Most Profitable Small Businesses Start
So you’re ready to start your own small business?
Want to escape from the commute and long hours demanded of you in your Corporate position?
Or you’ve just left College and can’t imagine working for a boss?
Then starting a small business may be just for you. And great that you’re doing your homework. Why not start out by finding a business that’s profitable?
You’ll find the 7 Most Profitable Small Business Industries of 2016 in the contributed post below. Here’s hoping you find one that suits your skills, interest, experience and personality. Oh.. and the best part? You can start any of these in the comfort of your own home.
The 7 Most Profitable Small-Business Industries Last Year
If you are looking to start a business from home, then being good at numbers can be a huge advantage.
In a survey looking at last year and business profit margins, accounting services came up as one of the best businesses to be in as it had the greatest profit margin. Property was next, with law firms and doctors offices following closely behind. But what makes these industries so profitable?
One of the first things that comes to mind is that they are driven by human capital; they are service industries. Service industries are common for getting good returns, as far as small businesses go, as they have pretty low overhead costs and don’t require too much capital to get the business started. When you think about it, these kinds of industries are the ones that can be started from your home. It is more about manpower, rather than having to use manufacturers, retailers, and factories.
Profit isn’t the only thing to be thinking about, though, when it comes to starting up a business.
You need to think about your expertise in the area as well. You can’t just start a law firm with no experience or qualifications in law, for example. But if you are creative, good with budgeting, enjoy home decor and houses, then something like property in a commercial or buy-to-let sense could be a good idea as it plays to your strengths.
There are plenty of other things to think about when it comes to property too. This article could be a good place to start if you’re thinking about getting into property as a business that you want to start: www.propertyguru.com.my/resources/buy-property-guide/the-complete-guide-to-buying-a-commercial-property.
Then as well as all of the above points, the kind of licensing and training that is required are also good things to be thinking about when it comes to deciding the kind of business that you want to create, property or not.
So… here are some of those profitable industries and their net profit margins – would one of them work for you on your way to becoming an entrepreneur?
1. Bookkeeping and Accounting
No matter what happens in the world and with the economy, people will always need accountants. So it is no surprise that the profit margin for accounting services came in at over 18 percent last year.
Experts from https://www.sageworks.com/ say that they consistently see it as a top performing industry.
- There is little overhead when it comes to accounting or bookkeeping.
- It is something that you can do alongside existing work, or start quite easily from home.
- It is scalable too, should you get plenty of repeat clients which are common in the industry.
- When someone is happy with their accountant, they aren’t likely to switch around very often as it will mean starting all over again.
2. Real Estate and Property
The real estate market does depend a little bit on the economy and how well it is faring.
However, working in real estate as an agent can have low operating costs as all you need to get is an agent or brokering license. So it is easy to see why it is a top-performing industry with a profit margin of over 15 percent.
Working in a buy-to-let sense or with commercial property can yield a similar amount of profit, if not more. There are higher costs involved as you will be getting a mortgage or using cash to buy the property. But you can get the money back fairly simply, as long as you have a plan and have done all of the costings.
Again, this is something that can be started from home.
3. Management of Companies
If you would like to get into company management, where you manage a few different offices or small holdings, then it can be a good industry to be in.
Take Warren Buffett and his management business Berkshire Hathaway as an example. That is a management company of smaller assets, and as we know, it does well for itself.
With around fifteen percent profit margin it could work well for you too.
It can be a long journey to get the ball rolling, as it will mean pitching to different offices and businesses to take you on but it can be profitable once you’ve got some clients.
4. Automotive Leasing and Rental
Things have been changing in business over the years, and the on-demand market is rising and rising.
People are looking to rent or lease cars much more than ever before. For people in cities that don’t normally have a car of their own, they hire out cars for the day with businesses like Zipcar, for example.
There is still demand for normal rental cars for when cars are being repaired or for vacations. This is an industry that will always have a high demand; people always need transport.
Last year the profit was over 14.5% so it shows how much of a growing industry it is.
Other than needing a fleet of cars, it can be relatively straightforward to set up and build yourself.
5. Legal Services
Just under the automotive leasing industry, legal services came out an around 14% profit last year. And for anyone that has ever hired a lawyer, they will know that it does not come cheaply, so it may not come as any surprise.
But law, much like bookkeeping and accountancy services, generally has low operating costs and technically, could be done from your home to start with.
You are likely to get repeat clients too or ones that will hire you for a year long contract for all of their needs, for instance.
So if your expertise lie in this area, then it could be worth pursuing. Building up clients can take time, but it is going to be profitable when you do.
6. Electric Power Generation
If you have an interest in renewable and green energy, then getting into the renewable energy sector can be a good place to be. As we go forward, it is likely to be an industry that is going to grow and grow.
Electric power generation looks at hydropower, solar, wind, and geothermal power to name a few. So this could be of interest if you wanted to look at solar panels or renting out land for wind farms, for instance.
Again, this could be something that you can do from home. And it is likely to give you a tidy 14% yield.
7. Commercial and Industrial Leasing
Like automotive leasing and rental, there are many businesses that will look to do the same, except with equipment and machinery.
Many businesses won’t have the money to be able to afford some of the equipment that they need, or will only need it for a short amount of time. So buying the machinery doesn’t make sense.
So if you are able to provide the equipment for them, then being the person that they go to will mean you can get a pretty good profit, recorded as 12.5% last year.
There can be some larger costs involved in setting this one up, though, as you will need to buy the equipment and have a warehouse to store it all. Which is probably why profit isn’t as high as other industries.
Having said that, you will always have customers as long as there are industries that have a need of the equipment that you have.
Have you ever considered getting into any of these businesses? Did any of them surprise you as being one of the most profitable? It would be great to hear what you think.
Aw, I thought Blogging or Online Marketing would feature in this list somewhere. Perhaps it’s not technically seen as a small business, though I beg to differ. I know bloggers who are earning in excess of $100,000 a month, with varied sources of income, so I would consider that a small business and overheads are generally pretty low. Don’t know how to work out the Profit Margins. Can clearly see why bookkeeping and accounting services is no. 1 on the list.