15 Most Profitable Small Business Industries

When looking to start a profitable business, being talented with numbers is a really big plus. Accounting and tax services top the list of the most profitable businesses for a generous profit margin of 18.4 percent. This is closely followed by real estate services in terms of profitability with a 15.2 percent profit margin. Law firms come next on the list with 14.5 percent, closely followed by doctors’ offices with 13 percent. This report was compiled by Sageworks, which is a financial data service that took up the task of analyzing the profit margins of more than 16,000 small businesses between September 2014 and August 2015. They categorized small businesses as those that earned less than 10 million dollars per annum. Other companies like Due.

com helped in the tracking of time and invoicing.

The net profit across all industries during this report’s time frame was 7.2 percent.

These companies are very profitable in that they are driven by human capital.

Jenna Weaver, an analyst at Sageworks says that service industries are commonly found on the most profitable small businesses list. These companies generally have very low overhead and startup costs. They are basically the type of industries one would start from the comfort of their own house.

Profits are not the only thing entrepreneurs have to consider, they have to think about whether their business of choice matches their particular skill set, what types of licenses and training are required for the prosperity of the business and basically how the business would fare in a recession.

List of the 15 most profitable businesses:

  1.   Accounting, Tax preparation, Bookkeeping and Payroll services at 18.4 percent: Weaver from Sageworks says that the accounting industry is a consistent top performer in the list. Regardless of the state of the economy, everyone needs accountants. This is also an industry that has very low overheads and has repeat clients.
  2.   Management of companies and enterprises at 15.5 percent: this industry has a lot of small, privately owned offices of bank holding companies and other forms of holding companies. Some holding companies that are not in the small business category are Warren Buffet’s Berkshire Hathaway and Carl Icahn’s Gahn Enterprises.
  3.   Offices of real estate agents and brokers at 15.19 percent: this type of business is hugely dependent on the general health of the economy. Real estate brokers and agents have very low operating costs as all one needs is a brokerage or agents license.
  4.   Automotive equipment rental and leasing at 14.55 percent: Libby Biermann an analyst from Sageworks says that with the on-demand economy, people lease and rent more cars using on-demand services like Zipcar and other traditional rental services like Hertz.
  5.   Legal services at 14.48 percent: Hiring a lawyer does not come cheap. This is also a business that has low operating costs and repeat clients just like in accounting. This category includes also notaries, settlement officers and title search agents in real estate.
  6.   Dental offices at 14.41 percent: dentists benefit from recurring patients. Despite the fact that dental equipment is expensive, dentists get to handle several patients at a time.
  7.   Electric power generation, transmission, and distribution at 14.02 percent: this includes privately held electrical companies, hydroelectric, nuclear, solar, wind and geothermal power.
  8.   Lessors of real estate at 14.01 percent: Lessors or landlords as they are more commonly known, prove that renting both residential and non-residential holdings is a profitable business once one recovers the initial cost of purchase.
  9.   Offices of other health practitioners at 13.30 percent: this includes chiropractors, optometrists, podiatrists and mental health practitioners.
  10.  Offices of physicians at 13.01 percent: despite the many years of training and cost of students loans, doctors benefit from low overhead costs and regular clients.
  11.  Commercial and industrial machinery and equipment rental and leasing at 2.58 percent: these industries typically rent or lease equipment across industries.
  12.  Religious organizations at 12.41 percent: just because an organization is not-for-profit, does not mean the goal is not to make profits. In these organizations instead of giving the profits to shareholders, they go to the organization’s mission. This does not apply only to churches, monasteries, temples, mosques and synagogues, but also to religious-run institutions like schools and hospitals.
  13.  Management, scientific and technical consulting services at 12.05 percent: these are businesses that provide either management or consulting on a wide range of expertise.
  14.  Specialized design services at 11.4 percent: these are businesses specializing in interior design, industrial design and graphic design. These businesses flourish as the value of a product of businesses increases according to appearance appeal.
  15.  Office administrative services at 11. Percent: these are the backbone of industries ranging from food services to physician offices. They provide day to day administrative services.

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