Prison: A Captive Market for Small Businesses

If you are looking for a captive market, look no further than the prison system.

Prison has become more than a place to lockup felons, criminals and other misfits of society (including those wrongly accused, of course). The prison system is a hot growing market full of business potentials, estimated to be about $37 billion serving more than 2 million inmates. States spend more than $30 billion annually for their prison system and about $5 billion is spent for the federal inmates. This is a sector that never runs out of customers — in fact, a study showed that 52 percent of released convicts were back in jail within three years! This is a tremendous market to crack!

The needs of this sector of focuses on a variety of things, including security, medicine, education, food service, maintenance and technology. A December 2006 article in Business 2.0 entitled “The Hard Sell” looks at some of the products and services that have penetrated this market:

Outside Connection http://www.outsideconnectioninc.net/ , a prepaid phone service serving both the inmates and their families
Compudyne http://www.compudyne.com/ , which provides electronic and hardware security products including modular prefab prison cells
Incarceration Optimization Program International in NY http://www.iop-nyc.com/index.html whose business is to prepare white collar criminals how to survive in prison including coursework, physical and mental training, self-defense and even role-playing.

The downside of this sector is the tremendous bureaucracy and government contracting process that a small business has to crack to be able to do business with the prison system. There is also the ups and downs of dealing with the federal and state budget system. Plus the sector is known for sticking with what works and slow to adapt to new technologies and innovative ideas. But still, the sector is ripe with all sorts of possibilities and opportunities.

If you are interested in this sector, check out the resources available at American Correctional Association http://www.aca.org/