Based on 300,000 companies, most with annual sales under $10 million. One takeaway: Specialization pays off.
Spiking sales might make for good cocktail conversation, but if you don't turn a profit--and keep turning one--you won't be in business very long.
With the help of Sageworks, a Raleigh, N.C.-based accounting consultancy and private-company data provider, Forbes assembled a list of the 20 most profitable businesses, on a pretax basis, that aspiring entrepreneurs might launch. At No. 1: offices of Certified Public Accountants, with an average pretax margin of 17.1%. Wired communication carriers (transmission-line operators and the like), which clock an average 10.1% margin, brought up the rear.
The data are drawn from financial statements on nearly 300,000 companies, most with under $10 million in annual revenue, and bucketed by five- and six-digit North American Industry Classification System codes. The figures were gathered between 2000 and 2009, to capture an entire business cycle. To be considered, each category included at least 100 companies. Some businesses gravely hurt by the latest downturn, like architectural services, were dropped to avoid skewing the results.
Twelve of the top 20 categories involve professional services that require years of training and certification, from healing the sick to balancing financial accounts. "Industries which provide need-to-have solutions rather than nice-to-have solutions tend to do better," says Sageworks founder Brian Hamilton.
Two big perks with professional services: consistent demand (no matter what the economy is doing, people will still catch fevers and want to avoid paying taxes) and relatively low overhead. Little surprise that traditional industries--like manufacturing and retail, which are hard to scale--didn't make the cut. The top of that heap, including medical-equipment makers and wineries, clock 6% pretax margins; jewelry stores, 4.4%.
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