Small business owners are reportedly the most optimistic they’ve been since early 2008, with several surveys indicating they also plan to hire more workers in 2015. And even though formation of businesses with more than one employee has declined over the past 30-plus years, the number of sole proprietors is on the rise again, and Americans by the largest share since 1999 believe there are good opportunities for starting a business.
Many entrepreneurial-minded Americans will undoubtedly be preoccupied with starting their own business in 2015, and it’s a fairly good time to go after this ambitious resolution, according to James Noe, an analyst with Sageworks, a financial information company.
“Despite some recent hiccups in the stock market, the economy appears to be churning along at a positive pace, with GDP, the unemployment rate and access to capital all headed in the right direction,” Noe said. As a result, now may be as good of a time as any to take the plunge into entrepreneurship, he added.
Many entrepreneurs already have a business idea in mind. But if you’re looking for industries where it might pay to start your own business, Sageworks compiled a list of industries that have both above-average revenue growth over the past year and typically low upfront investment requirements.
“Not only are these industries hot,” said Noe, “but most of them also require little in the way of start-up money and may have low barriers to entry, as long as you have the right domain knowledge.”
In this two-part analysis, Sageworks first analyzed financial statements to identify private-company industries that have been growing sales at a higher rate than the average privately held company over the past 12 months (8.6%). Second, Sageworks screened the industries for those that typically require little upfront investment.
“A lot of these industries can be started with a computer and an apartment,” Noe said. “Most of them do not require an official office space or a ton of upfront staffing.” This minimal upfront cost, combined with their above-average revenue growth, makes these industries prime candidates for lean start-up operations in the New Year.
The list, drawing from financial statements filed over the 12 months ended Nov. 30, includes online retailers, software publishers, investigators and security service providers, as well as providers of building services, including pest control, cleaning and landscaping. Also among low-capital, fast-growing industries on the list: specialty design, which includes interior, graphic and industrial designers, job placement firms, and architectural and engineering services firms.
Because jobs in several of these industries require specific skill sets, educational degrees or licenses, some industries will be better options for some people. Keep in mind also that 12 months of sales growth won’t guarantee that an industry continues to grow in 2015. However, the list can be a starting point to examine these industries for evidence that strong sales growth could continue.
Through its cooperative data model, Sageworks collects financial statements for private companies from accounting firms, banks and credit unions, and aggregates the data at an approximate rate of 1,000 statements a day. Net profit margin has been adjusted to exclude taxes and include owner compensation in excess of their market-rate salaries. These adjustments are commonly made to private company financials in order to provide a more accurate picture of the companies’ operational performance.
Sageworks, a financial information company, collects and analyzes data on the performance of privately held companies and provides accounting, financial analysis, and risk management solutions.
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