Do you see business ideas everywhere you look? Entrepreneurs around the world have a tendency to see business opportunities everywhere they go. If that sounds familiar, you may be interested in the most profitable small businesses you can open and manage yourself.
Running a small business is a great way to improve your income and take control of your money. But there’s also risk involved, so it’s important to do research and spend the time to pick the ideal business for your skills, interests, and finances.
If you want to know more about the most profitable small businesses, keep reading for ideas to get you started.
What were the most successful small businesses of 2019?
Last year, 2019, was a great year for businesses in the United States. While it’s easy to measure the success of big, public corporations, many small businesses don’t report their successes or failures publicly.
The latest data from the Small Business Administration (SBA) indicates that there are more than 30 million small businesses in the U.S. with nearly 60 million employees. That’s 99.9% of all business and about half of U.S. employees.
The top industries in the U.S.
According to the SBA, the top industries by the number of employees are:
- Professional, scientific, and technical services.
- Other services (except public administration).
- Health care and social assistance.
- Retail trade.
- Accommodation and food services
- Administrative, support, and waste management.
- Wholesale trade.
- Real estate and rental and leasing.
- Finance and insurance.
- Transportation and warehousing.
- Arts, entertainment, and recreation.
- Educational services.
- Mining, quarrying, and oil and gas extraction.
- Agriculture, forestry, and fishing and hunting.
It’s important to note that a large number of workers does not necessarily translate to profits. In fact, the opposite is often true. Businesses that need more workers cost more to operate. For many small business owners, a very small company with just one employee is the best way to go.
To earn the most profits, it’s important to choose a business that has an opportunity for high revenue and low costs. Physical product businesses have high costs related to supplies, and potentially production and shipping as well. If you need a brick-and-mortar location, you can also plan on spending a good chunk of cash on rent, insurance, utilities, and related expenses.
Just because a business made a lot of sales does not make it successful or profitable. For example, restaurants, grocery stores, resource extraction (mining, oil and gas drilling), and retail businesses can feel the squeeze of low margins. Looking forward to 2021 and beyond, it’s important to consider your potential for profits, not just making sales.
Which businesses are on track to be the most successful in 2021?
Just because a business did well in the past doesn’t mean it will do well in the future. Here are some business types you should consider for 2021 if you’re looking to bring in maximum profits:
Home and business cleaning
Maid, janitorial, and custodial services are easy to start with very low costs. You just need basic cleaning supplies and transportation to get started.
Businesses may be willing to spend more on cleaning than homeowners. Also, consider services like parking lot trash services as a way to start with a side hustle.
Accounting and bookkeeping
If you’re good with numbers, bookkeeping is always in demand. It just requires a bit of time and a computer to run this business, in addition to some accounting chops.
If you don’t know accounting but enjoy math, you may be able to take a short online or in-person course to learn enough to start.
Online content services
Online freelance businesses are doing very well right now. If you know writing, graphic design, website design, web or app development, audio or video editing, social media management, blog management, or anything else you can do online, this is a great way to earn with a side hustle or full-time. Your only big costs are a computer and reliable internet, as well as any required software.
There are more people alive today than at any time in history, and the trend looks like it’s going to keep going for a long time. As the population grows and ages, there are inevitably more deaths.
Services related to funerals, burials, and cremations are profitable and always in demand. However, startup costs and licensing requirements can be quite high.
Landscaping and lawn care
If you have a green thumb and love being outside, landscaping and lawn care are great ways to make money. Even middle and high school students can make money doing this. If you can scale up to multiple neighborhoods, you may be on the way to big profits.
People are willing to spend a lot of money on their kids’ education. Tutoring, college admissions coaching, and test prep are all in demand. You may need to prove your own educational background to start, but there are few other fixed costs to worry about.
If you want some help getting started, check out VIPKid. They’re a very flexible, online teaching program that helps children in other countries learn English. The application process is somewhat rigorous, but if you have a background in education, you should have no problem working for VIPKid.
You’re able to make your own schedule, teach one-on-one, and you’ll make $15-22 per hour.
If you are willing to spend the time and money to get a real estate license in your state, you may be able to start your own company with little additional work.
Some states have bigger licensing requirements than others, so make sure you follow all regulations when starting up.
Personal wellness and health
In addition to an aging population that needs more care, both at home and away, millions of people are looking to improve their diet, exercise, and lifestyle routines.
Home care workers, trainers, coaches, dietitians, and other self-employed services are a profitable way to fill the need.
Party and event services
The average wedding costs $30,000. That’s a huge amount of money spent in one day. All of those dollars have to go somewhere, and you may be able to get a cut.
Wedding planners, DJs, caterers, bartenders, photo booth operators, bakers, photographers and videographers, day-of coordinators, and officiants are just some of the people who could own a business and make money from weddings and other occasions.
What makes a small business successful?
Starting a business doesn’t have to be complicated. According to author Chris Guillebeau in his book The $100 Startup, you only need three things to have a business:
- A product or service to sell.
- Someone to buy that product or service.
- A way to deliver that product or service.
If you are the person your family or friends come to for help fixing their computers, you could have a business. If you know how to do basic household projects, you could charge to do them for others. If you have a skill or talent you get paid to do for an employer, you might be able to find your own customers and turn it into a business.
Assess costs and risks
When starting any new type of business, it’s vital to look at the potential costs, risks, and commitment. Businesses that have few competitors, high demand, and ramp up quickly can achieve fast profits and success. Businesses like breweries and restaurants that require a ton of equipment, supplies, and employees are a lot harder to get off the ground.
Many entrepreneurs are happy working in a solo business where they earn enough to pay for their cost of living. These are often called lifestyle companies. Others are set on the traditional startup model and want to become huge enterprises. There’s no right or wrong, just what’s right for you and your business idea.
Be aware of the failure rate
A large number of new businesses don’t last very long. Government data shows that about 20% don’t survive a year. About half of businesses last four to five years. About a third of businesses last for a decade.
To avoid failing in a new business venture, it’s important to take a realistic look at opportunities and risks.
What type of business is the most profitable?
Service-based businesses do very well today for many reasons. These businesses often do well because they can keep recurring costs very low. If you don’t need a physical location or inventory, most of the money you earn could go to profits.
Businesses that require a physical location and inventory are more expensive for a handful of reasons. Rent and utilities are a form of overhead, a business cost that you can’t get rid of no matter how you operate. Further, businesses that require an inventory could have high margin costs that increase with each sale.
The most profitable businesses are ones that scale up well. If you are trading hours for dollars, such as in a consulting business, you will eventually hit a point where you simply can’t work anymore. Businesses that scale allow you to add more customers without adding more hours. Many service businesses hire employees to scale up, but employees also come with big costs and require time to manage.
Billionaire entrepreneurs like Bill Gates, Warren Buffett, Steve Jobs, Mark Zuckerberg, Elon Musk, and others didn’t start out as billionaires. It took years of hard work and dedication to turn their ideas into large fortunes. Even Walmart started with just one small location in the town square in Bentonville, Arkansas.
Every business starts somewhere.
If you’re looking to start the most profitable small business for 2021, you have to look at your own skills, interests, hobbies, and talents for inspiration on where to begin. If you start with any business on this list, you could be on the path to long-term small business success.