If you have been thinking about starting your own business, you might not know which one can be most profitable. For some entrepreneurs, the choice is obvious because they already have an industry or type of business in mind or an area that they are passionate about. But if you don’t and want to choose an industry that is very profitable for small businesses, the following list can help guide you in the right direction, at least according to these articles in Small Business Trends and Forbes, which are based upon information collected by data aggregator, SageWorks.
Oil and Gas
The top industry in terms of net profit margin, according to data from Sageworks, is the oil and gas industry. Extracting oil and gas has always been a profitable business, but even more so now with the newest technologies to accomplish it. Less workforce is needed, which helps employers save money on labor and the work required. The net profit margin for oil and gas extraction for the period from February 2012 through March 2013 was 24.1 percent.
If you are interested in starting your own law firm or legal services company, now is the time. The legal industry is booming, with service firms having a net profit margin around 19.6 percent during the one year ended March 2013, which is over 150 percent higher than average small companies.
Outpatient Medical Care
The first area in the medical field that made the list is outpatient care. Outpatient care often includes elective procedures, such as cosmetic or plastic surgery, and similar procedures, but also include minor surgeries. Many surgeries now are performed in less costly outpatient clinics instead of more expensive hospitals. Diagnostic tests, like MRIs, Nuclear Stress Tests, are being conducted as outpatient services as are chemotherapy fusions and physical rehabilitation. The profit margin for outpatient care was 17.8 percent.
Real Estate / Dentistry
The housing industry might be getting more challenging, but realtors are still profiting a good deal to the tune of 16.5 percent as vacancy rates decline and rental rates rise. The trick here is to have a real estate leasing company that is in a good housing market in the U.S. Do your geographic research before opening this type of business and you can do very well. Tied with real estate, the dentistry field also saw a 16.5 percent net profit margin last year.
Many construction and similar companies are renting expensive equipment and machinery, as opposed to purchasing it. If you own machinery and equipment, you can profit by renting it out at a discounted price. It is convenient for these businesses because they don’t need the collateral for buying the equipment, as it is often used only on a few occasions. You benefit by renting the same equipment repeatedly to multiple businesses. The net profit margin for machinery and equipment rental last year was 18.5 percent.
A business that has nearly always been successful is in accounting and payroll services. Accounting includes preparing payroll and sending out paychecks, bookkeeping, basic or advanced accounting, financial advising, and even helping businesses prepare taxes or perform audits. For accounting, payroll, bookkeeping and tax preparation firms the net profit margin last year was 21.2 percent.
While you don’t have to choose one of these industries to be successful in business, it is a good starting point into where the majority of businesses are excelling. Let it guide you to a good business option for you. Keep in mind, that whatever business industry you choose, you must be protected with adequate business insurance.