When developing your business model, it is important to understand the current landscape for the industry your company will be entering. In August 2014, Sageworks released a report identifying the top 15 industries with the highest net profit for the previous 12 month period. The following profit margins were calculated to exclude taxes and include owner compensation.
Accounting, Tax Preparation, Bookkeeping, and Payroll Services – 20.0%
Oil and Gas Extraction – 19.2%
Commercial and Industrial Machinery and Equipment Rental and Leasing – 17.7%
Legal Services – 16.5%
Offices of Real Estate Agents and Brokers – 14.8%
Offices of Physicians – 14.8%
Offices of Dentists – 14.5%
Management of Companies and Enterprises – 14.1%
Lessors of Real Estate – 13.6%
Offices of Other Health Practitioners – 13.1%
Support Activities for Mining – 12.3%
Warehousing and Storage – 11.6%
Management, Scientific, and Technical Consulting Services – 11.6%
Outpatient Care Centers – 11.5%
Activities Related to Real Estate – 10.6%
Service-based small businesses, such as those in health care, consulting, and real estate account for nine of the most profitable industries. Sageworks reports that service-based businesses are historically very profitable due to minimal startup and operating costs. In addition, increased consumer access to healthcare has led to a higher demand for physicians and additional healthcare professionals.
Adapted from: Klich, Tanya. The Most Profitable Types of Small Businesses. Entrepreneur, 14 Aug. 2014. Web. <http://www.entrepreneur.com/article/236482>.