The 18 Best Industries for New Businesses

The economy may still be recovering, but some industries are experiencing plenty of growth and low competition. Inc released a list of what they consider to be the best industries for new businesses. Although it is unclear exactly what criteria was used to narrow down their selection, the options are actionable. Many times, a list of industries is simply that:  a handful of top-level categories. Inc’s list provides granular detail that executives and entrepreneurs want to see, like naming “software as a service” and “education technology” versus “internet technologies” or even “technology.” “Green construction” can also be found on the list, which is unsurprising, but  it also silently acknowledges that not all categories within the green movement are necessarily sustainable.

Find the full list below:

1. Candy
2. iPhone apps
3. Health-care technology
4. Beer, wine, and liquor wholesale
5. Software as a service
6. Home health care
7. Yoga products are services
8. Technical and trade schools
9. Fast-casual dining
10. Green construction
11. Niche consulting
12. Education technology
13. Temporary staffing firms
14. Government services
15. Accounting services
16. Repair services
17. Self-improvement
18. And, of course, Energy

Did you see any surprises on this list? Did Inc leave off any other emerging industries. Let us know what you think by leaving a comment below.

3 Ways Luxury Manufacturers Drive Sales During a Recession

Dollar stores, discount big box retailers and fast food chains saw the silver lining that comes with every recession, but they were not alone. Companies that manufacture luxury products refused to accept a decrease in sales with a drop in consumer spending power. Below are three examples of how luxury companies weathered the storm:

1.  ”Used” is such an ugly word; BMW focuses on pre-owned

BMW, among the best examples of a luxury automotive manufacturer, saw a decrease in sales caused by the recession. Instead of strictly pushing new sales, they reinvented the idea behind owning a used car.

According to Bloomberg, “U.S. sales of so-called certified pre-owned luxury autos rose 4.7 percent this year through August, bucking a 31 percent drop for new luxury models, according to researcher Autodata Corp. BMW, Lexus and Mercedes certified sales jumped 14 percent.”

• Takeaway:  Companies can retain the value of their brand without dropping prices. Provide or emphasize options that already exist at lower price points.

2.  Apple drops prices while introducing features

Earlier in the month, Apple introduced a refreshed line of iPod nanos with perhaps the most significant technological improvement since its introduction:  the ability to shoot and record video. And they did it with a $20 reduction in price.

• Takeaway:  Reducing prices alone makes a company look desperate, and the practice harms their brand. Reducing prices while adding features strengthens their brand while remaining competitive.

3.  Louis Vuitton/Ralph Lauren looks to the East

Reuters and Bloomberg report that LVMH and Ralph Lauren are looking to expand and penetrate China and Lebanon in the next few years, and their expansion has already begun. Companies like these want to lay the foundation for years of growth by increasing the percent of revenues derived from emerging markets.

• Takeaway:  All markets are affected during a global recession, but not all markets are affected or respond equally. Modern-day executives should pay attention to opportunities abroad.

The One Question Google Asks All of its Products

Take a look at some of the web services Google has grown, bought or cultivated in its web arsenal.  We have their basic search, the AdWords network, YouTube, Maps and Streetview, Gmail, Documents and Calendar, just to name a few.  We also see some of those little products that don’t quite appear on the main page but they still support, like Google Earth, Chrome, Goog 411, Knol, Picassa and trends.

Some products are related directly to search and finding answers to information, but others (especially products like the now defunct Lively) entered into new worlds and industries.

How could Google possibly evaluate every product and whether or not to continue to support each initiative?  After all, many of Google’s products have yet to turn a profit.  Services like YouTube alone are run at a lost, and YouTube is probably a few years away from entering into the black.

In an article for the New York Times, senior vice president of engineering Jeff Huber says, 

“There’s no single equation that describes us, but we try to use data wherever possible [...] What products have found an audience? Which ones are growing?”

Ultimately, Huber says people at Google ask, “is there an interest in our products?”  If there is—like YouTube—it’s likely they’ll continue to support the initiative, even at a financial loss.  If there product hasn’t found a strong audience—like social mobile network Dodgeball—it’s unlikely they’ll continue with the service.

Secondary questions come in to play as well, such as “does this service solve a substantial problem?” or “did this product have trouble attracting Google employees for development?”

How anyone can use this question

Modern executives, bloggers and entrepreneurs can use the question of “is there an interest in my product?” for almost every new venture.  

• For online entrepreneurs:  Let’s say you took the initiative to launch your own social network  in your free time a few months back.  Take a look at the people using the network.  Are people relying on your service and using it regularly? Do you see consistently more account registrations than when you began?
• For modern executives:  Let’s say you developed a new process within your organization to reduce the amount of reports people are creating and, thus, reducing the amount of time people on your team spend crunching numbers.  Are people using your process?  Does your process actually address the problem you created it for, and does it do it well?
• For bloggers:  Let’s say you launched a new type of section on your blog, such as a fresh back of links every Friday.  Do you find your readers, through stat tracking software, reading those links?

Moving forward

Make a list of each initiative/project that you are supporting.  Is there interest?  If not, what steps can you take to get more people involved?  Are you willing to wait a few additional months to see if there will be any interest?

The IKEA Effect: Why We Keep Failing Projects Alive

Even when signals and coworkers tell us that a project may not work, we push to finish.  We could have exhausted all resources and be well beyond our deadline, but we refuse to say enough is enough.

Why is this?  After all, our time could be better spent on our projects and more innovative ideas.  Michael Norton, for the Harvard Business Review, calls it “The IKEA Effect.”  Imagine assembling a complicated piece of furniture.  Regardless of how much you paid for the piece, you’re unlikely to give up assembling the item until it is finished.  It may take hours to put together a $20 chair, but you continue.  You don’t admit to yourself that you could have performed other tasks, or multiple other tasks, in the same time frame.

Norton adds:

Research conducted with my colleagues Daniel Mochon, of Yale University, and Dan Ariely, of Duke University, shows that labor enhances affection for its results. When people construct products themselves, from bookshelves to Build-a-Bears, they come to overvalue their (often poorly made) creations. We call this phenomenon the IKEA effect, in honor of the wildly successful Swedish manufacturer whose products typically arrive with some assembly required.

In one of our studies we asked people to fold origami and then to bid on their own creations along with other people’s. They were consistently willing to pay more for their own origami. In fact, they were so enamored of their amateurish creations that they valued them as highly as origami made by experts.

Modern executives should take a moment to consider the projects in their lives they’ve refused to abandon because of time commitment.  Unfortunately, sometimes personal relationships are the same way.  What are you doing, or have you been doing, that uses time better spent elsewhere?

Renegade Goals

The first quarter of every year sends executives scrambling for a set of annual goals to submit to their managers. Goals have been shown to improve company performance in just about any organization in any industry.  The problem arises, however, when executives are blinded by the benefits of goals to see how they may fail to fulfill the objectives of a company.  In the worst situations, poorly conceived and executed goals are detrimental to an organization.

Harvard Business School released a working paper on developing goals likely to cause positive results.  The paper gives an examples of how choosing goals that conflict with objectives affect the organization, and they use everyone’s favorite American automotive narrative to illustrate their point:

In the late 1960s, the Ford Motor Company was losing market share to foreign competitors that were selling small, fuel-efficient cars. CEO Lee Iacocca announced the specific, challenging goal of producing a new car that would be “under 2000 pounds and under $2,000” and would be available for purchase in 1970. This goal, coupled with a tight deadline, meant that many levels of management signed off on unperformed safety checks to expedite the development of the car—the Ford Pinto. One omitted safety check concerned the fuel tank, which was located behind the real axle in less than 10 inches of crush space. Lawsuits later revealed what Ford should have corrected in its design process: the Pinto could ignite upon impact. Investigations revealed that after Ford finally discovered the hazard, executives remained committed to their goal and instead of repairing the faulty design, calculated that the costs of lawsuits associated with Pinto fires (which involved 53 deaths and many injuries) would be less than the cost of fixing the design. In this case, the specific, challenging goals were met (speed to market, fuel efficiency, and cost) at the expense of other important features that were not specified (safety, ethical behavior, and company reputation).

The paper ends with a checklist of how to assign goals properly:

• Are the goals to narrow/specific?
• Are the goals too challenging to achieve within a time frame?
• Do short-term goals harm long-term objectives?
• Will any goal increase the likelihood for an employee to take a risk, and is your organization comfortable and prepared with a risk management strategy?
• Could any goal encourage unethical behavior?
• Are goals established on common standards so they can be tailored to individuals while still remaining fair to others?
• Will goals positively influence the organization’s culture?
• Are employees intrinsically motivated?
• Considering your organization and industry, is learning or achieving a level of performance more important?

Establishing goals for an organization is not as simple as turning objectives into actionable statements.  Modern executives should view goals from multiple perspectives to check for clarity in how employees may interpret or act on a goal.  Above all, goals should push management’s strategy for moving forward while enforcing the organization’s guiding principles in the process.

Poaching Innovators From Your Customer Base

Media and tech companies may not need to look much further than their own customers for adding value to their product lines. According to a recent article in the Financial Times, companies like the BBC and Last.fm, an online music service owned by CBS, have held events to gather independent developers for a day of invention and creation. People are encouraged to use the companies’ online services to develop a new program or feature. The best creations are awarded with a cash prize, and companies are able to quickly and cheaply get ahold of creative enhancements for their products.

From the article:

Organisations as diverse as the Guardian newspaper, WPP advertising agency, travel site Lastminute.com and O2, the mobile operator, have all hosted unconferences in recent months. These low-cost events are for enthusiasts as well as professionals, who are all required to present as well as listen. Developers compete for prizes, including the possibility of their product being commercialised, while the host organisations can tap into a new pool of talent.

Young and small, old and large; companies across industries are investigating this trend and how it can affect their business. From a talent acquisition perspective, companies have the opportunity to pull a developer aside and discuss a potential position within the company.

These conferences, or barcamps as they are sometimes referred, or barcamps as they are sometimes referenced, will continue to become more popular as technology becomes more social and companies realize constant innovation is imperative to their survival.

The Great, Online Executive Job Search

CareerBuilder? Monster? Not if you have a decade of industry and managerial experience under your belt. Basic job search sites are great to launch a career, but here’s our list of job resources that cater to modern executives. Think of it as life after CraigsList.

Theladders

• The Hook: Premium professional jobs, most with salaries above $100,000.
• The Line: Thousands of new jobs posted each week, and a sealed front door keeps opportunities legitimate and serious.
• The Sinker: Their “Pay to play” business model ranging from $30 to $120 keeps you wondering what’s behind the login screen before signing up. Some previous customers have chosen not to renew out of a lack of quality postings.

NotchUp

• The Hook: Post in front of organizations that look for top-level executives.
• The Line: NotchUp offers a free service that sorts out lackluster applicants and postings with review process, leaving great applicants with great opportunities.
• The Sinker: Submitting your resume is the extent of the interaction of the service. Applicants have to wait for employers to find them.

Itzbig

• The Hook: Posting a resume on CraigsList is not anonymous, but Itzbig promises an anonymous job search.
• The Line: Its simple main page asks two questions: “Where do you want to work?” and “What do you want to do?” After entering your email address to view results, you’ll see matches unique to the industry where you want to live.
• The Sinker: Most results we saw came back with “Our current opportunities are not an exact match based on the position and location you selected.” Itzbig has potential, but give it time to grow.

JobFox

• The Hook: Pitch your own interview.
• The Line: Post your “mini-interview” and select the companies you want to apply to.
• The Sinker: Lacks management consulting and finance positions, and may not be ideal for senior executives.

How Best Buy is Surviving the Holiday Season

For Black Friday, the nation’s largest shopping day of the year, the manager of a Manhattan Best Buy set up amenities for both employees and customers: a new Red Bull vending machine for exhausted employees, and an in-store dog sitting service for stressed out customers.

The retail electronics industry has been struggling for the past year to remain profitable, and Best Buy may be one of the last standing major players.  An article from Sunday’s New York Times writes,

[Best Buys'] chief rival, Circuit City, recently filed for bankruptcy protection and is closing 155 stores. Tweeter, a high-end rival, shut down this week, and Sharper Image’s stores, which sold more exotic electronics, are liquidating. CompUSA closed most of its stores last year.

But no retailer is immune from the drop in consumer confidence and spending, especially one that specializes in gadgets, not groceries. Sales at Best Buy stores open more than a year were down 7.8 percent in October, compared with the same month last year. The company will not release November figures until Dec. 16, but it’s already clear that November was a brutal month for electronics retailers.

After several prosperous quarters, Best Buy president Brian Dunn was a little surprised on how quickly sales in their company changed. Other stores were closing stores, and with a few less competitors out there, customers would naturally start flocking to Best Buy, right?

Best Buy’s president, Brian Dunn, discussed the challenges the company faced. “The depth and speed with which the economy stumbled was extraordinary,” said Mr. Dunn, who started as a salesman at the chain 23 years ago. “I’ve never seen anything like it. Our business was growing really nicely and then, all of a sudden, boom!”

Best Buy is responding to the change in revenue by cutting their inventory and advertising budgets. They are also pushing a few exclusive products designed to increase traffic to the chain’s stores. Apple, HP, Sony and Samsung are recognizing the challenges and modifying their contracts to change inventory levels. Plus, like every retailer pushing high-ticket items, Best Buy is promoting their financing options.

MaximumCEO published an article recently on how companies may need to revisit their business model and ask if their way of doing business is still relevant to their industry. During the peak of the retail industry’s year, we should recognize that Best Buy is making a few gambles, but their decisions on how to change seem justified.

What ‘Structural Breaks’ Mean To Your Business

During volatile times in a company or economy, a company’s crisis may be the signal that their business model is no longer relevant to their industry.  As an industry continues to change, companies must change with it or go disappear altogether.Richard P. Rumelt writes in an article from the McKinsey Quarterly that now is the time for companies to be strategic, and adjustments are crucial for survival. 

Structural breaks render obsolete many existing patterns of behavior, yet they point the way forward for some companies and at times even for whole economies… Difficult and volatile conditions wipe out some organizations—yet others prosper because they understand how to exploit the fact that old patterns vanish and new ones emerge. The first order of the day is to survive any downturns in the real economy (see sidebar, “Hard times survival guide”), but the second is to benefit from these new patterns. A structural break is the very best time to be a strategist, for at the moment of change old sources of competitive advantage weaken and new sources appear. Afterward, upstarts can leap ahead of seemingly entrenched players.        

 Continuing with a company’s current strategic plan may not be the best option in order to weather this economy. Companies that hope to succeed will have to analyze their business strategy and ask if it is still relevant to their industry.

How Retailers are Surviving the Economy

With the current economic slowdown, high fuel prices are pushing consumers to cut back their spending.  No industry is recession-proof, but teenagers still reach a bit deeper to buy their favorite brands. Julian Geiger, chairman and CEO of the New York-based retailer Aéropostale, said on Nightly Business Report,

“Parents tend to sacrifice [for] themselves before they sacrifice [for] their kids”    

He should know. Aéropostale’s second quarter was up 43% versus the previous year, while other retailers like Abercrombie & Fitch are suffering through stagnant or declining sales to prevent jeopardizing their brand’s authority and reputation for a temporary situation. Other shops have found a new solution to increasing revenues during a recession, and it doesn’t involve manipulating prices. Erin Armendinger, managing director of Wharton’s Jay H. Baker Retailing Initiative, Wharton’s retail program, writes in an article for Knowledge@Wharton:

Noting that some teens are unaffected by the economy and will continue to shop where they want, Armendinger says that to be popular, teen retailers must offer something unique and desirable. “If you’re differentiated, you’ll win,” she says, pointing to the example of Philadelphia-based, multiple-brand retailer Urban Outfitters, which reported in early August that its second-quarter earnings were up 79%. “Urban Outfitters has very little competition in terms of their store design and products —and guess what, they are doing very well.”   

Armendinger’s examples offer hope for all executives that some businesses can survive while maintaining their premium prices.

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