I’ve recently published a couple of articles suggesting businesses that need to be on your short list if you’re considering a startup. First I looked at businesses that are typically more able to withstand the strains of a recession and then I put together one of the longest lists of home-based small businesses you can start.
A list from Sageworks, a financial information company (www.sageworks.com), related to the concept behind those lists came to my attention and I thought it would be interesting – and hopefully revealing – to find the areas where these lists overlap. Sageworks just issued its annual ranking of the most profitable industries in the United States. These are the businesses that boast the highest profit margins.
Further, Sageworks was able to breakdown its data and give us the most profitable small business industries in the country. How can you beat that? After all, if you’re going to start a recession-proof, or home-based business, why not plunge into an industry that is know to have some of the highest profit margins?
Here’s the list from Sageworks:
Percent Net Profit Margin
|Accounting, tax prep, bookkeeping, payroll services||
|Automotive equipment rental and leasing||
|Lessors of real estate||
|Offices of real estate agents and brokers||
|Offices of other health practitioners||
|Offices of physicians||
|Management, scientific and technical consulting services||
|Activities related to real estate||
|Commercial and industrial machinery, equipment rental and leasing||
|Warehousing and storage||
|Specialized design services||
|Support activities for mining||
|Coating, engraving, heat treating and allied activities||
The first thing I need to point out is that accounting and tax preparation services score a hat trick. This business area is at the top of the Sageworks list, it’s a business that can be based out of your home and it’s also one of the best recession-proof businesses. The only thing that might threaten this sector is if Congress ever goes to a flat tax or national sales tax and eliminates the IRS.
I’m not holding my breath.
Also note that virtually every aspect of the healthcare industry is represented in the Sageworks list. If you’re old enough to remember “The Donna Reed” show, or saw it in reruns, you’ll recall that her husband was a doctor whose office was at their home. I don’t think very many physicians have that set up today, but there are some healthcare-related businesses you can start from home that are highly recession proof. The Sageworks data suggest that they could deliver healthy profit margins.
While the real estate industry isn’t immune to recessions, there are many real estate related businesses that can be based out of your home. In our list of 80 home-based businesses we specifically mentioned property management and that has a 16 percent profit margin, according to Sageworks.
Now that we have an idea of which startups deliver the best profit margins, which are recession proof and which can be run from your home, the only other information you need to plug into this array is your passions. Do you have the deep interest in any of these industries that would sustain you through the challenging months and maybe even years of getting your business up off the ground?