The 15 Most Profitable Small-Business Industries

Being talented with numbers can really pay off if
you’re looking to start a profitable business.
Accounting and tax services takes the top spot on the
list of the most profitable type of small business with
a generous 18.4 percent net profit margin followed
by real-estate services (15.2 percent), law firms (14.5
percent) and doctor’s offices (13 percent) reports
Sageworks, a financial data service that analyzed the
net profit margin of more than 16,000 small
businesses (that earned less than $10 million)
between September 2014 and August 2015.

(The average net profit across all industries for this
report's time period was 7.2 percent.)
What makes these industries profitable? For one,
they’re driven by human capital.
“Service industries,” says Sageworks analyst Jenna
Weaver, “are very common to find on the most
profitable small-business list. This is generally due to
lower overhead and startup costs. A lot of these
industries you can start from your house.”
While profit isn’t the only matter for an entrepreneur
to consider -- other factors to consider are whether
the business matches his or her skills, what sort of
licensing or training is required and how the
business would fare during a recession -- it’s an
important place to start.
Here’s the list of the 15 most profitable types of small
businesses and their net profit margins.
Related: The 10 Best Jobs in America for 2016
1. Accounting, Tax Preparation,
Bookkeeping and Payroll Services: 18.4%
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“The accounting industry is consistently a top
performer on our list,” says Sageworks’ Weaver.
No matter how the economy is doing, everyone
needs accountants. Also, this industry tends to have
low overhead and repeat clients.
2. Management of Companies and
Enterprises: 15.5%
Image credit: Shutterstock
This industry is made up of small, privately-owned
offices of bank holding companies and other types of
holding companies.
Some well-known examples of holding companies
(that do not fall into the small-business category) are
Warren Buffet’s Berkshire Hathaway and Carl Icahn’s
ICahn Enterprises.
3. Offices of Real Estate Agents and
Brokers: 15.19%
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While the real-estate market is largely dependent on
the health of the economy, real-estate brokers and
agents have low operating costs and all you need to
get started is an agent or brokerage license.
4. Automotive Equipment Rental and
Leasing: 14.55%
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With the on-demand economy on the rise, Sageworks
analyst Libby Bierman says that people may be
leasing and renting more cars using on-demand
services such as Zipcar -- along with more traditional
rental services such as Herz.
5. Legal Services: 14.48%
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Anyone who has ever hired a lawyer knows it’s not
cheap. Law, like accounting, generally has low
operating costs as well as repeat clients. However,
this business category includes not only lawyers, but
notaries, settlement officers (who deal in the
transaction of securities) and title search agents in
real estate.
Related: The Most Profitable Types of Small
Businesses
6. Offices of Dentists: 14.41%
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Dentists, like physicians, benefit from recurring
patients, and while startup costs can be expensive --
dental equipment is quite costly -- the profession has
the advantage of handling several patients at a time,
plus many pay out of pocket.
7. Electric Power Generation,
Transmission and Distribution: 14.02%
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This category of small, privately-held electric power
companies includes not just your traditional, fossil
fuel electric powers but also hydroelectric, nuclear,
solar, wind, geothermal and more.
8. Lessors of Real Estate: 14.01%
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Lessors, also known as landlords, show that renting
both residential and nonresidential properties is a
profitable gig once you recover the initial costs of
purchase.
9. Offices of Other Health Practitioners:
13.30%
Image credit: Shutterstock
How is this category different from physicians? It’s
not, really. There is a census delineation between
chiropractors, optometrists, mental-health
practitioners and podiatrists -- who fall under this
category of “other health practitioners” -- and all
other types of physicians.
10. Offices of Physicians: 13.01%
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Being a doctor requires years of training, certification
and likely, medical school debt. However, doctors
also benefit from regular clients and relatively low
overhead costs.
Related: Need a Business Idea? Here are 55
11. Commercial and Industrial Machinery
and Equipment Rental and Leasing:
12.58%
Image credit: Shutterstock
It pays to rent or lease. These businesses typically
rent or lease commercial machinery and equipment
across industries.
12. Religious Organizations: 12.41%
Image credit: Shutterstock
Religious organizations are having a profitable year.
Really. Remember, being not-for-profit doesn't mean
your goal shouldn't be to make a profit. It's just how
you distribute those gains. Instead of giving profits to
shareholders, all of yours go to your organization's
mission, which is the furthering of your church's
aims. It has been a good year not only for churches,
synagogues, monasteries, mosques and temples, but
also for schools, colleges and universities that are
operated by religious organizations.
13. Management, Scientific and Technical
Consulting Services: 12.05%
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Some types of businesses that fall under this
category are businesses that provide either
management or consulting on a range of expertise,
including human resources, marketing and
environmental issues.
15. Office Administrative Services: 11.3%
Image credit: Shutterstock
These administrative businesses are the backbone of
business operations across a variety of industries --
from food services to physicians offices -- and
provide the day-to-day administrative services, such
as record keeping, financial planning and billing.
Related: The 10 Fastest-Growing Industries for
Small Business
14. Specialized Design Services: 11.4%
Small businesses that specialize in interior, industrial
and graphic design are flourishing, as the value of a
product or business’s function has become
inextricably linked to appearance and design.