What business to start in 2012

Startups reveals the top 10 business ideas and opportunities for 2012

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1. Career coaching
2. Cycling
3. Dance and Zumba
4. Frozen yoghurt
5. Hobby and crafts
6. Independent coffee shops
7. Mobile apps
8. Smartphone repairs
9. Social gaming
10. The Olympics

Everywhere you look these days, it seems, small business is big business. George Osborne has offered an array of tax breaks to encourage investors to plough money into early-stage companies. Meanwhile, Vince Cable is leading a one-man crusade to slash through the red tape blighting these very organisations.

International celebrities such as Ashton Kutcher and Justin Timberlake are investing in young tech companies, and the out-of-town shopping monoliths appear to be crumbling, allowing fresh, agile retail firms to spring up in their stead.

The opportunities appear to be endless. Take digital music for example. The propagation of super-fast broadband is fuelling the growth of cloud-based streaming services, led by Spotify, which offer customers access to a huge library of music without the need to buy or download anything.

Yet the market is still in its infancy. Rara, a new “ultra-simple” music streaming service, claims that 80% of consumers have yet to embrace digital music, or adopt existing services such as Spotify and iTunes, so there is huge untapped potential. Following Rara’s lead, a wave of start-ups are shooting up in an attempt to cash in, and this trend will only continue as the technology improves.

Or take pop-up shops, an opportunity perfectly attuned to the small business revolution. As more and more start-ups take flight, eager to try out new products and marketing strategies, demand for temporary retail premises can only increase.

Graham Jules, creator of Real World Gallery, a temporary space frequented by artists and creative businesses, says: “If you’re a new business, it’s too expensive to get a lease long-term, and it’s also a long-term commitment. If you’ve got a new product or service, you need to trial it before you commit space to it. The rise of the internet helps us as well.”

And then there’s m-commerce, the retail revolution precipitated by the rise of the smartphone. Although the mobile payments sector is still tiny in comparison with the more established e-commerce, it is growing explosively, with sales doubling in 2011 and set to quadruple by 2015. Young companies such as Square are enabling consumers to make credit card payments with their smartphones, and, as we’ll see later on, the app market is maturing into one of the world’s most lucrative industries.

Don’t believe the hype

But not all the hype surrounding the start-up space is justified. Some opportunities, which have received huge coverage in recent months, may have already reached saturation point, or been superseded by new trends and technologies.

Take bulk discounting, for example. 2011 was certainly the year of the daily deal, with sites such as Groupon, Huddlebuy and LivingSocial offering huge savings for consumers, and new customers for retailers prepared to shave a sizeable amount off their profit margin (although typically what they’d have allocated to marketing anyway).

However, this market has become increasingly crowded, and several commentators believe that the appetite for daily deals (in the current format, at least) has started to subside. Meanwhile, with the sites typically taking up to 50% of the deal value, a number of small businesses have had their fingers burned by wildly underestimating demand for their deals.

So, when planning your start-up, it’s crucial to nail the zeitgeist. To find a sector on the rise, and beat the rush. The task of finding the genuine opportunities can be fiendishly tough – not even the world’s most seasoned investors get it right every time. To give you a helping hand, we’ve spoken to dozens of successful entrepreneurs, investors and thought leaders, and got their tips on the hottest sectors of 2012.

Of course, starting a business in these sectors is by no means a guarantee of success; nor can we be certain that these sectors will take off as forecasts and anecdotal evidence suggests. To succeed as a start-up, no matter what your specialism, you need the right business model, pricing, positioning, product or service, and a lot of hard work to stand a chance of success – and it’s crucial to thoroughly assess the viability of your idea before you take the plunge. That said, we hope these ideas will provide inspiration for anyone thinking of becoming an entrepreneur in 2012.

To read more about the sectors we’ve chosen, follow the arrows or click on the links above.

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