IF YOU'RE LOOKING FOR A HOT MARKET, look no further than organic products- those grown and farmed in such a way as to ensure sustainability (for example, without pesticides). According to the Organic Trade Association (OTA), the organic market is growing 20 percent every year. "Up to 6o percent of the population [is] willing to buy organic products," says Holly Givens, communications director of the OTA.
But to get those products into the hands of consumers, entrepreneurs must know their market well. The organic food and beverage market is estimated to be about $6.9 billion and is expected to grow between $12 billion and $13 billion by 2007, according to the Natural Marketing Institute (NMI), an organic market consulting firm in Harleysville, Pennsylvania Joe Marra, executive director of NMI, notes all areas are experiencing growth, especially spices, yogurt, coffee and meats.
Jumping into the trend is Ian Diamond, founder of Organic Connection Inc. in South Salem, New York. This entrepreneur, who's been in the organic industry for 20 years, launched his Web-based organic food delivery company in August 2002. Diamond, 44, owned an organic retail store in Melbourne, Australia, in 1985, but a drought forced him out of business. He then moved to New York in 1996.
Diamond noticed that while organic food in Europe was high-end, the offerings in the United States were "middle of the road," he says. "You don't see a wide range of organic foods, artisan foods or gourmet foods. In Europe, you see every food [category] covered with organic offerings." Wanting to replicate that variety here, Diamond set up his food delivery service, which specializes in organic meats. He projects $300,000 in sales for 2003.
Within any hot market, it pays to find your niche. Rochelle A. Lavens and Marleen Trader did just that with Heidi's Homemade Inc. in Columbus, Ohio. Started in 1999, this business specializes in organic pet food. The entrepreneurs have launched a brick-and-mortar store, an online store and a wholesale business.
"My dog, Heidi, got cancer' explains Lavens, who expects six-figure sales for 2003. "I was devastated." Lavens researched what went into pet foods and discovered some ingredients included spoiled foods, waste products and even parts of euthanized anlinals. "It was startling," she says. "I felt like I contributed to her illness." Detennined to help her pet, Lavens, 43, began making organic snacks, part of the organic diet she believes may have helped extend the dog's life by two years.
Now, says Trader, 49, the main challenge is educating consumers about how organic foods can benefit their pets. Lavens agrees: "You have to do your research. Don't mislead people--know your suppliers. Are they free range? Are they organic?"
Whatever avenue you choose, the future looks bright "I see organic products continuing to become more available in more places and with increasing variety in the product choices," says Givens. "There's still room for additional brands and companies."
While success in the organic market is inspiring, it's certainly not without its challenges. The federal government released new regulations in October 2002 detailing the specifications any product has to meet in order to be called organic. For any organic start-up, says Givens, learning the new regulations should be your first step. Check out www.ams.usda.gov/nop for more information.
Winning Ways
MEET THE WINNERS OF THE WHARTON BUSINESS PLAN COMPETITION.
TIMES HAVE CHANGED SINCE FIVE YEARS ago, when almost every contestant in the Wharton Business Plan Competition at the University of Pennsylvania's Wharton School was an Internet firm. This year, the watchword is "diversity," says Nicole Righini, associate director of entrepreneurial programs at Wharton. Among tech and energy-related companies, the 2003 winner was a pet health insurance business. Chris Ashton, 30, Natasha Ashton, 29, Laura Bennett, 37, and Alex Krooglik, 30, won $20,000 in start-up capital.
The fact that the Ashtons came from a personal standpoint helped--Chris and wife Natasha got the idea for the company when their cat, Bodey, fell ill in 2001. "We took her to the vet hospital--it was expensive," recalls Chris. After paying large out-of-pocket costs, the couple looked for the pet insurance that was easily available in England, their homeland, but wasn't as easy to find in the States.
The pair, students at Wharton, met up with Bennett, who had insurance experience, and Krooglik, who knew the technical side of a start-up. "We'd done surveys of pet owners and their needs," says Chris. "We collected over 2,000 responses to our first survey, so we had a strong assessment of what people wanted." They also got data from veterinary clinics to come up with a pricing plan.
It was the comprehensive business plan that helped set them apart from the competition, says Righini: "They'd given their business and marketplace a great deal of thought. They came up with a novel idea, and they were able to support it with their financials."
Righini notes the year was so competitive the judges went well over the allotted time to choose a winner. "I think this year is the best competition we've ever had," she says. "I don't think we've had such a rich mix of business ideas. The quality of these business plans is better than it ever has been before."
Chris hopes to launch the company (which has yet to be formally named) in January 2004. When asked about starting a company in difficult economic times, Chris responds with the air of a seasoned entrepreneur: "There are challenges, but if you can get the business sorted now, it's as good a time as any to get things up and running."
Got Some ID?
THE SBA'S NEW ONLINE FORM SAVES ENTREPRENEURS TIME AND MONEY.
GETTING YOUR FEDERAL EMPLOYEE identification Number (EIN) just got easier, thanks to the SBA. Entrepreneurs can now fill out one online form to get state and local taxpayer ID numbers. Set up together with EzGov Inc., an e-government technology provider in Atlanta, the new online program is intended to save entrepreneurs time and money during start-up. The program is being piloted in Georgia and Illinois, and other states are expected to join soon, says Ed Trimble, president and CEO of EzGov. "The hope is that all states will participate," he says.
The program was designed to make regulations easy to find, understand and comply with, says James Van Wert, senior advisor for policy planning and e-government for the SBA. Van Wert estimates that when businesses adopt the new technology en masse, they will save more than 2.4 million hours and almost $100 million annually, compared to the manual process.
The program is designed to link to a state's Web site as well, offering entrepreneurs a one-stop shop for registering their businesses. Until the new program is available in all states, entrepreneurs can still get their EIN online (even if their state isn't yet participating). Visit www.businesslaw.gov to get started.
According to reports, 694 businesses used the new service, which launched in February 2003, in its first week. Says Trimble, "It eases the setup task that all small businesses go through."
WHAT'S YOUR. PROBLEM?
FINDING HEALTH-CARE COVERAGE THAT'S JUST THE RIGHT FIT FOR YOU
Q I need an affordable health-care plan that will cover pre-existing illness for self-employed business owners. Where can I find one?
Name withheld
A Some states have laws that require insurance companies to cover people in situations like yours. For example, Colorado requires insurance companies to offer coverage to self-employed people who would normally be declined. Washington makes insurance companies sell individual health policies to anyone. And Florida guarantees individual health insurance coverage to "eligible" individuals.
Find a knowledgeable insurance agent who will work and solve problems with you. However, expect guaranteed coverage to cost 10 to 50 percent more than regularly issued insurance. There may also be a waiting period before pre-existing conditions are covered. Here are some other possibilities:
* Affiliate with an employee leasing company that has a health plan that will cover your conditions. For instance, the SOHO Resource Group (www.sohoresourcegroup.com) is worth checking out.
* You might find a plan that's more affordable by taking a very high deductible. Some are as high as $7,500. Be aware that this increases your out-of-pocket risk if you become ill or injured.
* If you're desperate and willing to sacrifice time from your business and personal life to be eligible, you may get coverage by joining a group that insures every member without individual screening. For instance, if you enroll as a university student, you can participate in a student health plan. Or, try working enough hours as an employee somewhere else to qualify for that business's health plan.
NEXT STEP
Check out these organic industry Web sites for more information:
