From the Trash Heap to Holiday Fashion ChicHow startups are cashing in on the ugly sweater trend this holiday season.

Clarissa Trujillo of UglySweaterStore.com Photo Courtesy of UglySweaterStore.com

Heinous stripes. Reindeer. Candy canes. Bells. Beads. Applique galore.

Ugly sweaters are a holiday staple, much like grandma's fruitcake. The love-to-hate fashion faux pas unexpectedly blasted their way into popular culture in recent years by way of "ugly sweater parties." While you might not have attended one yet, the parties are gaining popularity for festive cheer at offices, bars and other venues around the U.S.

And as with any good American craze, new companies are cropping up to cash in on it.

EnterUglySweaterStore.comand a host of online stores that sell -- you guessed it -- ugly sweaters. A Web search for "ugly sweater" turns up several, includingBuyUglySweaters.com,UglyChristmasSweaterParty.comandBaadSheep.com.

Clarissa Trujillo came up the idea for UglySweaterStore.com in 2008. The previous winter, Trujillo's husband, George, spent days scouring local thrift stores for something he could wear to an ugly sweater-themed Christmas party.

"It became clear that there was an unmet need out there that we could fill by creating an online boutique store," says Trujillo, 29.

The parties have caught on because the outré attire gives people a chance to let their guard down. "Everyone wearing a sweater looks funny [and] people really get into the holiday spirit," says ugly sweater enthusiast Kostas Giannikoulis, co-owner of Miner Street Tavern in Des Plaines, Ill. UglySweaterStore.com is helping organize the bar's second annual ugly sweater party.

Trujillo's new promotional video captures the spirit of ugly-sweater parties with a hilarious rap spoof, called "Super Ugly," featuring "Lil' Ugly," a fictitious rapper whose appearance saves a boring office party -- "U-G-L-Y -- I got my sweater on I'm looking oh, so fly."

She seized on the idea for the business because she had long wanted to run her own company. "The concept of an online ugly sweater store seemed simple, manageable and fun," she says.

Trujillo juggles a full-time job as a communications manager at a pharmaceuticals company with managing the business. She hand-picks the sweaters from a network of thrift stores "with an expert eye for ugly," she says, and hand-washes each before shipping. While the price she pays for the sweaters varies, they retail on the site for about $25 on average and as much as $40. Trujillo says she expects to sell more than triple the more than 500 orders she filled in 2009. Trujillo has put more than $10,000 into the business with inventory being the largest expense. Her husband George is the site's operations manager.

"The concept is still simple, but it demands a lot more time than I originally envisioned," she says. Trujillo says she somehow manages to enjoy the holidays through the site's busiest season. "Every time we find a new outrageous sweater design or sell one of our favorites, we can't help but laugh about the service we are bringing to people."

Daniel Redman of BuyUglySweaters.com Photo Courtesy of BuyUglySweaters.com

Another entrepreneur who has been capitalizing on the ugly sweater craze is Daniel Redman, a 31-year-old national media director at an Internet marketing agency near San Diego, Calif. He launched BuyUglySweaters.com in April 2009 after noticing holiday chatter online around ugly sweaters in 2008.

"I began identifying the typical keywords people were using [when searching about ugly sweaters] and matched them with a domain search to see how relevant and keyword-rich the available domains were," Redman says. "I went with "BuyUglySweaters.com" and a few other iterations because that name held more buyer intent than a lot of others."

After an initial investment of about $3,000, BuyUglySweaters.com sold about 160 sweaters last year, with most retailing for about $20. Redman says he expects to sell up to 200 more this year.

BuyUglySweaters.com also makes money selling advertising, according to Redman. Using the Google Adsense online-advertising program, the site has hosted ads from such companies as Groupon and Amazon. The ads make up about 10 percent of the site's total revenue.

Redman says selling sweaters will always be at the core of the business. "The key for us has been having a variety and depth of product so that we can cater to this mindset," he says. "One man's trash is truly another man's treasure."

According to Trujillo, the popularity of ugly sweaters in the U.S. already is spreading abroad. "We've already shipped sweaters to customers in South Africa, Australia and the United Kingdom," she says. "There are so many more opportunities for the business."