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Starting a new small business? Here are the most profitable SMB sectors in 2021

I sure wish the internet was around when I first opened my business in 1991.  An easy web search would have made life much easier, especially because I would have been able to source the most profitable businesses to open, and would likely have gone that route!

When I first started in business, doing research was difficult. It meant I had to go down to the library to research different businesses and industries.

In fact, prior to opening my business, I spent days in the UCLA library reviewing what would be the next big, up, and coming industry.

I happened upon the telecom market, and the business that I opened subsequently, I operated for almost 30 years up and until my exit three years ago. The business did extremely well, I grew the company to over 50-employees, and sold for 8-figures to private equity. You can read the article and more about the sale of my business, and how I grew it, here, and if you want to know how to become a decamillionaire you can read that here.

Fast forward a few years, and the internet revolution was upon us.


Had the internet been around, it would have made doing business research that much easier.

Not only that, but, I definitely would have researched the best, and most profitable small businesses to open as I mentioned above.

If you’re going to open a business, some industries are less competitive than others, with greater profit margins, and have fewer barriers to entry.

Having said the above, let’s review some of the industries by profitability, and then I will review some of the possible small businesses that you can open. The goal, of course, is to help you figure out what business you should open, and this article will be an excellent starting point.

I am also very aware that COVID-19 has changed the business landscape, and in fact, if you’ve now found yourself without a job, or, are looking to create some financial independence in your life, then there’s no better time than the present to open a new business.

There’s no better time to start a business because we’re at the cusp of what will become some entirely new industries and unique business ideas that will span as a result of the virus, which has created havoc for some industries and created a real boom for others.

In addition, some costs, like advertising, for example, and some other startup costs could be lower today than they would have a year ago.  You can read my thoughts on the changing business landscape and the opportunities here: There’s Never Been a Better Time to Open a New Business Than During COVID-19

Having said all of the above, it’s all too common for entrepreneurs to launch their business, and then almost “forget” how important profitability is to the business.

On this note, it’s essential to start with a business plan. You need to communicate a strategy to start your business. Having a business plan gives insight into actions to be taken, the tools needed to accomplish your company priorities, and a timetable of predicted results.

The Most Profitable Business by Sector:

Before we dive into my carefully crated list of small businesses you can open in 2021, I want to spend a minute highlighting a study done by Sageworks in 2017. In the study, they listed the industries and businesses that were most profitable by sector. I’ve cross-referenced that with the United States Census Bureau.  Here’s what they found:

** To clarify what these percentages mean, they are the EBITDA margins.  The amount of profit as a percentage of revenue.

  • Accounting = 18.4%
  • Lessors of Real Estate = 17.9%
  • Legal Services  = 17.4%
  • Management of Companies = 16%
  • Activities Related to Real Estate = 14.9%
  • Office of Dentists = 14.8%
  • Offices of Real Estate Agents = 14.3%
  • Non-Metalic Mineral and Mining = 13.2%
  • Office of Other High Practitioners = 13%
  • Medical and Diagnostic Labs = 12.1%
  • Privately-held Companies = 8.9%

Credit: Jeff Wiener


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