Last week I wrote about the five worst industries to start a business in… avoid those like the plague unless you’re looking for daily headaches and a dwindling bank account.
In this article, I want to look on the positive side of things and highlight five fantastic industries every entrepreneur should consider. These particular industries are ripe with opportunity despite being unconventional and largely under-explored. These sectors aren’t exactly sexy startup industries, but they are highly profitable.
You see, the right industry for an entrepreneur to enter is one that is riddled with inefficiencies and weak competition. Inefficiencies are often due to a lack of market participants. On the contrary, overcrowded industries are often sexy and very efficient, so stay away from them. You need to find industries that are being ignored. The five industries I’m about to introduce are either being ignored or they are still in their infancy.
[Tweet “the right industry for an #entrepreneur to enter is one that is riddled with inefficiencies”]
Here are the top five industries I believe you, the aspiring entrepreneur, should consider:
It’s 2014 in case you forgot. Entrepreneurs need to be thinking globally.
I challenge you to look for opportunity beyond your city, state and even country. The fastest economic growth is coming from countries in Africa and Asia. Did you know that Africa has 6 of the world’s 10 fastest growing economies?
Property development in developing nations will be on the rise in the next few years. Globally, there is a huge void in lower income markets. The point of entering this market is to provide comfortable homes for those who otherwise could not afford one; and, of course, make a lot of money doing so. I’ve said it for years, lower income housing may not be sexy, but it is extremely lucrative. Additionally, it is much appreciated by governments and citizens alike, bringing a lot of perks in the form of tax breaks for developers.
Obviously, there is not a huge market for this in the Western World (unless we are talking about Detroit), but there is a massive opportunity in many emerging economies. The next generation of homes and home building will see a boom in the sub-ten thousand dollar market. Get rid of your preconceived notions of what a home is and how it may look so you can approach this sector glass half full.
One example of a market potentially ripe for this opportunity is the Philippines. The Philippines is one of the fastest growing economies in Asia. GDP growth is anticipated to be 6.6% this year alone. Guess what the average apartment price is? Roughly USD$8,000.
If you can swing the banking aspect of this, or you can get some friends to pool in, it is virtually impossible to go wrong in the rental property market if you have a five year (or longer) time horizon and follow my formula (read my articles on rental properties – start here).
If you have strong credit, you can leverage it to buy a multi-unit property with immediate cash flow potential. Also, although it comes with a premium price tag, you can leverage credit to buy a building that already has strong occupancy, which the bank may be more inclined to back.
If you are handy, or have close connections with a construction or building firm, opt to get a fixer-upper and do a lot of the work yourself or via your connections. In almost all instances, fixer-uppers, provided they don’t require major repairs (click here for my article on this subject), produce superior cash flow with a 20-30% down payment.
Without cash flow, you’re not running a rental property business; you’re merely buying and holding like the masses. While the rental pays the loan in almost every scenario (even the one the masses follow), and the equity of the building accrues, that’s not the goal when buying rental properties. It’s all about cash flow and building your portfolio of properties ASAP.
This industry is dominated by a few large players who have all but taken it for granted. The large players provide, from my experiences, shit service.
There is a huge opening to enter the budget traveler’s market and provide a truly innovative solution to personal transport. We’ve seen companies like Uber take off, as well as companies that have share-a-car programs. The market is still wide open and numerous solutions are viable.
I wrote about a former fund manager’s venture into the rental car business on the island of Antigua. He has this industry down pat, which I learned after speaking with him while on vacation (click here to read my article about what I learned from this guy).
Since meeting him in the Caribbean, we’ve been in touch and his business has taken off. His budget rental car company has grown and he’s inked deals with airliners, hotels and travel agencies. By the way, he’s done all this with a four person shop! Talk about a lean startup. Entrepreneurial success is all about filling a void, and he realized Antigua needed a professional and reliable rental car service during his many visits to the island. His differentiator was something so simple: He provided GPS… unbelievably, no other rental car company on the small Caribbean island provided GPS.
The market for apps is insatiable and looking at the way Android and iOS are going, we are just at the beginning. The overhead to create phenomenal apps is not excessive by any means, but you have to be a talented programmer or partner up with one (or a group). There is limitless potential in apps so long as you have the imagination. Once again, successful apps are all about filling a void in people’s lives.
This industry is only worth entering if you have a strong grasp on the app market. If you have that, almost every other area that is required to get this off the ground can be outsourced.
A close friend of mine just launched a financial app with great success. His secret to a successful launch wasn’t about dumping tons of money into marketing. Quite the opposite. In fact, start to finish, the app (which is complex), cost him around $11k. He cut costs by bringing in a talented programmer as a 20% partner.
This friend of mine used his financial database (consisting of roughly 65,000 newsletter subscribers) to get his app off the ground. Within two weeks he had over 11,000 active users…smart.
No, I’m not talking about starting your own “online college” where you give away degrees just for participating.
There is a large educational market out there that most individual entrepreneurs have not even begun to pay attention to. People have a burning desire to learn new things online, all the time. Whether it be academic tutoring to how to use Photoshop, if you are a true authority on a viable skill/talent/lifestyle, there is an audience out there willing to pay you for your knowledge.
The success or failure in this industry comes down to quality and consistency of content. You have to constantly brand yourself as the authority in whatever subject you are an expert on. You must get your writing published on reputable sites, in magazines and the like. This takes time and a ton of effort on your part, but it can be extremely lucrative and offers, bar none, the best entrepreneurial lifestyle.
I have another friend who has built a men’s fitness/lifestyle business and spends damn near half his days traveling the world. His work is very rewarding on a personal level too. The fan mail this guy receives is inspiring stuff to say the least, and he has helped thousands of men achieve their personal and fitness goals. This friend of mine makes six figures helping/teaching men how to be better men. It’s a great business model that serves a great purpose in our emasculated society.
The five industries listed above will show tremendous growth in the years to come and are lacking competition at this very moment – that’s precisely why I’m bullish on them. These aren’t conventional entrepreneurial ideas, but that’s what makes them great. I believe that if you are an aspiring entrepreneur, you must seriously consider entering one of these five industries if any of them line up with your passion.