If you’re thinking about starting a business, chances are you want it to make money. Preferably, you'll make so much money that you can retire to an island and spend all day sipping drinks with colorful umbrellas in them. Unfortunately, no business is guaranteed to pull in big profits. Still, you can give yourself the best chance possible by choosing a business that is more likely to be profitable.
Most Profitable Businesses to Start
Overhead cost is an important factor when considering which business to start. The average cost to buy an existing business was $245,000 in the first quarter of 2018, with agriculture, mining, and manufacturing businesses being the priciest. When starting a business from scratch, it's important to consider the money you'll need to spend to rent retail or office space, hire employees, purchase equipment, and pay for inventory manufacturing and storage. Those costs will cut into your earnings.
One of the cheapest businesses to start is a pet-sitting business. For less than $500, you can line up everything you need to get started. There are also apps available that can connect you with people in your area who need your services. In general, the pet services industry has seen considerable growth in recent years, with Americans shelling out more than $69 billion a year on their furry family members.
An in-home tutoring business can be started for $0, as long as you already have a computer and a kitchen table. You can count on word-of-mouth or social media posts to get the word out. If you're not a fan of bringing students into your home, you could ask a local school or community center to let you use a room. You can even be a virtual tutor, joining one of many websites that connect educators with students who need help. The tutoring business has a positive outlook, expected to grow more than 7 percent over the next four years.
Although existing restaurants sold for $185,000 on average, you can cut costs by investing in a franchise. Startup costs for a new restaurant can run between $50,000 and $200,000, depending on the franchise, but for a new business owner, the ongoing support from corporate can be a big help. The restaurant industry brought in $799 billion last year and the outlook for this year is just as strong.
If you have the skills, the tech support industry is a great start. Expected to be a $172.2 billion industry by 2020, you can start this type of business with nothing more than a computer and a phone. However, if you plan to provide support to businesses or local residents, you may want to invest in liability insurance to protect your personal assets, at a cost of less than $62 per month.
If you have the necessary education and certifications, an in-home health care business is a great choice, since the industry has not only exploded, it’s experiencing a workforce shortage. This is an expensive business to start and run, but the money you can make, combined with the positive outlook, will help you recoup those costs. Buying a franchise can help you defray some of that expense, while also giving you access to the resources you need. Plan to have at least $20,000 cash on hand to apply for a franchise.
Determine What Kind of Business to Start
In addition to startup cost and industry outlook, also consider your own interests and background when choosing a business. Potential customers will want to know that you have the expertise necessary to help with whatever issues they’re having. Even if you plan to act as the leader and to employ trained experts to do the hands-on work, it’s difficult to run a business if you’ve never had experience in the area.
Look at your background and imagine it on the “About Our Company” section of your company's website. Does it establish you as someone people would trust in a particular field? Also make sure the subject matter area is your passion. A study of successful startups found common factors, the top two of which are that the founders were driven by the impact of their work and had a commitment to stay the course.
What You'll Need to Start Your Business
Money is the first thing you’ll need to start a business, even if it’s a low-cost startup. You’ll at least need to invest in billing and accounting software, upgrades to your personal electronic equipment and website hosting. If you want a professional-quality logo, business card and website, you’ll likely need to pay someone to design those. Crowdsourcing sites make it easy to hire quality talent at an hourly or project rate, so you may be able to get these services at a discount. Check with friends to see if they know anyone who can help.
Early in your business’ life, you’ll need to prepare a good business plan. The Small Business Administration has a business plan-building tool on its website, but you can also visit one of their Small Business Development Centers for one-on-one help. In addition to the documents needed to establish your business, you'll also have to decide how to handle client meetings if you’re working out of your house. Some businesses choose to rent at least an occasional conference room at a co-working center, eventually graduating to dedicated desk space before moving to a leased office somewhere.
- Statista: Spending Forecast of Information Technology
- AMN Healthcare: Home Healthcare: Fastest-Growing Industry Faces Workforce Challenges
- Entrepreneur: Why Some Startups Succeed (and Why Most Fail)
- Small Business Trends: 6 Low Overhead Businesses You Can Start Before the End of the Year
- Fundera: 14 Business Startup Costs You Should Know Before Taking the Plunge
- SBA: Build Your Business Plan
- SBA: Small Business Development Center
- BizBuySell: BizBuySell Insight Reports
- Franchising.com: The Costs Involved in Opening A Franchise
- Time to Pet: The Cost to Start a Pet Sitting or Dog Walking Business
- Fox Business: Americans are pet obsessed, spending over $69 billion a year
- Rewards Network: 2018 Restaurant Trends: Industry
- WRCB-TV Chattanooga: Private Tutoring in the US Market – Structure, Size, Trends, Analysis and Outlook 2018-2022
- Insureon: How Much Does General Liability Insurance Cost?
- Franchise Direct: Senior Care and Healthcare Franchise Opportunities