The small business model is appealing for many reasons, but whatever your reasons for starting or joining a small business you will want to make sure the business is successful and profitable. Small businesses often depend on their originality and marketing strategy and 2020 and the impact of Covid-19 has also taught many small business owners the importance of flexibility and adaptability.
Owning or working in a small business can be incredibly rewarding when the business is run well. However, with 60% of small businesses failing within the first three years, it is vital to understand the SME market and enter at the right point.
What kind of Small Business is most profitable?
Turning a good profit is the purpose of business. With most small businesses battling to make a profit for the first two years, it is important to know what kind of business will either start making money quickly or have enough of a profit in the long term to make it feasible.
Although the success of your business will depend largely on where you live and the market saturation in your area, the following types of business have been noted as being the most generally profitable:
Professional, Scientific, and IT services
If you have put in the hard work of gaining education, experience, and expertise, then you are perfectly positioned to enter the small business market. With this sector averaging almost a 12% profit margin it is the most profitable sector on the list.
Legal services, accounting, financial planning, IT support, and technical setup and assistance are all in high demand. People cannot handle professional services on their own and are often more willing to give their business to an SME knowing that their service will be more tailored and personal.
If you have been in the industry for a long time you can also offer your services to businesses as a consultant. This can work out cheaper for a business because they don’t have to employ someone on their own books, but it also allows you the flexibility of working in a small business capacity while taking advantage of your own hard-won expertise.
Within this bracket, you can also find healthcare professionals. Make sure you have the right insurance and then practice from your own premises, or offer your services to a private practice as a self-employed healthcare provider.
Trades, manual labour, and physical assistance
People who can offer a trade are always in high demand. This includes plumbers, construction workers, electricians, mechanics, technicians, and tilers, among others.
No matter where technology leads, people will always need repairs and technical assistance, especially in areas of highly specific training and where physical or manual expertise and dexterity are required.
Even if your trade is less specialised and more physical, people are always willing to hire people to help them with physical work they can’t do themselves. This could include painting, driving, gardening, washing windows, and even dog walking.
A rapidly growing industry that requires little to no education is rentals, although you will need a knack for understanding trends. Rentals require more start-up capital, but with a lot of people wanting to try things themselves and not invest in expensive equipment, rentals and “equipment libraries” are becoming more and more popular.
Rentals can be quite a niche market, so make sure you know your target market and demographic well. Recently successful rental businesses have taken advantage of the DIY trend as well as the growing number of people avoiding environmentally demanding products such as single wear apparel.
Online goods and services
Take advantage of the masses buying online and market your own goods and services. Buy in bulk and resell, offer web services, create a local listing store for local shops with no online presence, or join the growing ranks of virtual assistants.