Updated: Dec 23, 2019
The National Small Business Association (NSBA) stated in its 2015 Year-End Economic Report that small business owners continued to be confident in the future of their businesses as 2015 came to a close — even with predictions of overall economic growth slightly slowing. Those sentiments were validated as 70% of small business owners surveyed by Constant Contact in February and April of 2016 reported meeting or exceeding their first quarter revenue targets.
As small businesses continue to perform strongly, the following industries are expected to be ripe for entrepreneurs.
Artificial Intelligence (AI)
As more and more businesses begin to automate processes, artificial intelligence will play an important role in helping businesses scale and improve interactions with their customers. Chatbots, for example, are helping small businesses with customer support that small business owners may not normally be able to afford. Recently, an artificial intelligence chatbot lawyer from DoNotPay made headlines for helping users challenge over $4 million in parking fines.
AI technology has many applications from self-driving cars to vacation planning. Funding in the AI sector has grown drastically from $45 million in 2010 to $310 million in 2015 (with an aggregate of $967 million since 2010) according to venture capital research firm CB insights. The market for AI technology is expected to reach $9.2 billion in the U.S. and $15.3 billion globally by 2019.
Virtual Reality/Augmented Reality (VR/AR)
Virtual reality and augmented reality are the next big innovations that will eventually revolutionize how people interact with the world from playing games to shopping. Virtual reality companies have raised about $630 million in funding worldwide in 2015 according to PitchBook. Similar to artificial intelligence software development, small business owners looking to capitalize on the VR and AR industries will likely need technical knowledge to build the software and hardware. Entrepreneurs, however, can think of creative ways to enter the industry without actually having a technical background such as emulating Virginia Tech’s Virtual Reality Room.
Biometric scan software is authentication software that utilizes a user’s fingerprint, iris, or other human characteristic for identification. Apple, for example, incorporated biometric technology into their iPhone and iPad as Touch ID. Biometrics can have many applications ranging from facial recognition for social media applications to voice recognition for artificial intelligence software.
IBISWorld, a research organization specializing in long range forecasting of industries and the business environment at large, projects that the biometrics industry will experience high demand. The biometrics industry is estimated to grow at an average rate of 14 percent annually, to $9.47 billion, by 2020, according to IBISWorld. Entrepreneurs looking to enter the industry can focus on software development, hardware manufacturing and distribution, or implementing novel applications of biometrics to existing products.
As consumer demand rises for faster delivery services, companies such as Amazon are turning to drones to fulfill their delivery needs. The drone industry is expected to grow to $8.4 billion by 2019, according to ABI Research. As drones become more and more mainstream (as evidenced by increased regulation), entrepreneurs can capitalize on the growth of this industry in several ways such as software development, hardware manufacturing, distribution and sales, repair and maintenance, rentals, piloting services, and even entertainment.
The demand for environmentally friendly products is growing across industries from food to baby products to homes. Actress Jessica Alba found tremendous success in the launch of her “green” non-toxic household products line The Honest Company.
Similarly, green building practices and supplies are becoming a routine part of the nation’s construction industry. The U.S. Green Building Council reports that the hospitality industry is expected to see tremendous growth in green building. The production of sustainable building materials is estimated to be a $36 billion market in the U.S. These materials help reduce water and energy costs, while also reducing pollution and waste. Entrepreneurs are likely to find traction by producing or selling green products across a range of industries.
Business Support Services
Historically, businesses that support other businesses have always been quite successful and that remains true today. Business-to-business services are highly fragmented across industries, allowing small businesses an opportunity to specialize in a particular niche. In fact, a majority of the most profitable small business industries as reported by Entrepreneur can be categorized as business support services such as accounting, office administration, or consulting. One of the benefits of joining this industry is the symbiotic relationship business support service companies have with their clients – as their clients’ businesses grow, their own business often follows.
For more on the economic outlook of small businesses, check out Business News Daily’s 50 Small Business Trends and Predictions for 2016.