and service industries, the firm said. "Both consumers and companies are spending more, which is fueling growth in these value-added service-related industries," says IBISWorld research analyst Eben Jose.
The other five industries on the list were: TV and home theater installation services; virtual data rooms (e.g. cloud storage); travel agencies; translation services; and digital forensic services, which investigate crimes involving computers and hand-held devices.
Among the growth leaders was the social network game development industry, which has grown 184 percent per year on average during the past five years, driven by surging Internet traffic and the widespread prominence of social networks, particularly Facebook, according to IBISWorld.
PRIME OPPORTUNITIES IN 2013. The industries identified have low barriers to entry, a high level of technological change and strong revenue growth, presenting prime opportunities for start-ups in 2013, Jose says.
This was encouraging news to Angelo Scuccimarri, co-owner of Wishes Come True Travel, a 2-year-old Levittown-based travel agency.
While the industry took a hit with the economic downturn, it's been recovering since 2010 and revenue is expected to grow 6 percent to $20.7 billion in 2013, notes IBISWorld.
"As the economy recovers, people are having a little more disposable income," says Scuccimarri, a teacher who co-owns the business with his wife, Christine, also a teacher. He says they've seen a 10 percent uptick in inquiries and bookings in the past six months.
While the IBISWorld report was national, regional tech experts say there are local opportunities in some of these industries.
Social network game development, virtual data rooms and IT security consulting show promise on Long Island, says Peter Goldsmith, president of the Long Island Software and Technology Network, which is spearheading a start-up incubation program called Long Island Tech COMETS in Mineola.
Three companies are in the COMETS program, which offers participants legal, tech and operations support, Goldsmith says. LISTnet plans to identify six more start-ups for the program by fall, he says.
One of the COMETS participants is Clerk 123, a secure document solution provider that also offers IT security consulting, one of the growth areas on the IBISWorld list.
"It's not surprising it's listed as a high-growth industry," says Blake Cornell, a partner at Clerk 123 in Garden City. Security threats are increasing at an alarming rate, he says.
"More people are being attacked and more people are becoming attackers," he notes. But costs for penetration testing -- simulating an attack to determine vulnerabilities -- and IT security consulting are still steep for many companies. Industry rates for these services range from $150 to $225 an hour, and a typical job might take one to three weeks or longer, says Cornell, noting that "being proactive is a hard sell."
LOCAL GROWTH AREAS. Other areas of potential growth for start-ups locally that weren't on the IBISWorld list include food-related start-ups; solar energy technologies; and 3-D printing, where three-dimensional objects are prototyped or manufactured from digital designs, says Andrew Hazen, co-founder of LaunchPad Long Island in Mineola, a 12,000-square-foot business accelerator and co-working space for start-ups and early-stage companies.
He's seeing a handful of these types of firms at LaunchPad, which houses more than two dozen start-ups. LaunchPad has been accepting applications for its new business accelerator program; Hazen hopes to have six companies participating by June. LaunchPad takes an equity position in the companies, and they receive a weekly stipend, dedicated mentors, access to industry contacts and a chance to pitch investors, he says.
Hazen recommends would-be entrepreneurs seek assistance and mentors when getting started. "Go to people who have been there and done that," he says.