Doing Business

February 09, 2013

What Business Should You Start? Fast-Growing Sectors For 2013

Here are two important words for entrepreneurs looking to launch a startup this year: Market opportunity. The economy is recovering in fits and starts. Where are there unconsolidated, evolving industries with low startup costs that are seeing sales growth?

A new report from industry research firm IBISWorld has identified eight industries that are seeing high growth and have ample opportunity for new players. Some might seem fairly intuitive, but others are low-glamour industries that don’t get a lot of ink.

What’s the hottest niche for 2013? Look up from playing FarmVille on Facebook for a minute, I’m talking to you!

Oh yes — it’s social games.

The sector saw explosive growth of over 180 percent over the past five years. The spread of mobile devices and Internet usage means more users for games every day. And a recent Nielsen survey found mobile-device users spend 30 percent of their time on social networks.

Get yourself a smart coder and Internet access, and you could cook up the next Words With Friends. Zynga has its own troubles these days, and there’s room for anyone with a fresh game that gets people hooked. And research from the Entertainment Software Association can help you spot trends and figure out what type of game to build.

The second hot niche IBIS identified is less in the spotlight, but in increasing demand. It used to be dealmakers got in a room together to look over sensitive business proposals. Now, that happens online in virtual data rooms. As companies create increasingly far-flung teams and commerce becomes more global, demand for secure ways to exchange information will only rise.

The virtual data room industry leaders are IntraLinks, Merrill Corp., and RR Donnelly, but it’s still a fragmented sector. Plus, demand is expected to rise as the economy improves and more business deals get done.

In third place is something I never thought I’d say was a hot niche: Online shoe sales. Liberal return policies and online-fit tools have overcome consumers’ initial reticence to buy footwear online, and now sales are growing more than 16 percent a year on average.

From all the media coverage they get, you might think Zappos is selling every shoe on the Internet. But IBISWorld reports Amazon (which owns Zappos) and Foot Locker are the industry leaders — and the two companies only capture 16 percent of online shoe sales between them.

 

8 Hot Industries for Startups in 2013

Which industries are still highly fragmented, yet seeing fast growth and have a low barrier to entry? A recent IBISWorld report spotlights eight industries with great opportunity for startup entrepreneurs in 2013.

1. Social network game development

5 year compound annual growth rate: 184%

2013 forecast growth: 32%

Why it's hot: Growth in the use of mobile devices means more people spending more hours on social media -- and gaming is a favorite activity

.2. Virtual data rooms

5 year compounded annual growth rate: 16%

2013 growth forecast: 16%

Why it's hot: Far-flung virtual teams and increasingly global deals make it harder for dealmakers to get in a room to view confidential documents, so more will rely on secure online data sharing.

3. Online shoe sales

5 year compounded annual growth rate: 16%

2013 growth forecast: 14.5%

Why it's hot: More and more shoppers are getting comfortable with buying shoes online -- Zappos' owner Amazon.com and FootLocker, the two sector leaders, only have a 16 percent market share.

4. Digital forensic services

5-year compound annual growth rate: 12%

2013 growth forecast: 11%

Why it's hot: More mobile Internet connections mean more opportunity for data breaches. Revenue for the sector is nearing $1 billion, and the sector is lightly regulated, making it relatively easy to start new firms.

5. Information-technology (IT) security consulting

5-year compound annual growth rate: 10%

2013 growth forecast: 9%

Why it's hot: Recent, high-profile data breaches at companies including Sony, Zappos, and LinkedIn has more companies beefing up their security systems. As companies invest in more technology, the need for security expertise will only grow.

6. Travel agencies

5-year compound annual growth rate: 4%

2013 growth forecast: 6%

Why it's hot: The rise of the online agency is bringing new opportunity, especially for sellers of more complex vacation packages. Costs are low to open an online travel site, so many new competitors are expected.

7. TV & home theater installation services

5-year compound annual growth rate: .5%

2013 growth forecast: 4%

Why it's hot: This service business requires little startup capital, and a rising number of U.S. households are purchasing big-screen TVs or full-blown home theater setups.

8. Translation services

5-year compound annual growth rate: 2%

2013 growth forecast: 3%

Why it's hot: It's an increasingly global world, spurring demand for translation of materials for both business and pleasure (the graphic above advertises a Chinese translation of Finnegan's Wake). The Internet has made it easier for translators to connect with customers, and industry revenue now tops $3 billion.

 

Text by Forbes
 

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