Forbes.com has made a list of the 10 Most Profitable Businesses to start, which are:
- No. 1: Accounting Services = Average Pretax Margin: 25%
- No. 2: Legal Services = Average Pretax Margin: 21. 6%
- No. 3: Dental Services = Average Pretax Margin: 20.9%
- No. 4: Specialized Design Services = Average Pretax Margin: 17.6%
- No. 5: “Other” Health Practitioners (e.g. Chiropractors, optometrists, podiatrists, physical therapists, speech therapists and mental health professionals) = Average Pretax Margin: 17.5%
- No. 6: Outpatient Care Centers = Average Pretax Margin: 16.9%
- No. 7: Insurance Brokers = Average Pretax Margin: 15.9%
- No. 8: Physicians’ Offices = Average Pretax Margin: 15.8%
- No. 9: Medical And Diagnostic Labs = Average Pretax Margin: 15.3%
- No. 10: Depository Credit Intermediation = Average Pretax Margin: 13.6%
What jumps at me from this list is that majority are professional services that mostly require specialized training and education, such as accounting, tax, law, design and medical-related firms. The irony is that medicine related careers are the highest paid careers, and now they’re also the most profitable. So if you’re a doctor, you can’t go wrong whether you are employed by a hospital or running your own practice — you’ll still be very profitable.
The writer explains that the reasons these businesses top the list in terms of profitability are: constant demand and relatively low overhead.
As for the least profitable businesses, this is their top 10:
- No. 1: Community Care Facilities = Average Pretax Margin: -7.2%
- No. 2: “Other Support” Services (e.g. organizing trade shows) = Average Pretax Margin: -2.6%
- No. 3: Beverage Manufacturing = Average Pretax Margin: -2.2%
- No. 4: Real Estate Related Services = Average Pretax Profit: -2.1%
- No. 5: Bakeries And Tortilla Manufacturing = Average Pretax Profit: -0.9%
- No. 6: Amusement and Recreation Services = Average Pretax Profit:% -0.9
- No. 7: Motor Vehicle Parts Manufacturing = Average Pretax Profit:% -0.7
- No. 8: Specialty Retailers = Average Pretax Profit: -0.5%
- No. 9: Beer, Wine And Liquor Retailers = Average Pretax Profit: -0.18%
- No. 10: Travelers’ Accommodations = Average Pretax Profit: 0.26%
The reasons given are interesting — from small retailers lacking the muscle of big retailers to squeeze profit margins from their suppliers to restrictive alcohol sale regulations to continuous capital improvement needs in the case of hotels and travelers’ accomodations.
If you’re thinking of starting a business, the list is worthwhile to consider.
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I think one of the keys to succeed in any business is specialization. Last year I had over $90,000 due on Capital Gain taxes. I interviewed many CPAs until I found one that specialized in real estate taxes. He helped me save over $60,000. His fees were two times higher than most CPAs but it was well worth it. I’ve referred many people to him and they’re very pleased. “Concentrate in a specialty or niche and you’ll have an edge over your competition”.