Whether it’s a small business or not, whether you’re laying its foundations as we speak or you’re already in the game for quite a while, all businesses have an underlying goal – to make a profit. However, seeing as the world, its markets and consumers are in perpetual motion, trades change as well. A simple look back over the past hundred years will show you that being a blacksmith is no longer as profitable as it used to be at the turn of the century. Therefore, let’s take a look at what are the best and most profitable industries to start a small business in as far as 2016 is concerned.
The industries listed in this article have been ranked according to their profit margin percentage as per the beginning of 2016.
#1. Accounting, Bookkeeping, Payroll Services, and Tax Preparation
As expected, if you’re good with numbers and love crunching them for a living, then starting a small business in any of the fields above is unquestionably a good idea. Sageworks is a company that handles financial data services and which analyzed over 16 000 small businesses and their net profit margin. All the firms in the study earned less than $10 million and were put under the analyzing spotlight between the years of 2014 and 2015.
According to this study, the fields of accounting, bookkeeping and everything related to them came out on top with a whopping 18.4 percent profit margin. An analyst with Sageworks stated that the accounting industry is always a top performer, no matter what. The reason is simple enough to understand. Independently of how the economy is performing, people still need accountants. Apart from that, the field itself has low overhead and loyal customers, even with a small business.
#2. Management of Enterprises and Companies
This type of firms has a 15.5 percent profit margin. The field itself comprises a plethora of offices belonging to bank holding companies as well as to other kinds of firms. Typically, they are privately-owned and can belong to both a small business and a large one.
An excellent example of a holding company, which, evidently, cannot be considered a small business, but fits the category, is Berkshire Hathaway, owned by Warren Buffet. Another one would be ICahn Enterprises, belonging to Carl ICahn.
#3. Real Estate and Brokerage
This part of the industry gathered a 15.19 percent profit margin. It is true that the real-estate market is chiefly dependent on how healthy the economy is. However, brokers and real-estate agents will always have low operating costs. Apart from that, if you need another incentive to get started on your small business in this domain, think about the fact that all you need is a broker or agent license, and you’re good to go.
#4. Small Business Companies That Rent or Lease Cars
Their profit margin was 14.55 percent. The same analyst from Sageworks says that, since that the on-demand economy is on the rise, people will be renting or leasing more and more cars as we go. They typically use services such as Zipcar, as well as more traditional types of rental services, the likes of Herz.
#5. Legal Services
The business, which had a profit margin of 14.48 percent, is made up of not only lawyers, as one might think, but settlement officers, notaries, and agents who search titles in the real estate business as well. The reason why it’s good to start even a small business in this domain is, evidently, the money. As we all know, hiring a lawyer does not come cheap.
#6. Dentistry and Everything Related
Building on the above, if lawyers are expensive, so are dentists and the work they perform. Their profit margin, according to Sageworks, was 14.41 percent. Apart from not being cheap, dentists also have recurring patients, provided they do a good job and independently of how much of a small business they run.
However, if you’re thinking about starting up your own practice, you need to understand that it’s going to be quite an investment. The dental equipment alone is costly. However, you can handle several patients at the same time and get back all the money you put in relatively quickly.
#7. Religious Organizations
Their profit margin, as pointed out by Sageworks, was 12.41 percent. As a matter of fact, all the numbers point out to the fact that religious organizations are having quite the profitable year. Churches, monasteries, mosques, synagogues, and temples are having one of their best years so far, as do colleges, schools, and universities.
It might seem a bit surprising to you because these don’t seem like organizations built for profit so you might be reluctant in starting a small business in any of these domains. However, remember that, if your organization is non-profit, that doesn’t mean it cannot make one. It can and it will if you run it correctly. Apart from that, you can use the extra cash to further your noble purposes.
#8. Consulting in the Scientific, Technical, and Management Fields
They have had a profit margin of 12.05 percent. A few examples include human resources departments or company or small business that provides consultancy on environmental or marketing issues.
#9. Services in Office Administration
Their profit margin comes up to 11.3 percent, and they are doing very well at the present moment because they are needed on a large scale. They truly are the backbone of all business operations of many an industry across the world. The type of services they provide includes financial planning, billing, as well as keeping the records.
As a final thought, one might ask himself why are these industries so profitable, to begin with? The answer comes from the same analyst at Sageworks. It’s all about human capital as well as very low costs. Many of the companies in the fields we listed above are the small business type, which can begin right from your living room. Therefore, what are you waiting for?