Start a Business on the Cheap: 10 Growth Industries
Looking to start a business without breaking the bank? Look no further. We used data from independent research firm IBISWorld to pinpoint the best industries for bootstrapping a company right now. Our list includes industries with healthy five-year growth forecasts and low-capital intensity—in other words, those that invest a large portion of capital on labor costs, as opposed to expensive equipment. We’ve included some classic examples of low-cost startups (think IT consulting). But others might surprise you. Relaxation drink, anyone?
--By Nicole Carter and Eric Markowitz
Green and Sustainable Building Construction
Projected five-year annual growth rate: 23%
Going green isn’t just good for the environment; it’s also good for business. Over the past five years, publicly-funded projects have been a boon for construction companies specializing in green and sustainable buildings. Meanwhile, the federal government’s LEED certification program has spurred private businesses to incorporate green and sustainable materials in buildings in exchange for tax incentives. Public projects are expected to wane as stimulus funding ends, says IBISWorld analyst Deonta Smith, but demand from the private sector is on the rise.
Projected five-year annual growth rate: 6%
As most business owners know, managing healthcare for employees is an onerous task. And it’s getting even trickier as companies scramble to comply with Obamacare policies. That’s good news for healthcare consultants, who are likely to see increased demand for their services in the next five years. For entrepreneurs, the industry is relatively easy to enter, says IBISWorld analyst Radia Amari. "Finding people who have experience and are fluent in the health care sector will be the biggest challenge," Amari says.
Projected five-year annual growth rate: 13.7%
It's not exactly a CSI episode, but companies specializing in verifying, mapping, and recovering data have enjoyed surging demand in the last few years, as more businesses and consumers move their lives online. Launching a business in the $1 billion industry requires minimal capital. Five years from now, mobile computing services will drive the industry, so companies will have to be well-versed in that area, says IBISWorld analyst Kevin Culbert. "Specialization is paramount," he says.
Projected five-year annual growth rate: 2%
Snap! Thanks to advancements in digital cameras and post-production technology, you no longer need a studio and expensive equipment to start a photography business. But competition is stiff in the $9 billion industry, according to Jack Plunkett, CEO of Plunkett Research, a business intelligence firm that studies trends affecting industries. "Your best bet for a decent income is to specialize in weddings, children or family events, or pets," Plunkett says.
Artificial Grass Turf Installation
Projected five-year annual growth rate: 12.3%
Fake grass might not spring to mind as a hot business opportunity, but the turf installation industry is growing fast. The reason? Major technological advancements have improved the quality of artificial turf, making it an appealing option for sports venues eager to cut down on field maintenance costs. You’ll pony up for licensing fees to get in on the $649 million industry, but the bulk of installation costs is related to labor.
Projected five-year annual growth rate: 3.2%
Every business needs a good IT team. But it’s often cheaper to outsource tech services than to employ staffers in-house. That helps explain why IT consulting has become a $327 billion industry employing more than 1.7 million people worldwide. In the next few years, increased merger and acquisition activity, coupled with an economic recovery, will fuel further demand, according to IBISWorld analyst Andrew Krabeepetcharat.
Projected five-year annual growth rate: 24.8%
There are now some 400 brands of relaxation drinks, including Dream Water, that contain melatonin and other ingredients purported to aid sleep. Some health experts have questioned the effectiveness of the drinks, but the market is poised for continued growth. Start-up costs are low, since you can outsource production to a third-party facility, says IBISWorld analyst Agata Kaczanowska. One big hurdle? Even though you can sell the drinks without FDA approval, it's a smart idea to get the agency's stamp of approval, Kaczanowska says.
Projected five-year annual growth rate: 2.8%
During the recession, many companies either imported workers or exported manufacturing, increasing the need for a variety of translation services. Meanwhile, more businesses are going global. Setting up a translation business requires little capital other than the cost of hiring employees fluent in other languages. On the downside, there's plenty of competition, not to mention a proliferation of translation software that does the work of humans.
Projected five-year annual growth rate: 6.8%
More companies are looking for ways to comply with environmental regulations. As a result, the $21 billion environmental consulting industry is primed for scrappy bootstrappers. While many environmental start-ups focus on helping companies comply with green regulations, there are a variety of other opportunities as well, including green marketing and packaging, says IBIS industry analyst Andrew Krabedtetcharat. "A lot of big companies want to promote a green image, but that requires an entirely new strategy," he adds.
Elderly and Disabled Services
Projected five-year annual growth rate: 4.7%
These days, more senior citizens are skipping the nursing home and spending their golden years in their own houses or assisted-living residences. That trend is expected to continue as the Baby Boomer generation ages. The $36 billion elderly and disabled services industry is highly fragmented and obtaining licenses from Medicaid and other government entities can be extremely difficult, warns Jack Plunkett of Plunkett Research. He suggests focusing on providing an unregulated service--for instance, helping seniors transition from their homes to assisted living communities.