Small Business Outlook For 2018
The New Year is an exciting time for entrepreneurs.
What can entrepreneurs expect 2018 to hold for their business? According to key economic and business trends, there will be a strong entrepreneurial environment in health care, high-tech, repair and maintenance, personal and laundry and solar PV installation industries.
The Small Business Optimism Index has increased more than 10 percent in the past five years, and the trend shows a more optimistic entrepreneurial environment in 2018.
Another strong business indicator is job creation. Job openings have doubled since the financial crisis, and we can expect to see more job titles and growing employment in 2018. Plus, there is a good environment for better-than-average economic growth in the fourth quarter of 2017, according to the Consumer Confidence Index.
1. Health Care
The aging population and advances in medicine and technology are the main reasons for the expanding health care industry. According to the Bureau of Labor Statistics (BLS), businesses related to the health care industry, especially small businesses, such as home health care services, outpatient care centers and ambulatory health care services, have shown the fastest growth since 2012. Health care support occupations and health care practitioner jobs are projected to grow 18 percent from 2016 to 2026.
These are some health care business ideas that entrepreneurs can choose from in 2018.
- Ambulatory Health Care Services: healthcare providers, ambulance services, chiropractic offices, dental offices, home health-care service and nurse foot care services.
- Nursing and Residential Care Facilities: mental health centers, elderly home care and residential care homes.
- Social Assistance: adoption services, startups in biotechnology, organic food stores, day care centers, personal care stores, self-help counseling and homeless shelters.
According to Charles S. Gascon and Evan Karson of the Federal Reserve Bank of St. Louis, "Tech-sector industries have been growing rapidly over the past several years and have the capacity to help bolster economic growth going forward.”
High-tech industries accounted for 12 percent of total employment in 2016, according to the BLS. There is a large concentration of engineers (civil engineers, mechanical engineers and electrical engineers) working in the high-tech manufacturing sector. In the high-tech services industry, there is a growing number of computer and mathematical occupations. However, the dominance of high-tech services industries is still a recent phenomenon.
There are some high-tech startup ideas that an entrepreneur should extra pay attention to in 2018. They include the following.
3. Repair and Maintenance
Nowadays, consumers are hoping to keep their vehicles and electronic devices longer. The consumer demand for repair and maintenance services is generating more revenue opportunities for small businesses in this sector.
The repair and maintenance industry consists of businesses restoring machinery, equipment, and other products to working order. According to the BLS, from 2016 to 2026, the repair and maintenance sector shows strong growth momentum. One of the industry highlights is bicycle repair shops. It's predicted to be one of the top 10 fastest growing businesses in 2018 by the BLS.
If you are thinking of opening your own repair business, here are some sub-sectors for you to invest in.
4. Personal and Laundry Service
The personal care and laundry industry is expected to be fueled by the growing demand for gender-specific products and services. According to the BLS, industries in the personal and laundry services sub-sector group that provide for individuals, households and businesses are also projected to grow. Employment of personal care and service occupations is projected to grow 18 percent from 2016 to 2026, much faster than the average for all occupations. Businesses in this industry include:
- Personal Care Services: hair and nail salons, hair loss treatment and removal businesses and tanning salons.
- Death Care Services: green burial businesses and funeral homes.
- Laundry and Dry-Cleaning Services: home-based laundry services and laundromat.
- Other Personal Services: pet care services and dating services.
5. Solar Photovoltaic Installation
Solar power is the fastest-growing source of new energy worldwide, outstripping the growth in all other forms of power generation for the first time. According to the BLS, employment of the solar photovoltaic (PV) installation industry is projected to grow 105 percent from 2016 to 2026, much faster than the average for all occupations. If you live in a warm and sunny place, solar panel installation is a business with a future in 2018.
Location, Location, Location – Three Things to Consider
Before you start shopping for a business, you need to analyze market opportunities by conducting your own market analysis.
Check the General Demographics
In general, picking the right location is crucial. It's better to find a place that exhibits the most active small business and entrepreneur friendly environment. In terms of established small-business density, Ohio, Pennsylvania and Wisconsin rank the highest among 25 large states. Vermont, West Virginia and Iowa have the most dense small businesses established among the smaller states. According to the new release of Kauffman Index, Pennsylvania tops the list where small business survived their first five years. In the map below, you can check if the targeted state is entrepreneur friendly.
Check the Industry Specific Demographics
If you want to start a business in health care, you should determine the market you would like to reach that exhibits the fastest growth. In the maps below, you can see the health care industry in Nevada, Colorado and Utah have faster growth than others.
If you would like to have your own high-tech business, the best three states are California, Colorado and Massachusetts. You can see the places with the most high-tech startups for each state by hovering on the map below.
According to the new 2017 Bicycle Friendly State Ranking by The League of American Bicyclists, Washington, Minnesota and California have taken the most number of Bicycle Friendly Actions. If you want to open a low-cost bike repair shop, you should aim to reach a bicycle-friendly market.
As solar power continues to grow throughout the U.S. in 2018, you may want to open a solar PV installation business in a sunny environment. Tucson, Ariz., Reno, Nev. and Honolulu, Hawaii will lead the way in solar power in 2018.
Check the State-Specific Corporate Income Tax Policy
Where will your business pay the least amount of tax? If you’re starting a business, the state-specific corporate income tax policy is an important consideration. Alaska, Connecticut and Iowa levy the top marginal corporate income tax rates of nine percent or higher. The most tax friendly states are South Dakota and Wyoming, since they do not levy a corporate income tax or other form of tax.
Calculate Your Startup Cost
Calculating the startup costs for your small business is always a wise way to attract investors and request funding. There are some common startup costs you are very likely to have no matter what form your business is. Also, make sure to add any other specific costs to your calculations.
- One-time expenses: rent deposits, inventories, licenses and permits fees, etc.
- Monthly expenses: monthly rents, employees payroll, marketing expenses, repairs and maintenance, etc.
Launching a New Business
Now is the time to launch the business of your dreams. After you do your research and raise your startup capital, you can be your own boss and work in an industry you love.