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:
- iPhone apps
- Health-care technology
- Beer, wine, and liquor wholesale
- Software as a service
- Home health care
- Yoga products are services
- Technical and trade schools
- Fast-casual dining
- Green construction
- Niche consulting
- Education technology
- Temporary staffing firms
- Government services
- Accounting services
- Repair services
- 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.
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.
It’s been a little more than a year since Howard Schultz returned to the iconic Starbucks Coffee Company as CEO. The stock, which has tumbled from 19 at the beginning of 2008 to 10, hasn’t performed quite as well as analysts expected and shareholders hoped.
Now, Schultz introduces Via, its inaugural venture into the instant coffee category, to a less than enthusiastic public. Starbucks fanatic blog “Starbucks Gossip” gave sneering remarks:
“Okay, company over. Everyone go home”
If there’s one thing Schultz loves, besides growing an empire of coffeehouses, it’s a well brewed cup of coffee. Starbucks has been known for its luxury designer drinks at a high price point. The venture into instant coffee may allow Starbucks to reinvent the category, much like how it reinvented the coffee shop in the early 1990s. Via brings the cost down to encourage people to still enjoy their morning Starbucks, even if they have to wait until they arrive at the office for that first sip.
Fast Company was able to sample an early taste test. Starbucks set up a blind taste test to try competitor instant coffees, Starbucks’ brewed coffee, and Starbucks’ new instant coffee. The results? Favorable, but only if you are used to drinking Starbucks:
Most were impressed, calling the flavor “impressively rich” and noting that “the color, taste, and consistency are identical to a $2+ venti.”
Keep in mind, a few of the samplers from Fast Company didn’t like Starbucks’ original brew. And Starbucks didn’t provide cream or sugar for people to add to taste. If the sample was comprised of regular customers, it’s likely that the results would have been more positive.
Even in a recession, Starbucks has already introduced a line of instant oatmeal, which performs very well. The Via instant coffee will join the product lineup to allow any customer an affordable Starbucks breakfast, to go.
The word “change” may never be the same. For some, it’s change from the previous political administration. For others, it’s global change and a new approach to each problem we encounter as a world. But looking back over the last few decades, what would be the most significant innovations that changed how we live?
PBS’ Nightly Business Report celebrated its 30th year on the air with a special on the top 30 innovations in the past 30 years. NBR solicited nominations from the public, and a panel of professors from Wharton sorted and awarded the top innovations.
From medication and technology marvels to those basic staples like LEDs found in every device, the list is not very surprising.
- Internet and the Web
- PC/laptop computers
- Cell phones
- DNA testing and sequencing/Human genome mapping
- Magnetic Resonance Imaging (MRI)
- Fiber optics
- Office productivity software
- Non-invasive laser/robotic surgery (laparoscopy)
- Open source software and services (e.g., Linux, Wikipedia)
- Light emitting diodes (LED)
- Liquid crystal display (LCD)
- GPS systems
- Online shopping/ecommerce/auctions (e.g., eBay)
- Media file compression (jpeg, mpeg, mp3)
- Photovoltaic Solar Energy
- Large scale wind turbines
- Social networking via the Internet
- Graphic user interface (GUI)
- Digital photography/videography
- RFID and applications (e.g., EZ Pass)
- Genetically modified plants
- Bio fuels
- Bar codes and scanners
- SRAM flash memory
- Anti retroviral treatment for AIDS
What’s missing from this list? And should social networking (which affects people online and who have registered for services) really score higher than genetically modified plants (which fill the shelves of every grocery store)?
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?
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?
When Microsoft announced their decision to enter the retail space, many critics remembered the days of Gateway Country and the current Sony Stores who demonstrate products but move little merchandise. Perhaps the only reason why tech columnists are not entirely laughing is because Microsoft grabbed one of Walmart’s retail executives to help them enter the industry.
The list below reveals five ways Microsoft will have to copy Apple’s retail strategy in order to survive the industry.
- Premium locations. Apple, as a premium brand ignored, the conventions of big box computing stores and Gateway Country. Instead of positioning themselves on the outskirts of towns and in desolate suburbs, they rented locations in the center of shopping districts and major metropolitan areas, like Manhattan or Chicago’s Michigan Avenue. Apple’s are set up along side high-end fashion retailers, and the location matches their brand image.
- Plenty of qualified sales people. Technology is tricky, and Microsoft develops software and hardware for everyone, at every computer literacy level. Microsoft will have to employ approachable, knowledgeable, patient and charismatic sales associates that push features and remain advocates for the Microsoft brand. Above all, these people should be willing to educate customers so they can make the best decision for their needs and expectations.
- Training events for adults/summer camps for the kids. Apple pulls people into the stores to show them the software, let them play and tweak the little devices, and ultimately learn how their tools help people live better lives. Microsoft will have to demonstrate to the public how Windows Vista, and Windows 7, has the same impact. Hold events, and let customers come together to learn about the products and meet people who are trying to same things.
- Unify the Online, Software, Hardware and Retail Experiences. Apple has done well to unify their image and feel across media and environments, thanks to a relentless set of brand guidelines. Microsoft needs to pull their brand on to the same page as well. With the retail stores, we could see the future of the Microsoft brand, and see how their entire brand will adjust over the next few years.
- Move the merchandise off the floor and simplify the layout. Big box electronic stores are set up like mazes in grocery stores. Plenty of products are set out on shelves for customers to help themselves. Apple, on the other hand, may have as little as a tenth of their inventory on the shelves. Out of the 70 customers that may be swarming a store at any time, Apple may only have 30 demo computers on display. It works well because people are not overwhelmed by selection. Think of a person looking to change the type of toothpaste he or she may use. Standing in a grocery store isle reveals ten different brands, and each brand may have multiple types. On the other hand, think of a person looking to buy a laptop at one of Apple’s retail stores. They really only have two options: consumer-level or professional-level. The decision to buy becomes that much simpler.
What do you think? What does Microsoft have to do to succeed in the retail industry?
A recent issue of CFO magazine published the results of the Duke/CFO Global Business Outlook Quarterly Survey. The results are not surprising, as CFOs are more pessimistic than ever, but these numbers introduce objective support for a company looking to change.
The next survey may look even more grim. After all, this study was conducted before the fall of Lehman and the approval of bailout packages.
On July 2, 1962, Sam Walton opened the first Walmart Discount City store in Rogers, Arkansas. Walmart incorporated and grew into new states over the years to follow, but it wasn’t until 26 years following the grand opening of the first store that Walmart opened stores in a different country.
Many young businesses realize their idea could work just as well abroad as on their homeland. As a result, companies are beginning to skip the initial growing stage and launch internationally to pool resources from across the world. A company could choose to incorporate in the state of Delaware, but Switzerland may provide better tax advantages. Suppliers may offer a product or component a few hours away, but suppliers in Asia may provide even better prices.
It’s even become cheaper to work with suppliers and vendors from other countries. A quick selection process is available for free with a web search, and online directories categorize data and contact details. The only limitation is initial funding.
A few obstacles as well.
Launching internationally has a few more obstacles that companies launching in one market would not experience.
- International laws and tariffs: Setting up shop in a new country does not provide the founders with a native’s advantage. Most markets are supportive of capitalist companies coming in, but each market requires a separate analysis to review every part of your business to assure compliance.
- Cultural limitations: Messages and packaging would have to be translated, but companies also may have to observe how natives view products or services in that industry. A separate logo or company name may have to be created.
- Time zones: Some suppliers are hard enough to reach during normal business hours. Dealing with suppliers who can sometimes be fourteen hours ahead of your clock could affect the outcome in times of crisis.
Entrepreneurs have to be able to articulate to their investors reasons why they are going global, and larger revenues, economies of scale or first mover strategy are not justified reasons. Entrepreneurs also have to realize that relationships between the suppliers they want to work with have the potential to destroy their company. Supplier relationships should not be created with the intention of saving the most money; instead, they should be created with a potential ally in the industry where both parties can depend on each other.
When an idea has the potential to work well in multiple markets—and startups find ways to gather investors and distinguished members for the board—entrepreneurs may be willing to deal with the hassles of launch and navigate unknown territories to build a promising, global organization.
We see plenty of analysts and critics on either side of the decision for Congress to lend tax dollars to keep GM, Chrysler and Ford afloat. Both sides have great points, too.
Give ‘Em the Cash, and Keep Americans Employed.
- Falling to help the Big 3 won’t only affect the board of directors in the situation, but it will trickle throughout their partners. Entire companies have formed to provide parts, service and support for these companies. Not helping the Big 3 will put entire industries out of business.
- Paying for the bailout will be expensive, but paying unemployment to millions of workers over the next three years will be even more expensive. The federal government stands to lose billions in tax revenues in the next five years. With the bailout, we could get that money back. With the Big 3 closing, we won’t get any of it back.
Let Them Learn from Their Mistakes, and Don’t Spend Americans’ Tax Money.
- The Big 3 are seeing this situation because of their stubbornness and refusal to adapt to consumer preferences. Their business model began failing a decade ago, and they never changed. By passing along the money, we won’t see any change; we’ll simply allow them to hold their head above water a bit longer. The bailout is a life jacket, not a rescue boat. And in this situation, they should no longer be in the water anyway.
- The Big 3 are giving us a hefty dose of black-and-white reasoning. If we give them the money, they claim their industry will see short-term changes and return the companies to the glory days of black budgets and rewarding pensions. If we don’t give them the money, they claim the entire industry will fail, millions of people will lose jobs, and America’s economy will never recover. Both situations are extreme, and analysts cannot exactly pinpoint which view is closer to reality.
Regardless of the decision, Americans will pay with taxes: either through the bailout or to cover the loss of tax revenues. While analysts and politicians will continue to bicker over the financing, modern executives should be wondering exactly what will Detroit have to become to return to the glory days. Is it anything like Better Place, where Hawaii just joined to become a test state for the system of electric cars?
The American automotive industry needs to reinvent their business model, not just their automobiles. The terrifying part about dreaming up new business models is that they may realize that they have to change more than they can to stay in the black. Even worse, they may realize that the industry has changed, and following a new business model in the global automotive industry may almost make them irrelevant.
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.