Entrepreneur recently ranked the top 15 most profitable small businesses, and the majority were in the service industry. This is not much of a surprise as one of getting to high profits is through having lower costs. Service industries can provide low overhead costs as there is not always a physical product to obtain, manufacture or keep in inventory. Also, many service oriented businesses can be started from home or need only a small office space for just one individual or only a handful of staff.
Let’s look at the top 5:
1 . Account, Tax Prep, Bookkeeping and Payroll
With an average profit margin of 18.4% not only is this industry profitable but it is also somewhat recession proof. This type of industry helps other small businesses keep going and typical a client becomes a forever client if trust is built.
2. Management of Companies and Enterprise
This industry consists of what can be referred to as holding companies or companies that hold interest in multiple businesses. They manage the business and make sure these businesses maintain profitability which helps to increase their own profitability. At 15.5% average profit margin, this is the second most profitable small business industry.
3. Offices of Real Estate Agents & Brokers
While the average profit margin of 15.19% may not always be recession proof as is evidenced by the market crash in the early 2000s, real estate offices have lower overhead costs which can help them still fight through the tough times. With just a license and some good people skills starting as an agent can happen in just a short time.
4. Automotive Equipment Rental and Leasing
The first on the list to require some type of physical product to offer it still offers a healthy profit margin at 14.55%. As the sharing economy grows the need for an automotive vehicle may decrease for some as they utilize services like Uber and Lyft but these services do require vehicles. These vehicles can often be rented or those who choose not to have a personal vehicle may only rent one occasionally for special circumstances
5. Legal Services
The first thing that comes to mind with legal services are lawyers but this industry category also includes notaries, settlement officers and title search companies for real estate. Not all small businesses in this industry category require extensive education to obtain a law degree and they offer on average a profit margin of 14.48%, two big positives.
Small businesses continue to grow and the desire of individuals to start their own businesses continues to grow as well. The “start-up” culture is helping to grow this desire and there are many opportunities to enter into these service types of industries with low overhead and be very successful by working towards these high profit margins to reap the rewards.
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