Business is booming in some industries, so much so, it’s wise for you to take notice. If you’re an entrepreneur looking for the trends in most profitable small businesses to capitalize on, look no further.
We rolled up our sleeves and dug into the latest research on small businesses, examining the following:
Combing through IBISWorld’s exhaustive reports as well as specialized market research, we found some niche specific industries whose profit margins may surprise you.
If you’re a small business owner—whether your trade graced the list or not—you can glean vital information to help scale your business.
2015 Overall Revenue: $90 billion
5-year Annual Growth: 3.4%
Returning from the 2014 list, accounting and bookkeeping services continue to reliably be among the most profitable small businesses, with a nearly 21% net profit margin. Revenue has increased yearly since 2011, and there’s no slowing down in sight. More than 500,000 businesses launch each year, so someone has to count the money and keep things on the up-and-up with the IRS.
Why it’s profitable: With economic growth and business startups, there’s no shortage of opportunities in the industry. Small businesses in the sector are particularly positioned to be profitable with the integration of technology and digital mobility in the practice.
Many firms are moving toward virtual offices, cutting out the overhead of office space, equipment, and server rooms. While large and mid-size firms are tied to leases and equipment contracts, smaller firms can easily transition to virtual operations. Likewise, startups will find it easier than ever to launch.
2015 Overall Revenue: $36 billion
5-year Annual Growth: 2.6%
People are traveling so much resulting in an increase need of rental cars. The car rental industry is closely tied to the success of air travel, and the increase in flying the past five years has driven the resurgence of rentals.
Though the industry deals with the rising cost of purchasing and maintaining vehicle fleets, it hasn’t hurt its bottom line as revenue has already surpassed 2014’s record $26.1 billion. Even as employment costs rise, car rental companies are still hiring because demand is high.
Why it’s profitable: The airline industry is experiencing 6.7% passenger growth, according to the International Air Transport Association, as both consumer and business travel is rising. Even outside of airport rentals, there has been steady growth. Independent companies had the largest revenue growth percentage-wise last year, according to Auto Rental News.
Small agencies are leveraging technology to get a foot in the market by using an automated check-in processes and marketing through social media, which keeps costs low while attracting customers.
2015 Overall Revenue: $117 billion
5-year Annual Growth: 3.8%
Remember when the housing market was in the dumps? That was so 2010. The industry has been seeing increasing growth, which is great news for Realtors, brokers, and professionals in related services. Analysts expect revenue to continue to grow, despite a likely increase in interest rates. Time to invest in that real estate license!
Why it’s profitable: People are buying homes—bottom line. Purchase applications are 19% higher than a year ago and houses are at their most affordable level in two years. Homes are selling like hotcakes—at an annual rate of 5.5 million (the second-highest pace since 2007).
2015 Overall Revenue: $374 billion (IT); $201 billion (management); $29 billion (economic & scientific)
5-year Annual Growth: 2.6% (IT); 5.2% (management); 5% (economic & scientific)
Consulting services of all types have seen tremendous growth over the past five years. The industry was hit hard during the economic slowdown in 2009 as companies slashed budgets, but since then it’s been quite profitable, especially for small businesses with a 13.5% net profit margin this year.
Why it’s profitable: Starting a consulting business is one the easiest and most practical small business avenues. Many businesses are one-person operations with low startup costs and expenses. The industry is wide-open, since its size and demand prevents one company from dominating the market. Most consulting work can be done remotely, cutting back on travel costs.
2015 Overall Revenue: $30 billion
5-year Annual Growth: 4.6%
The industry has benefited from the aftermath of the economic downturn as companies find it more cost-effective to rent equipment for commercial and industrial purposes instead of purchasing it. Businesses mainly serve clients in construction, agriculture, medical, and entertainment.
Why it’s profitable: If there’s construction, there needs to be equipment… And there’s been plenty of construction. But the sector is not limited to construction. As the health and agricultural industries grow, equipment and device rental is in high demand. Small businesses have seen 12.2% net profit margin as they hone in on local markets.
2015 Overall Revenue: $22 billion
5-year Annual Growth: 3%
This isn’t the public storage where hoarders keep the junk that won’t fit in their garages. The business specializes in storing commercial goods and provides shipping and logistic services. Goods can be anything from farm products to books.
Why it’s profitable: Home-based and e-commerce business is booming. Many online-based companies are small and don’t have the infrastructure to store and distribute their products. Paying for storage at large warehouses can break the bank, so small storage operations are the perfect option. Start-up for this type of business will cost you $10,000-$50,000, but once it’s up and running, it can become profitable in a short time.
2015 Overall Revenue: $32 billion
5-year Annual Growth: 3.9%
The fastest growing IT industry, this business operates software that is in high demand for businesses of all sizes. The most popular products include customer relationship management (CRM) and enterprise resource planning software. Most companies have turned to Software as a Service (SaaS) solutions, where the service provider hosts the applications and the customer uses it over a network or the cloud.
Why it’s profitable: Businesses crave it! The tools help with customer retention and automate many processes. It also provides predictive analysis that helps with strategy and resource planning. The industry has seen tremendous growth, with a 37% average profit margin. Plus, because many services operate from the cloud, small businesses find it affordable to adopt.
2015 Overall Revenue: $2 billion
5-year Annual Growth: 3.9%
Though the revenue doesn’t blow you away, the average profit margin is staggering at 55%, which is why Inc. named it the best industry to start a business based on profit margin.
Why it’s profitable: It’s quite inexpensive to run. The cost of administering surveys is low and you can get thousands of respondents. Surveys continue to be useful for businesses because of their broad capability and accuracy in acquiring information from a targeted audience. There’s also plenty of ways to conduct surveys such as email, social media, text message, or online.
2015 Overall Revenue: $24 billion
5-year Annual Growth: 4.9%
The industry has grown steadily the past five years and has been fueled recently by the demand of mobile-friendly websites and apps. Companies are always looking for unique user interface (UI) and better user experience (UX) to please their customers in a crowded market. How crowded? There are more than 1.4 million apps available in the Apple App store alone.
Why it’s profitable: As startups pop up and businesses expand, there will continue to be a need for developers and designers. The average size of a business in the industry is two people, and no company has more than 5% of total annual revenue. Starting a business in the industry is quite simple and finding clients doesn’t take long. Everyone needs developers!
The small business landscape is always subject to change, but each industry on the list is projected to grow the next five years. The most profitable small businesses have relatively low expenses, so there’s a good chance of making a profit.
Now that you know what small businesses are most profitable and the trends throughout the market, why not begin your own venture? We’re here to help you get started. Download our free business guide.
Need some capital to start or grow your business? See if you qualify for a small business loan.