Want to know if your start-up is in a sector set to boom – or bust? Or are you wondering which sector is best for start-ups? For start-ups, good ideas will remain good ideas regardless of economic conditions, but it’s advisable to see which way the wind is blowing before launching your business. Business information analyst IBISWorld has researched 500 industries, forecasting which sectors are expecting exceptional growth, as well as identifying those that are facing troubled times ahead.

1. Top 10 growth industries – and those
that are set to crash
Robert Bryant
IBISWorld
Oliver Milman
StartupSmart.com.au
James Thomson
SmartCompany.com.au
Sponsored by:

2. WWW.IBISWORLD.COM.AU
Topics
1. The Australian Economy
2. Industries In Perspective
3. New and Emerging Industries
4. Industries to Watch

3. WWW.IBISWORLD.COM.AU
1.
The Australian
Economy

4. WWW.IBISWORLD.COM.AU
Asia Economy
Other A-P Other
ppp terms 2010 (F)
0.8% Indian S-C
3.3%
Malaysia 0.9% Greater China
Singapore 1..0%
Vietnam 1.1% 42.3%
Philipp 1.3%.
Thailand 2.2% India
15.1%
38.0% China
16.9%
Japan
NZ 0.7%
H/K 1.3%
$US 25.8 trillion
Source: CIA/ IBISWorld 02/07/10
(35.8% of world GDP)

5. WWW.IBISWORLD.COM.AU
9
Economic Growth
Annual real GDP growth (%) progressed in quarters to September 2010 (and forecast to June 2015)
8
Average long business cycle is 34 quarters (81/2 years)
7
Forecast
6
5
4
3
2
1
0
-1
-2 34 qtrs 34 qtrs 33 qtrs 38 qtrs 33 qtrs 36 qtrs ?
-3
1960
1968
1976
1986
1994
2002
2010
2018
1962
1964
1966
1970
1972
1974
1978
1980
1982
1984
1988
1990
1992
1996
1998
2000
2004
2006
2008
2012
2014
2016
2020
Source: IBISWorld: 20/01/11 Years, ended June

6. WWW.IBISWORLD.COM.AU
The Market Economy
Capital Year to September 2010
Consumption
Expenditure Govt. CapEx
27.8% GBEs GG Expenditure
72.2%
Company
CapEx2
Household
Consumption
1 Mainly on behalf of household
2 Incl. inventory change & transfer costs
Gross National Expenditure (GNE)
$1312 billion (current prices)
Source: ABS/IBISWorld 01/12/10

7. WWW.IBISWORLD.COM.AU
Australian Index of Consumer Sentiment
2 months progressive to January 2011
Happy 65% of last 40 years
73% of last 20 years
Recession Level
Source: Westpac-Melbourne Institute (IAESR), IBIS estimates 20/01/11

8. WWW.IBISWORLD.COM.AU
Consumption Expenditure Growth
4 qtr moving average to September 2010
9
8
7
6
5
4
3
2
1
0
-1 Recessions do not occur from collapsing consumption expenditure
-2 (mainly households), but from capital expenditure which does go
-3 severely negative every 8.5 years.
-4
-5
-6
1960
1966
1970
1980
1984
1990
1994
2000
2004
2010
2014
2020
1962
1964
1968
1972
1974
1976
1978
1982
1986
1988
1992
1996
1998
2002
2006
2008
2012
2016
2018
Source: ABS: 5206-05 (01/12/10)

9. WWW.IBISWORLD.COM.AU
Capital Expenditure Growth
4 qtr moving average to September 2010
18
16
14
12
10
8
6
4
2
0
-2
-4
-6
-8 Recessions occur when
-10 GFCE falls more than 8%
-12
1960
1966
1968
1974
1976
1982
1988
1990
1996
1998
2004
2006
2012
2018
2020
1962
1964
1970
1972
1978
1980
1984
1986
1992
1994
2000
2002
2008
2010
2014
2016
Source: ABS5206-06 01/12/10 Years, ended June

10. WWW.IBISWORLD.COM.AU
2.
Industries In
Perspective

11. WWW.IBISWORLD.COM.AU
Changing Importance of Australian Industry
share of GDP* by industry division
100% Agriculture
Mining
90%
Manufacturing
80% Utilities
70% Construction
Wholesale trade
60% Retail trade
50% Transport &storage
Communication
40%
Finance &insurance
30% Prop &business
20% Dwelling O'Ship
Govt admin
10% Education
0% Accom, cafes &rest
Health &community
1800
1820
1840
1860
1880
2000
2020
2040
2050
1900
1920
1940
1960
1980
Cult &recreation
Personal &other
Note: *At market prices to 1940, at factor cost thereafter Source: N.G Butlin, ABS & IBISWorld

12. WWW.IBISWORLD.COM.AU
Australia’s Industry Mix
Shares of GDP in constant F2009 price terms Year to September 2010
Pers. & Other Serv.
Hospitality Agriculture
Cult & Rec. Serv. Mining
(2.0%)
2.2% 9.5% Utilities 2.0%
7.1% Construction
O’Ship Dwells. 7.4%
11.0%
Prop. & Business Services
Finance
& Ins.
3.0%
Sectors
Primary
Secondary
Prof., Scient. & Tech Services 6.1% Tertiary
Rental, Hiring & Real Estate 2.6% Communications
& Media Quaternary
Admin. & Support Services 2.3%
Quinary
GDP $1292 billion (constant F2009)
ABS 5206-26 IBISWorld

13. WWW.IBISWORLD.COM.AU
Importance of Australian Industries
F1960 F2010
100% 2.1% Agriculture Agriculture
11.0% 7.8%
90% Mining
Manufacturing
8.6%
80% Utilities
7.3% Construction
28.9%
70% 4.5%
4.1%
Wholesale trade
Retail trade
4.8%
60% Transport &storage
9.9% Communication
50% 7.7%
Finance &insurance
10.8% Prop &business
40% 11.6% Dwelling O'Ship
5.9% Govt admin
30% 3.8%
7.8%
Ind taxes et al
4.9%
Education
20% 7.0% 6.8% Accom, cafes &rest
4.1% Health &community
10% 5.8% Cult &recreation
0% Personal & Other
$0.22 trillion (2010 prices) $1.28 trillion
Shares of GDP by Industry Division, current prices Source: ABS/IBISWorld

14. WWW.IBISWORLD.COM.AU
3.
New and Emerging
Industries

15. WWW.IBISWORLD.COM.AU
Australia’s Economic Growth
GDP @ Constant F2008 Prices 1788-2010 (F)
1800
Hunting Agrarian Industrial Infotronics
1700
1600
Age Age Age Age
1500
Service
1400
industries
1300 Hunting, Agriculture, An Industrial Age is when and IC&T
1200 trapping, Mining, Manufacturing,
1100 fishing, Banking, Construction
GDP $ billion
1000 crafts, Commerce and Utilities (electricity,
900 religion gas
800 & water) dominate the
700 economy, that is 30-50%+
600 of GDP
500
400
300
200
100
0
1790
1860
1930
1950
2000
2020
1780
1800
1810
1820
1830
1840
1850
1870
1880
1890
1900
1910
1920
1940
1960
1970
1980
1990
2010
2030
2040
2050
2060
IBISWorld 17/02/11 Year, ended June

16. WWW.IBISWORLD.COM.AU
Fastest Growing Industry Themes
New Age 1965-2040s
 IC&T - the New Age all-pervasive utility.
 Business Services - outsourcing non-core functions.
 Financial Services - outsourcing of transactions/investment.
 Property Services - outsourcing property ownership/services.
 Knowledge Industries - databases & multi-media services.
 Health - outsourcing home doctoring.
 Education - outsourcing pre-school, plus universities.
 Personal & Household Services - outsourcing chores.
 Hospitality & Tourism - outsourcing the kitchen and travel
 Recreation & Cultural Services - outsourcing leisure.
 Mining - energy minerals (oil, gas, coal, uranium)
 Biotechnology & Nanotechnology - New Age technologies
 Environmental Services - testing, assessment, amelioration

17. WWW.IBISWORLD.COM.AU
Outsourcing Creates Most Industries
 We outsourced the growing of things to create the
agriculture industry, aided by new technologies
 We outsourced the making and building of things to create
the industrial age industries of manufacturing and
construction, aided by new technologies and utilities.
 We are outsourcing services (household services and
business functions) to create the current infotronics age
from 1965-2040s, aided by new systems & technologies and
a new utility sector. These created $ 1 billion in extra
revenue pa by 2010

18. WWW.IBISWORLD.COM.AU
Who Outsources?
Households (80-90% of all new jobs and GDP)
 new industries carry out household activities in a quarter of the
time and a third of the (real) cost of the DIY household and
improve both our standard of living and our quality of life.
Businesses (no net new jobs )
 businesses are now outsourcing non-core activities and franchising,
transferring jobs from one business or industry to another
business or industry to be done more efficiently with huge
productivity gains.
Other Nations (10-20% of all new jobs and GDP)
 our exports are the result of other nations outsourcing some of
their needs of goods and services to us.

19. WWW.IBISWORLD.COM.AU
New Age Industries
1965 – 2040s+
Household Outsourcing Business Outsourcing
 Hospitality (meals, accommodation)  Trucking
 Entertainment (clubs, casinos)  Facilities management
 Household services (everything!)  Business services (A/C. legal)
 Personal services (beauty, fitness)  Knowledge services (data, consulting)
 Health (everything!)  Cleaning.
 Tourism (transport, agencies)  Catering
 Education (pre-school, tertiary) services)  HR services (recruitment, staffing).
 Child minding (pre-school, nanny services)  Security
 Finances (advice, management)  Call Centres/CRM services
 Other services (inc. unmentionables)  Operations (via franchising)
Overseas Outsourcing (To Us) New Enabling Utilities (& technologies)
 Mining (energy minerals)  IC&T
 Tourism (inbound)  Nanotechnology
 Education (mainly tertiary)  Biotechnology
 Health  Just-in-time systems
 Aquaculture (& crustaceans)  Self-service systems
 Manufacturing (smelted ores)
 IP (royalty arrangements)

20. WWW.IBISWORLD.COM.AU
Industry Lifecycles
Australia has 500 classes of industry in its economy
ranging from Grains Growing to Waste Disposal
Services.
All such classes of industry have long lifecycles of
around 40-60 years, which repeat to form new
lifecycles.
IBISWorld charts such industries by their contribution
to the GDP (value added share)

21. WWW.IBISWORLD.COM.AU
Typical Life Cycle in an Industry
(measured as an Industry’s value added share of GDP)

22. WWW.IBISWORLD.COM.AU
The 5-way Changes in A New
Lifecycle
Each new lifecycle brings gradual changes to an industry. It takes until
the top of the new cycle for 60% of the industry’s revenue to reflect
these changes, and the end of the lifecycle to reflect 80% of the new
changes. So it is a slow process. The 5-way changes are:
Products
Customers
Geographic location
Systems & Technology
Ownership (industry enterprises)

23. WWW.IBISWORLD.COM.AU
Wine Industry Lifecycle
Value added as % of GDP 1890-2007
0.300
0.280
0.260 2nd Era 3rd Era 4th Era 5th
0.240 Table Fortified Table Era
0.220 ?
Wines Wines Wines
0.200
0.180
0.160
0.140
0.120
0.100
0.080
0.060
0.040
0.020
0.000
1870
1890
1920
1950
1980
2000
2030
1860
1880
1900
1910
1930
1940
1960
1970
1990
2010
2020
Source: IBISWorld 18/01/10

24. WWW.IBISWORLD.COM.AU
4.
Industries to Watch
in 2011 and beyond

25. WWW.IBISWORLD.COM.AU
Top Growth Industries
Annualised growth over 5 yrs to 2013
measured as a percentage of industry revenue
Video Games 14.8
Online Education 14.1
Organic Farming 13.1
Renewable Energy 9.3
House Construction 6.2
Debt Collection 6.0
Takeaway Food Retailing 5.8
Physiotherapy Services 5.4
Motor Cycle Dealing 5.4
Waste Disposal Services 5.3
Source: IBISWorld 28/02/11

26. WWW.IBISWORLD.COM.AU
Signs of Flight
Industries benefiting from;
 Greater disposable household income
 Technology enabled growth
 Demographic and behavioural change

27. WWW.IBISWORLD.COM.AU
Organic Farming
 Premium product – greater disposable income
 Social values and behaviour
 Lifecycle stage and related characteristics
 Volatile industry – climatic impact
Growth 13.1%

28. WWW.IBISWORLD.COM.AU
Online Education
 Technology enabled growth
 ‘Lifelong learning’ – appeal to a broad demographic
 Increasing profitability
Growth 14.1%

29. WWW.IBISWORLD.COM.AU
Video Gaming
• Technological advancement
• Online social behaviours
• Gamers of all ages
Growth 14.8%

30. WWW.IBISWORLD.COM.AU
Motor Cycle Dealing
 Dramatic increase in registrations 2005-10
 Rising fuel prices
 Rising dollar value – competitive pricing
 Increased disposable income – the grey haired biker
Growth 5.4%

31. WWW.IBISWORLD.COM.AU
Takeaway Food
 Evolving product – health, convenience of ordering
 Stable share of household expenditure
 Benefit of the substitution effect in tough times
Growth 5.8%

32. WWW.IBISWORLD.COM.AU
Renewable Energy
 Government support
 Significant technology development
 Increasing participation and profit
 Downstream opportunities
Growth 9.3%

33. WWW.IBISWORLD.COM.AU
Declining Industries
Annualised growth over 5 yrs to 2013
measured as a percentage of industry revenue
Revenue
Industry 2011 Decline %
$millions
Computer Equipment Manufacturing
753 -11.6%
Telecommunication Resellers
2,610 -5.5%
Men’s & Boy’s Wear Manufacturing
260 -4.2%
Book & Magazine Wholesaling
1,504 -3.3%
Video Hire Outlets
1,039 -3.2%

34. WWW.IBISWORLD.COM.AU
Gravitational Forces
Industries feeling influence of;
 Overseas competition
 Lifecycle stage
 Technology threats
 Government influence

35. WWW.IBISWORLD.COM.AU
Summary…
 International (regional) demand and opportunity
 Private Capital Expenditure driving growth
 Business Environment Factors
 Industry Lifecycles

36. Thank you
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