Small Business

Smart Startup Ideas for '07


Experts pinpoint emerging trends and tell entrepreneurs planning their next ventures which opportunities to consider, on and off the Web

No doubt about it, 2006 was a banner year for online social networking, user-generated content, and online video. YouTube made history when Google (GOOG) agreed to buy it for $1.65 billion in October (see BusinessWeek.com, 10/10/06, "YouTube's New Deep Pockets"), and so did Facebook, when it turned down Yahoo's (YHOO) $1.4 billion offer (see BusinessWeek.com, 9/22/06, "Yahoo Keeps Its Eyes on Facebook").

But it wasn't just the Web that was making waves in 2006. Rising energy prices, continued fighting in the Middle East, and the boom in all things labeled "green" or organic (see BusinessWeek.com, "The Organic Myth") shook the physical business world as much as the virtual one.

So what business opportunities will 2007 hold, on and off the Web? And what trends should entrepreneurs be watching as they plan their next ventures?

A few of the major trends gaining steam at the end of 2006 were luxury goods and services (think $15 lattes), a form of advertising called "tryvertising" that allows customers to try a product before purchasing it, and instant add-ons or services that enhance products—take, for example, the ongoing iPod accessory craze (see BusinessWeek.com, 7/19/06, "iPod Accessories Gone Wild"). These are just a few compiled by Reinier Evers, founder of trendwatching.com, a consumer trends company with a network of more than 8,000 trend spotters who scan the globe for emerging consumer crazes.

Some Growing Sectors

Many great business ventures will undoubtedly draw from these global trends. And some of them will be online, where buzz spreads quickly (see BusinessWeek.com, 1/4/07, "Seven Internet Predictions for 2007"). No longer does every company require a huge startup budget to get something great going. Knowledge tends to spread organically through blogs and other means, says Evers. "If you do something that's good, people will hear about it. I would encourage people to start something up and let its quality do the work," he says.

Retailers were hit by a rocky 2006 holiday season (see BusinessWeek.com, 12/26/06, "Retail Results Signal Tough Times Ahead"). But in 2007, many retail sectors are slated to grow, chief among them being toys and video games, gift cards and gift certificates, and baby products, according to Forrester Research's U.S. eCommerce study, released in October, 2006.

Sucharita Mulpuru, an analyst at the Cambridge (Mass.)-based firm and author of the study, says entrepreneurs shouldn't limit their thinking when starting or expanding a business. "If you can get really deep in an unusual area that nobody owns, that's an area of potential value as well," Mulpuru says. She points to baby products and toys as two areas with potential.

Fountain of Youth

Another important trend continuing in 2007 is the consumer hunger for green products (see BusinessWeek.com, Summer, 2006, "Do You Need to Be Green?"). Much of that demand is fueled by aging baby boomers, says Bill Rosenzweig, adjunct professor of social entrepreneurship at the University of California, Berkeley, and managing partner at venture fund Great Spirit Ventures. The Baby Boom population is huge—75 million to 80 million people by 2010—who have "expectations of control over their life. It's one of the trends that's just going to keep happening; there's bound to be opportunities to serve the aging baby boomer population for years," says Rosenzweig.

To serve that population in 2007, consumer health and food products that marry disease prevention and nutrition are going to be hot, says Rosenzweig. And he should know, since his venture fund recently backed a snack company that sells a wellness bar to enhance the immune system, and a company that makes a preventive mouth rinse that kills heart disease-causing bacteria.

There is also a plethora of dependable businesses built around serving boomers' concerns about longevity, many of which are franchises that will make their franchisors and owners a lot of money in 2007. Matthew Shay, president of the Washington-based International Franchise Association, says the best opportunities for entrepreneurs reflect changing U.S. demographics. Franchise opportunities in nonmedical home-care services look like they'll be strong for some time, he says. And franchise opportunities surrounding the promotion of good health and fitness have been, and continue to be, attractive, Shay adds. "Aging baby boomers want to stay fit and live longer."

Click here for a slide show of nine promising small-business opportunities on and off the Web.

Jeffrey Gangemi is member of the MBA Class of 2009 at the Johnson Graduate School of Management at Cornell University. He was previously a staff writer for BusinessWeek.com.

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