Which industries hold the most promise for savvy entrepreneurs over the next 10 years? Inc.com chose 10 industries that are projected to have enormous growth -- and opportunities.
America's population is graying. Jobs are being moved overseas. Computers are becoming evermore a part of our daily lives. To some this may not mean a lot. But to the entrepreneur, these trends could mean the success -- or failure -- of a business.
Just look at how wealth, health and technology have both elevated -- and crushed --businesses. Gas-powered automobiles killed the horse and buggy business in the early 1900s. Today, the digital camera is giving old stalwarts like Fuji and Kodak a run for their money, as well as mom-and-pop developing studios. But while the car and the digital camera harmed industries, they also gave rise to others, like auto insurance and online photo services.
So which industries hold the most promise for savvy entrepreneurs? The Bureau of Labor Statistics' (BLS) job-growth projections for 2002 to 2012 were the cornerstone of our list. According the to Small Business Administration, more than three quarters of all jobs are created by small businesses; therefore, it is safe to say, if the industries noted below are projected to have enormous job growth, you can bet a major portion of it will come from small and growing businesses.
In addition, the industries we chose are projected to have fairly high rates of growth in real output during the same time period. Real output reflects output produced for sale to firms as well as final output ultimately delivered to various markets. Taking both employment and real output forecasts, we chose 10 industries from a list of 40-plus to come up with those that seemed particularly promising over the next 10 years.
Coming in first and second place are Internet services, data processing and other information services; and computer systems and related services. Aging baby boomers, however, take the prize for affecting the most industries: four. Longer work hours and more women in the workplace are the driver behind the seventh best industry to start and grow a business: childcare services.
This isn't to say that starting and growing businesses in these industries will be a cakewalk. Demands for goods and services within these industries will increase over the next decade -- and so will the competition. To help us get a handle on the current climate and prospects for the future, we interviewed 10 successful business leaders from our top industries for a firsthand perspective on what it's like to run a business in each sector. Each offers insight into the challenges you might face, and where specific opportunities might lie.
The advice you glean from their stories, and the facts contained in our top 10 list, could help keep you from becoming the person who started the horse and buggy business in 1913.
Instead, you could be the one who opened a gas station.
How many times a day do you hear someone say, "Just check the Web." The Internet is used to buy cars, upgrade software, track shipments, store data, compare prices, conduct research and much more. Its proliferation will continue through the next decade, and our reliance on its capabilities will increase. That's why this sector is projected to be the top industry to start and grow a business in the coming decade.
Two things have driven the success of the Internet: falling PC prices, which has helped put more computers on more peoples' desks, and increased connection speed. Today, 850 million computers exist worldwide, 71% more than in 2000, according to eTForecasts, a market research firm. By 2010, eTForecasts predicts 1.4 billion computers will be up and running.
Not only has the number of computers increased, but so has the number of computers connected wirelessly. From 2000 to 2010, the worldwide share of wireless computers is expected to grow from 19% to 55%, putting the total number of people online at over 2 billion--roughly one-third of the world's population.
According to the Bureau of Labor Statistics (BLS), output by the Internet service industry is to grow 10.3% annually, the highest among all industries. Job growth in the industry is impressive as well, 46.2%, which put it in the top five amongst all industries.
Thanks to an increasing reliance on information technology and falling computer prices, employment at computer design and service firms is projected to grow 55% by 2012, making it the second best industry to start and grow a business. The sector will also enjoy healthy output, growing at a pace of 9.0% per year.
Solutions for networking hardware, software, and communications technologies will be a major growth spot. So will computer security, as "hackers" and viruses are anticipated to increase over the next decade. Mobile technologies, like WiFi, will become more prevalent as well, resulting in an increased need for "mobility consultants" who help integrate a firm's technology.
From homes to small businesses to multinational corporations, information technology has quickly become the lifeblood of the 21st century. Thanks to this reliance, the U.S. is expected to add 68% more software publishing jobs in the coming decade, a slight slow down from the previous decade. With more software developed each day, the sector expects to see output grow by 8.4% per year through 2012.
Software begets software, in the sense that products complement each other, which makes software one of the top industries to start and grow a business. The Internet, for example, spawned e-commerce sites, like eBay. eBay in turn spawned PayPal, a software that allows individual to pay one another with credit cards. PayPal, and the million other sites that accept credit card information online, increased the demand for computer security programs.
With more software developed each day, the need for complementary products will increase. Add the world's ever-increasing reliance on computers, and it easy to see that software publishing is an industry full of opportunity.
Today's business environment is hyper-competitive and constantly in flux. To increase response time, companies have turned to temporary employees in an effort to stay productive while managing overhead. This trend is projected to continue through 2012, pushing up the employment rate in this sector by 54%.
Interestingly, employment services will be a major player in the home healthcare industry, the sixth best industry to start and grow a business, according to our survey. Hospitals and other medical facilities will rely heavily on temporary workers to meet the needs of the aging baby boomers.
Human resource consulting, a product offered by a few employment service firms, will be in demand between now and 2012, thanks to complex employee-related laws, worker's compensation claims and health benefit plans.
Placement agencies are predicted to grow, too, but not as fast as temporary service providers. Though firms are increasingly willing to use outside employment service companies to screen potential candidates, online job sites are taking a lion's share of the industry. All told, between now and 2012, the sector should see a healthy output rate of 5.1% each year.
As the economy expands and the nature of business becomes more complex, the demand for consultants increases, which helps explain the huge 55% job growth expectation for this industry, as well as a healthy 4.1% per year rate of output through 2012.
Business consultants are projected to do well, based on the increasing number of businesses that will need help drafting business plans, budgets and strategies. Marketing consultants will also been in high demand, as franchise restaurants and retailers will need advice on locations and marketing plans. The more businesses and the bigger economy will increase the number of logistical consulting firms. Finally, businesses will continue to need consultants specializing in government compliance to help navigate the federal government's sea of regulations.
As the global economy becomes more integrated, the need for outsourcing consultants will be invaluable. So, too, will be firms that assist companies in doing business overseas.
While employment in the health service industry is projected to grow 28% by 2012, employment in the specialized home health care industry is expected to be nearly twice that, or 54.5%. Each year, over 7.6 million people receive home health care services, according to the National Association for Home Care. In 2004, annual expenditures in home health care were projected to reach $45.2 billion, according to the Centers for Medicare & Medicaid Services (CMS), Office of the Actuary, National Health Statistics Group.
In demographic terms, the number of people in older age groups is growing faster than the total population because of the post-war baby boom followed by a drop in the birthrate of American woman. Advancements in medical technologies also have extended the lives of the very ill and the very old.
Along with healthcare, baby boomers will need advice managing their money in the coming decade, making financial advisory our seventh pick for starting and growing a business.
On demographics alone, financial advisory is a growing sector. If the Bush Administration gets its way, however, and Social Security is privatized, the need for financial advisors could grow beyond the 45.7% predicted by the government. With just a fraction of the $54 billion a year in investments predicted under the President's plan, the advisory sector could be evermore lucrative in 10 years, and one great place to start a business.
When women started pouring into the workforce 30 years ago, a new industry was created: childcare. The child daycare service industry has become one of the fastest-growing businesses in the U.S., and it takes in more than $11 billion annually. And it's only going to get bigger, thanks to an expected increase in the number of woman between the ages of 15 and 44 entering the workforce.
The number of women in the workforce, though, isn't the only thing changing in the coming decade. With the 40-hour work creeping upwards, parents will need more childcare services, particularly later into the evening and on weekends. For these reasons, the number of persons working in childcare is expected to grow 43% by 2012, making it the eighth best industry to start and grow a business.
The baby boomers are going to be the richest retirees in our nation's history. So what are they going to do with their cash? Spend it, of course. With plenty of time and a penchant for enjoying life, the baby boomers are expected to drive the arts and entertainment sector, which includes everything from fitness clubs and health spas to cruise ships and golf courses.
The arts, entertainment and recreation sector will also benefit from a younger clientele. Over the last decade, the saving rate among Americans has fallen, partly because of an increase in the cost of living, but also because of increase spending on discretionary items. This trend, coupled with the demand from baby boomers, provides entrepreneurs with many business opportunities.
Fifty years ago there were three television channels. Thirty years later, after the advent of cable television, the number of channels grew to 40, tops. Today, Americans and much of the world flip through over 200 channels of programming. The movie industry has grown in a similar fashion, with single movie houses getting consumed by 20-screen theatres with stadium seating.
Such a massive amount of programming requires a commensurate supporting industry of production studios, distributors, advertisers and engineers, just to name a few. Over the next decade, the number of persons employed by the motion picture and video industry is expected to grow 31%, making it our tenth best industry to start and grow a business.