Despite the economy's dismal bounce back from the recession, there are some small business sectors that have thrived during this time and are expected to do well over the next few years. A recent report from IBISWorld, which publishes reports on market industry research, said that some of these industries below are "expected to continue their meteoric rise and far outpace the rest of the economy."
So what are they? Some of the of fastest growing sectors involve sustainable building, personal health, social network game development and the solar panel industry. Let's take a look at how they're doing and where they're going over the next five years:
Although construction and homebuilding were hurt during the recession, the green building industry has weathered the storm quite nicely. According to IBISWorld, sustainable building has had annualized growth of almost 29% since 2002 and is expected to grow by more than 18% during this year. Private demand has grown for sustainable building, and state building codes have encouraged builders to use sustainable materials. Both of these things have contributed to the rise of this sector. Over the next few years, sustainable building is expected to grow at an average rate of 22.8%.
With an aging American population, some businesses have seen the potential for personal health services and products. One area that has been unaffected by the recession is yoga and Pilates studios. There are currently no major players dominating the market and the expected annual revenue growth is 4.8% through 2017. Another personal health market to consider is the self-tanning industry. Although self-tanning products don't increase personal health directly, tanning lamps and beds have been proven to increase the risk of cancer. Therefore, many people are looking more to other products for their tanning needs. According to IBISWorld, self-tanning products have experienced a 22.7% average annual revenue growth since 2002 and the expected annual growth over the next five years is almost 11%.
Solar Panel Industry
We all know the story of Solyndra; this solar panel company received a government-backed loan worth more than $500 million, and then the company had to file for bankruptcy. Don't think that means all solar panel companies are in the same boat. From 2002 to 2012, the solar panel industry had an annual revenue growth of 32.3%, and more than 9% is expected this year. Solar panel companies that use silicon in their products have benefited from the decrease in silicon costs over the past few years, while Solyndra was banking its competitive edge on silicon prices remaining high. Investments in silicon by China helped drive down the price and the industry is on a path of growth.
It's hard to talk about fast-growing sectors without mentioning some type of technology industry. Considering social gaming really came in to play in 2007, it's still in the infancy stage. Its growth and potential is increasing quickly. There are big players, like Zynga - which grew a company worth less than $1 million to a public company with revenue of more than $1.3 billion in just four years - but there are many other smaller companies in the sector as well. In 2012, 250 companies are expected to enter the market. Half of Americans who have a cellphone are using a smartphone, which is helping to boost the social gaming sector. According to a report by IBISWorld, the social media gaming industry is expected to grow by about 22% annually over the next five years.
The Bottom Line
Obviously there are factors that change business sector predictions, but we can use trends and hard data to see the potential of where these industries may go. Any glimmer of hope coming from the small business world, and the economy in general, is a welcome change.
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