Top 10 start-up opportunities

Despite the prevailing economic climate, there is still money to be made and niche markets to corner for those willing to establish a new business during a global recession. IBISWorld analysts have identified the ‘Top 10′ start-up opportunities for 2009, and beyond.

The Top 10 list features opportunities from two distinct groups:

1. Opportunities relevant for those looking to establish an owner-operator business, small partnership or work-from-home venture; and
2. Ventures more suited to entrepreneurs or those with significant capital to invest, who may be able to take advantage of the current economic situation to purchase or establish a profitable enterprise.

1. Insulation installation providers

Following the Rudd Government’s $3.9 billion proposal to insulate Australian homes, this is one industry that will be well protected from the raging economic storm, with an estimated 40% of the country’s houses currently without insulation.

At the moment, the market is made up of numerous small players, and there are no specific licensing requirements or qualifications needed to undertake insulation work – making it an ideal opportunity for a low-skilled, capital-short entrepreneur.

Start-up costs are low, since the majority of expenditure is labour related, which is again ideal for sole proprietors or small partnerships – the only major cost to be incurred would be transportation, which could carry the equipment required, although a car and trailer would suffice. However, challenges exist as these latest incentives and the potential for high returns could encourage a flood of new operators into the market, intensifying competition and reducing fees and margins.

Revenue forecast: Up to 50% pa until 2011
Start-up costs: $3,500 – $5,000

2. Tutoring

Growth in the tutoring industry has traditionally been, and will continue to be, driven by immigration, particularly higher immigration from Asia and Eastern Europe, and demand is greatest in Sydney and Melbourne.

The industry is best suited to (although not the exclusive domain of) people with teaching or educational experience, and services range from individual in-home tutoring to small group coaching classes, seminar-style programs and classes instructing English as a Second Language (ESL).

While the current economic climate may result in some price discounting, parents who consistently pay for tutoring do not regard it as a discretionary expense and will continue to pay for the service despite the declining economy. In fact, they may believe studying to sit for scholarship exams or selective school tests to be even more urgent than previously, helping small providers attract a continuing stream of students.

Since tutoring is primarily made up of private individuals or small businesses, it is well suited to new entrants.

Revenue forecast: 6% in 2008-09 then 5% in 2009-10
Start-up costs: $4,000 – $75,000 (Note: The upper end of this spectrum relates to purchasing an existing tutoring business operating from an established location.)

3. Consultants

Both management and IT consultancies should do well over the short to medium-term, as consultants typically enjoy counter-cyclical benefits. During good times, management and IT consultants are hired to develop new strategies and systems to enhance growth and advise on expansion plans, while during a downturn they’re employed to cut costs.

In the current market, those with skills in making redundancies and reducing inventory are particularly sought after, and anyone with this type of experience specific to a certain industry who may have lost their own job is now in a position to promote themselves as a consultant. With many companies looking to restructure in the face of a radically changed financial sector, knowledge of designing and implementing new IT systems is projected to be invaluable.

Those starting out are recommended to use their existing industry contacts to help win initial contracts, as while Australian businesses’ love affair with outsourcing is slowing, this is expected to continue its upward trajectory once the economy begins to recover. As a result, while setting up a consultancy may be an excellent option right now, it is also a solid long-term proposition.

Revenue forecast
Management Consultants: 5% pa / IT Consultants: 5.4% pa
Start-up costs: $10,000 – $200,000 (Note: The higher end of the spectrum relates to the cost of purchasing an existing client base.)

4. Online retailing

While competition in the e-commerce market is increasing, online retailing is still a relatively untapped market in Australia, which is projected to enjoy consistent growth for the foreseeable future.

While retail broadly is suffering right now, it’s important to note sociological and technological trends pointing towards sustained growth in the industry as Generation Y serve up a large category of spenders comfortable with transacting on the internet from a young age.

In addition, the number of broadband subscribers is projected to reach 10.3 million by 2014 – up from 6.9 million this year – which, together with improved security, myriad online platforms and expanding wireless applications, will enhance the potential for trading in an online environment. In the short term, online shopping is expected to be resilient in the face of the downturn as an increasing number of Australians turn to the web to seek bargains, and to better research purchases to ensure value for money.