Which small businesses are the most profitable?
Small businesses continue to be one of the driving forces behind the U.S. economy. According to the Small Business Administration (SBA), there are more than 30 million small businesses in the U.S. employing almost 60 million people. Millions of Americans either own or work for a small business.
While owning and operating a small business is a great way to improve your income as well as take control of your money, there are risks involved. Therefore, you’ll want to do your due diligence when it comes to finding the industry that aligns with your skill set, interests, and finances. While many people prefer working in solo ventures that provide enough of a profit to pay for their cost of living, others favor the more traditional startup model, with a goal of becoming a larger corporation where they can earn six figures.
If you’re considering starting a small business, you need to put some serious research into the potential costs and risks as well as the amount of time and energy needed to make your endeavor successful. A business that has little competition, is offering a high-demand product or service, and one that can start up quickly has a better chance of achieving fast profits and success.
Brick and mortar businesses are more expensive for several reasons. Overhead, in the form of rent, utilities, and technology, is a cost you’ll have to bear. If your business requires inventory, you could end up having high margin costs that could increase with each sale. Businesses that need more employees are going to cost more to operate.
Service-based businesses, on the other hand, do very well because they can keep their recurring costs very low. Without the overhead that comes with a physical location or the cost of inventory, most of the money earned can go to profits. A small company with few employees may be the way to go.
Are you looking for a new business opportunity? Then, you’ll want to consider the most profitable types of small business to better ensure your chances of success.
Does your business make the shortlist?
According to the SBA, the top 5 most profitable small businesses are in the following sectors:
- Professional, Scientific, and IT Services
- Healthcare and Social Assistance
- Retail Trade
- Accommodation and Food Service
In addition to their profitability potential, many of the businesses listed above are in strong demand as a result of the continuing trend by corporations to outsource many of their commercial functions including accounting, payroll, information technology, social media, legal services, and marketing.
Working toward small business success
Unfortunately, data collected by the federal government show that approximately 20% of new businesses don’t last a year; about 50% last four to five years. Approximately a third of businesses last for 10 years.
To ensure that your small business venture is a success, GYL CPAs and Advisors provides business consulting services in San Diego for small business owners. With offices in San Diego and the Inland Empire, the professionals at GYL will analyze and map solutions to create short and long-term plans that achieve your goals.