As the economy continues to improve, many aspiring entrepreneurs are turning their small business ideas into reality. Last summer, during a global pandemic, a record number of Americans applied for new Employer Identification Numbers (EINs) or tax ID numbers, according to Axios.
While the pace of startups has slowed some since then, there is still a lot of activity around startup businesses making 2021 an excellent time to start a business. And if you need some help regarding how to start your own business and which businesses you should start in 2021, you’ve come to the right place.
Small Business Ideas
Hopefully, you have a list of small business ideas that appeal to you. The idea is to identify those ideas that can become profitable small businesses. Often, startup entrepreneurs are advised to follow their passion. While that might work in some cases, the truth is just because you are passionate about something doesn’t mean consumers will care. The most successful businesses are the ones that offer products or services that consumers (whether B2B or B2C) want at a price they’re willing to pay.
So, what do consumers want today? Here are a few small business ideas that may be worth pursuing.
B2C Small Business Ideas
The NRF (National Retail Federation) forecasts overall 2021 retail sales to grow between 10.5% to 13.5 %, to between $4.44 trillion-$4.56 trillion. But the more important news is non-store, and online sales will likely range from $1.09 trillion to $1.13 trillion, an increase of 18% to 23%.
According to The NPD Group, parents are buying a lot of products for their children. NPD says juvenile-products had revenues of $7.35 billion in 2020, up 6.5% in a year.
The most popular categories were:
Safety products, including health & grooming products and baby gates. 2020 sales hit $587.5 million, up 35% from 2019.
Furniture sales came in at $952.1 million, up 17% from 2019. Top sellers in this category included cribs, toddler beds, and children’s and baby furniture.
The entertainment category, including activity seats/jumpers, and swings, rang up $963.6 million in sales.
Retail sales of toys continue to boom, generating sales of $25.1 billion in 2020, up 16%, according to a report from The NPD Group. Many of these sales took place online, boasting an amazing revenue growth of 75% growth from 2019 to 2020. NPD recommends brick-and-mortar retailers continue to offer BOPIS (buy online, pickup in-store) or curbside pickup options since they provide convenience to busy parents.
Fashion dolls and accessories (+56%), sports toys, including skates, skateboards, and scooters (+31%), games (+29%), building sets (+26%), and summer seasonal toys (+24%) were top sellers.
New online customers
If you want to open an online store, your target market of customers has significantly grown. Running a business online is an excellent side business idea or home business idea. The Washington Post reports baby boom consumers over 65 are now the fastest-growing category of e-commerce shoppers, joining millions of millennials and Gen Zers.
One of the fastest-growing categories in the beauty industry is products targeting male customers. The personal care market for men “has grown exponentially over the past decade and should hit $166 billion by 2022,” according to Allied Market Research.
And per a report from CBS News, global research firm Mintel reports more than two-thirds of Gen Z males in the U.S. are interested in gender-free beauty products, and not just products in traditional masculine packaging (dominated by deep red, green and black colors). According to Mintel, “9% of Gen Z males say they use some form of lighter, ‘no-makeup’ makeup, whether it’s tinted moisturizer, BB cream or CC (color correcting) cream.”
Overall, in the beauty industry, all the buzz is about clean beauty. The global clean beauty market is expected to grow from revenues of $5.4 billion in 2020 to $11.6 billion in 2027.
Clean beauty means the products are safe and non-toxic.
Likely due to the increased number of people working from home, many decided to transform their spaces, according to consumer research giant The NPD Group. In 2020, consumers invested their home improvement dollars in their kitchens and baths (revenues were up 28%), while overall home improvement revenues rose 22%, and paint sales increased 16%.
This means there are opportunities for businesses that sell these home products. The outlook is also strong for contractors and remodelers. According to Harvard University’s Joint Center for Housing Studies, which issues the Leading Indicator of Remodeling Activity (LIRA) report, forecasts remodeling industry revenues will reach $352 billion this year.
Also, since many of us will be working from home for the foreseeable future, entrepreneurs selling organizational products or services are in high demand.
Food trucks/ghost kitchens
If you’ve always wanted to be in the food business, but the startup costs are too high, consider starting a food truck business or launching a ghost kitchen. Ghost (or virtual) kitchens thrived during the pandemic. They offer take-out and/or food delivery only and often can operate in less costly parts of a city.
A report from industry insider, QSR Magazine, said this about quick-service restaurant operators (QSRs): “You can see the appeal. Virtual kitchens are stripped-down commercial cooking spaces with no dine-in option. Functioning as hubs for online delivery and catering orders, they circumvent the need for costly buildouts in premium locations.
Less prime real estate also means more space to accommodate delivery and catering vehicles that would otherwise jockey with customers for parking space.
Tutors are in great demand today, and starting a tutoring service is a great side business idea. ZipRecruiter reports private tutors are averaging sales of nearly $45,000 a year.
B2B Small Business Ideas
All those new startups are going to need help launching and growing their businesses. This means there’s a lot of opportunities for businesses that serve other businesses (B2B). Business services in demand include:
Accountants and bookkeepers
Business plan writers
Social media consultants
Once you decide on what type of business you want to start, you need to take care of the details. Of prime importance is choosing the business formation structure that’s right for you. If you don’t want to incorporate, the simplest and least costly option is to operate as a sole proprietor. If you don’t register a separate name for your business in your state, your first and last name will become, by default, your company’s name.
When you run a sole proprietorship, there is no legal shield between you and the business. That means you can be personally sued by unhappy clients.
Today, many business owners are starting an LLC (limited liability companies), which are considered a separate legal entity from its owner/s, which means they’re protected from personal liability for any debts and claims on the business. If you own an LLC, you are required to keep your business’s finances and expenses separate from yours or other members of the LLC.
Which is right for you?
Each business structure has its pros, cons, and tax consequences, so before choosing the one that’s best for your company, consult with your accountant and attorney.
If your small business will eventually provide working capital solutions to your customers, learn how to become a Fundbox partner to utilize our platform for embedded finance.