Most Profitable Small Business to Start
The modern market provides entrepreneurs with ample opportunities for self-realization. Small businesses move local economies and create new jobs (up to 70% worldwide). The main thing that is required from you is a great idea. You should first understand which businesses are worth starting in your area and which services will bring you the most profit. Any work should begin with careful analysis and planning, and ORTY experts will help you with them.
Best Small Business Ideas
The term “small business” refers to agencies and organizations whose profits and the number of employees don’t exceed certain indicators. What is a profitable business? It’s an activity in which income exceeds expenses. Net profit margin indicators can vary in different areas and under different conditions.
Statistics show that the most profitable types of business are retail, food, and other services. In these industries, your efforts pay off the fastest. However, they are highly competitive, so you need to strive to offer customers something unique. In this article, we have compiled the best kinds of businesses to start so you know which direction to go.
Most Profitable Food Businesses
Although the pandemic has adjusted the restaurant industry operation and initially slowed it down, this area has received a new development thanks to the possibility of online orders and home delivery. The restrictions are gradually being lifted, and the restaurants can return to their usual mode. Here are the top 10 successful businesses in this area.
Pizza is a versatile dish that is loved all over the world. The most successful entrepreneurs can even reach 25%. You should focus on the best, and therefore if you decide to open such an establishment, get a high-quality pizza restaurant POS system to optimize the work of your enterprise.
Ice cream shop
The sale of ice cream belongs to the so-called seasonal business. Of course, in summer, people consume much more of this product than in winter. As a rule, there is enough profit for the warm months so that the owners can survive the rest of the year without issues.
The production and sale of wine is a complex and expensive process. Even though upfront investments are quite high compared with other businesses, with proper planning and management, they will pay off in full after some time.
Nightclubs regularly make it to the list of most profitable small businesses. Successful entrepreneurs, even beginners, manage to break even in the very first year. Depending on marketing, location, assortment, etc., a small establishment, on average, can earn up to $30000 for one month of work.
Coffee shops are also highly lucrative businesses due to low start-up capital and stock price and high profitability. The average profit margin reaches 12%. And now you can turn to franchises instead of opening a shop from scratch. This method, combined with competent up- and cross-selling, significantly increases your income.
If you don’t want to look for and rent a suitable place, pay attention to food trucks. You are not tied to a specific location, can move around the city and stop at the most profitable points. A whole food truck culture can compete with classic cafes and restaurants.
Margin spread in the bakery business can be significant: 4% to 20%. So success largely depends on your efforts and planning. Fortunately, excellent sweet and savory pastries are now in demand. Unlike some other food industry representatives, this direction gives you creative freedom.
Owning a brewery is also considered a profitable business with the correct planning. However, it requires certain initial investments, time, and knowledge. Having your own taproom significantly speeds up the payback since the margin on the retail sale (in glasses) can reach 90%.
Quick service restaurant
Fast food restaurants are almost everywhere. Although large franchises often squeeze small businesses out of this niche, there are still entrepreneurs who can attract consumers with something special. With a good location and quality marketing, your margin can be 12 to 20%.
Cafeterias with inexpensive menus provide an almost uninterrupted flow of visitors throughout the year. You can arrange such a place near any large company or government organization and get up to 30% profitability.
Most Profitable Retail Small Businesses
Retail businesses can take many different directions. Perhaps the only thing that unites all of them is the sale of goods directly to consumers. This direction has always been in demand, and in recent years it has received a new online format, thanks to which retail companies have become even closer to their target audience. So, what are the most lucrative businesses to start in this area?
Various supplies can be sold through the gift shop POS system, which buyers purchase as souvenirs and gifts to friends. Travelers often buy trinkets as keepsakes, so the gift shop business is considered profitable.
The ever-evolving technology is a goldmine for entrepreneurs. Consumers crave the latest smartphones, game consoles, computers, and more, so diving into this area can be a good and lucrative idea.
Specialty stores combine products of various brands but with a single focus, e.g., sports shoes, books, office supplies, and more. Such specialized outlets have to compete with malls. However, they are in demand as it’s believed that the owners of such businesses are better versed in their products.
Pharmacies occupy a vital niche. It seems the ownership of such an enterprise simply cannot but be profitable. Indeed, the average margin is more than 20%. However, starting this business, given the receipt of various licenses and certificates, is not an easy task.
Everyone needs food, and with a convenient store location or a quality online service, you can find regular customers. However, the margin in this area is not the highest and can range from 1% to 12% (about 4% on average). That’s because you cannot make too large markups, and you also have to deal with spoilage and shrink from time to time.
The furniture industry itself gives a relatively low profit (about 3.5%) and, therefore, never gets into the lists of small businesses with the highest profit margin. However, if you are interested in this particular direction, you can significantly increase this figure if you sell pre-fabbed furniture.
Most Profitable Service Businesses
Service-based businesses do not lag behind product companies in terms of their profitability and capabilities. As in any other, it is essential to choose the right business model, analyze competitors, and find your customers in this niche. What is the best business to own in the service industry?
Fashion and beauty
The beauty industry is another highly demanded segment. Therefore, regardless of whether you are a stylist yourself or rent a place, your margin can reach 17% annually. With a high-quality POS for beauty salon, you can arrange a whole network.
Running a gym is one of the best types of businesses to buy. It can pay off in less than a year, and with successful development, you can increase this figure ten times. If you offer different activities, combined with recreational opportunities and a convenient location, you will get an incredible profit.
As in the case of gyms, the hotel business success largely depends on the location. With good management and a convenient booking system, you can expect margins from 25% to 40%. Of course, competitive prices, quality of service, marketing, and personnel should also work for income.
Whether you’re in the business of repairing cars, selling vehicles, or offering parts and accessories, anything related to cars can be highly lucrative. Even a local repair shop with a small team of mechanics can earn hundreds of thousands of dollars annually.
Summing up all of the above, it should be said that there are many areas where you can find the easiest, most profitable business to start in the retail, food, and service industries. Any idea can be great if you find the right approach to its implementation and carefully plan everything.
Kaitlin is an editor at Square where she covers everything from how small businesses can start, run, and grow, to how enterprise companies can use tools and data to become industry leaders.