Small businesses can be more profitable than bigger businesses due to lower startup and running costs. However, there are some small businesses that are more financially successful than others. If you want to start a small business but are not sure what kind of business to start, take a look at our list of the most profitable small businesses for 2020.
Things to Consider When Deciding What Type of Business to Open:
- Starting a business takes a lot of self-discipline and passion, so you should definitely think about the things you love doing and consider a business that will let you work at your passion. At the same time, you will need to research that market to make sure there is a market for your idea and an opportunity to stand out from your competitors.
- Analyze the market's projected growth as well as your competition to see where there are unmet needs that you can fill and ensure that there is a future for your business.
- You will need to research startup costs, legal requirements, access to suppliers and distributors, and your potential clients and find out if there are any high barriers to starting your business.
Most Profitable Small Businesses:
Annual Growth 2014-2019
Accounting and Tax Preparation
Warehouse and Storage
Marketing and PR Services
Auto Repair and Auto Leasing
1.4% (auto mechanics) or 4.8% (auto leasing)
The profitability percentages shown in the table are the most recent numbers that could be found by our researchers. The table rankings take into account both profitability and annual growth.
What are the most successful small businesses?
What businesses have the best profit margins?
According to Forbes, the following businesses have the highest profit margins:
- Accounting, Tax Preparation, Bookkeeping, and Payroll Services - Net profit margin: 19.8%.
- Legal Services - Net profit margin: 17.8%.
- Oil and Gas Extraction - Net profit margin: 16.4%.
- Commercial and Industrial Machinery and Equipment Rental and Leasing - Net profit margin: 16.4%.
- Dentist Offices - Net profit margin:14.9%.
- Real Estate Lessors - Net profit margin: 14.1%.
What would be a good business to start?
Starting a business takes a lot of self-discipline and passion, so you should definitely think about the things you love doing and consider a business that will let you work at your passion. However, you will need to research that market to make sure you can sell your idea. There are certain small businesses that are generally more profitable than others; you will just need to do some market research.
How much profit should a small business make?
There is no universal average or law to say how much profit a small business should make. A small business can have a pretty good profit margin in the beginning, as startup costs and overhead expenses are low and the workforce is small. As the business grows and hires more employees, the profit margin will naturally decrease.