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Need a small business idea? Don't pick what's hot

Wednesday - 5/14/2014, 1:57pm  ET

In this May 7, 2014, Jen Collins Moore, owner of Meez Meals places some of her ready to cook entrées in a delivery container in her kitchen in Chicago. Her company makes and delivers ingredients for dinner to customers whose busy lifestyles leave little time for meal preparation. (AP Photo/M. Spencer Green)

JOYCE M. ROSENBERG
AP Business Writer

NEW YORK (AP) -- Jumping on the latest hot trend seems like a sure-fire way to strike entrepreneurial gold. But while yoga studios and gluten-free bakeries may be popular, investors and business consultants say take a broader view. Trends in society, including changing demographics and technology are the best guide. Instead of joining the pack, would-be small business owners should look for a niche and fill it.

MAKE LIFE EASIER

THE OPPORTUNITY: Products or services that make life easier, particularly for the well-to-do.

Businesses that deliver ready-to-cook dinner ingredients or care for elderly relatives are good bets, says Brian Cohen, chairman of New York Angels, a group of investors that buy stakes in small or young companies.

"Over and over again, the companies that are getting funding are serving upper-income people," Cohen says.

Think about things that are convenient, save time and are fun to use -- such as dinner ingredient companies, which deliver to customers all the makings of a dish like stir-fried beef or vegetable lasagna. They offer people who like to cook the satisfaction of making a meal, without having to shop.

Elder care companies, which send aides to care or do housekeeping for older or sick people, relieve the stress on family members when a parent or other relative needs full- or part-time attention.

WHY NOW? The economy is growing and people have more money to spend on things that aren't necessities. As for elder care, people are living longer and are more likely to need help.

ENTREPRENEUR BEWARE: There's already a lot of competition. Two companies, Blue Apron and Plated, already deliver dinner ingredients to a large part of the country. And home-care businesses abound.

BEEN THERE, DOING THAT: Jen Collins Moore started Chicago-based Meez Meals, which delivers ready-to-cook ingredients to consumers, in 2010. She realized there was a demand for an ingredient delivery service when she worked with focus groups of women at a consumer products company. The women wanted to cook but didn't have time to do all the work. She started her business before Blue Apron and Plated, but isn't worried about the competition; unlike Moore's rivals, Meez Meals delivers food that's already cut up and chopped, saving customers time.

"We do it differently. We do the prep work," Moore says.

STAND OUT FROM THE FOOD CROWD

THE OPPORTUNITY: Organic, natural and gluten-free foods.

The market for gluten-free foods, estimated at $10.5 billion in 2013, is expected to grow to more than $15 billion by 2016, according to market research company Mintel. But rather than trying to come up with a product like another gluten-free muffin, consider a business that supports or services the gluten-free industry, says Dwight Richmond, a purchasing executive at Whole Foods, the grocery chain. One example: a company that creates gluten-free ingredients like Penford Corp., based in Centennial Colorado. It makes tapioca and other ingredients used in gluten-free food.

"The people thriving are the ones who find new and better ways to innovate," Richmond says.

A product that gives consumers the information they want about their food may also be a good choice. Investor Alicia Syrett bought a stake in a company that makes high-end muffin and cake mixes, Cisse Trading. She likes that it allows people to go online and research its ingredients and where they come from.

"Consumers want transparency. They want to know, what are we putting in our bodies?" says Syrett, CEO of Pantegrion Capital, an angel investment firm.

WHY NOW? About 3 million people in the U.S. have celiac disease, an intolerance for gluten. Millions of others have food allergies. Many people are concerned about food additives like hormones and chemicals and foods that have been genetically modified. Others want what are called fair trade foods, produced by companies that treat their workers and the environment well.

ENTREPRENEUR BEWARE: By the time many would-be entrepreneurs grab hold of an idea, the field could be packed, says Dennis Ceru, adjunct professor of entrepreneurship at Babson College and a business consultant. "The most hot trend is probably at least at its midpoint," he says.

"See what other industries, what other business services or products support that trend. That might be an opportunity," he says.

BEEN THERE, DOING THAT: Kelly LeDonni got the idea to sell labels and tags for gluten-free food after she was diagnosed with celiac disease. A tiny amount of gluten can make her very sick. She started Gluten Free Labels in February 2013, selling to consumers online. The Washington Crossing, Pennsylvania, company's customers include restaurants, retailers and university cafeterias.

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