If you want to start a business this year, but aren’t sure what type of business to start, a new survey from Guidant Financial and LendingClub has some ideas—as well as reassurance that you’re not alone. According to The State of U.S. Small Business In 2018, the number-one reason people start their own businesses is because they’re “ready to be my own boss”—not necessarily because they have a specific business idea.
So what types of businesses are currently hot for entrepreneurs? The top five industries where small businesses are represented are:
1. Business services—11%
2. Food/restaurant businesses—11%
5. Home services—5% (This category bumped Automotive services from last year’s No. 5 spot.)
Within those five categories, however, some industries are growing much faster than others. The fastest-growing areas are:
Health, fitness and beauty
2018 saw a sizable increase in health, beauty, and fitness businesses as the number of wellness spas, salons, and gyms grew by 34%. Here are some ideas to inspire you:
Between 2015 and 2017 the global wellness industry grew nearly twice as fast as overall global economic growth (3.6%). According to the IHRSA, the global health club industry alone generated $87.2 billion.
Fitness clubs aren’t the only way to capitalize on the health and wellness trend. You could also start a business that incorporates smart home technology to help people achieve their fitness, health, and wellness goals. If you’re an inventor at heart, what about developing a fitness product such as exercise equipment or clothing? (Get some tips about how to develop a fitness product that people will actually buy.)
From millennials to baby boomers, Americans are paying more attention to wellness than ever. Wellness encompasses physical, mental, and emotional wellness, giving rise to one-stop wellness centers that incorporate health, fitness, and even medical care. These are a natural for busy consumers who want to simplify their lives.
Within the beauty category, a couple of trends stand out. Skin care is the most profitable product category in beauty: by 2019, its market value is projected to grow by $20.1 billion compared to 2014. Skin care for men is a growing category, especially popular among younger men.
Whether it’s cosmetics, skin care, or hair care, natural beauty is hot, with 45% of women naming it a top trend. Consumers are also embracing their own natural beauty, and companies are developing products to enhance the beauty and fit the needs of multicultural consumers. Market research firm Mintel says “trend-driven, multicultural women” are propelling the growth of the U.S. beauty industry, and identifies custom-blended beauty products as an especially promising area.
Restaurants are perennially popular among startup business owners, but especially so today. Last year the number of food/restaurant businesses grew by 14%, according to Guidant/LendingClub’s report.
Restaurants are notorious for having a high failure rate, so it’s important to plan carefully and know what you’re doing. (Check out these tips for opening a restaurant to get started.)
Wondering what kinds of foods to serve? Breakfast is hot at any time of day. Reports from the National Restaurant Association and Technomic’s Breakfast Consumer Trend Report say 75% of consumers eat breakfast out five times more frequently than they did 10 years ago; almost 60% would eat out more frequently if breakfast items were offered on more lunch and dinner menus. Need more ideas? Here’s a rundown of 2019 food trends.
Don’t forget to provide multiple restaurant delivery options. Delivery is vital to attracting patrons—especially millennials and Generation Z. In fact, almost two-thirds of U.S. restaurant dining is off-premises (this includes carryout, delivery, drive-through, curbside pickup, and food trucks).
Financing options to start a business
How will you start that new health, beauty or food business? According to the Guidant/LendingClub survey, 32% of startups use cash from their own savings to finance their businesses, while 13% use Rollovers for Business Start-ups (ROBS), a method of using retirement funds to start a business without incurring tax penalties.
However, last year saw more startups and entrepreneurs turning to forms of financing that have traditionally been less popular. For instance, the number of entrepreneurs using mortgage refinancing to start a business grew by 33%, those using SBA loans increased by 29%, and the number using a home equity line of credit (HELOC) grew 27%.
As home values rise once again in many parts of the country, more and more Americans have home equity to tap into to raise money. Just keep in mind if you use your home to borrow startup capital, you’re putting your home at risk if your business isn’t as profitable as you expect.
Get more hot startup business ideas
Health, beauty, fitness and food aren’t the only hot business startup trends for 2019. To get even more ideas, visit my website SmallBizDaily.com to download my new eBook, Hot Businesses, Markets & Trends 2019. It’s got 114 pages of bright ideas, so you’re sure to find plenty to inspire you—and help you make 2019 your most successful year ever.
By Rieva Lesonsky