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- There are more than 30 million small businesses in the US.
- If you’re starting a small business in 2020, it helps to be in an industry seeing steady growth.
- Business Insider evaluated top industries based on revenue, employment, cost of entry, and competition to find out which are the best bets for small businesses to grow.
- The number one growth industry is health because of its large and growing demand and its resiliency against economic downturns.
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There are more than 30 million small businesses in the US, and they employ 47.5% of workers in the country.
If you’re starting a small business in 2020, it helps to be in an industry seeing steady growth.
Women could be the trailblazers in many of these growth markets. According to a recent report, women are more likely than business owners in general to identify a need within a market and start a company to fill it.
Business Insider evaluated top industries based on revenue, business size, capital requirements, and economic forecasts to find out which are the best bets for small businesses to grow.
Using NAICS data on the size and revenues of US businesses, we selected for industries with the highest number of businesses making over a million dollars in sales, favoring businesses with fewer than 100 employees.
We excluded all nonprofits, as well as industries with enormous capital requirements or low margins. For the remaining set, we considered where the US economy is in the business cycle, and considered how financial market performance and employment forecasts would impact each type of business.
Lastly, we gathered the relevant industries into the sub-sector groups for ranking in terms of our best bet on which small businesses will have a highly profitable year in 2020. If a category is on this list, we think it has a bright year ahead.
Needless to say, nothing in this post constitutes investment advice. These are just the areas we will be watching closely in the coming year.
Here are the 10 industries seeing major growth opportunities for small businesses to thrive.
10. Transportation and logistics
Sub categories:Last-mile delivery, personal transportation.
Getting people and their stuff from place to place is a challenge that isn’t going away. Indeed, shipping and delivery is one of the most important B2B sectors in America, as it supports 50,800 jobs in the US.
Amid the severe disruption taking place, there is both risk and opportunity. The $800-billion trucking industry is taking a painful hit, but transportation is more than big-rigs, and new technologies are improving efficiency and speed throughout the industry.
High saturation in e-commerce and customer expectations of lighting-speed delivery add another layer of complexity to how the industry will evolve.
Sub categories:Franchises, full-service
Full-service restaurants are a competitive market, and rising labor costs add pressure to anyone looking to start their own. And there’s growing opportunity in fast food franchises, but some require a lot of capital to start.
Food service is by no means an easy business, but people will always need to eat, and many are too busy to prepare their own meals. In 2019, the National Restaurant Association says diners spent more than $863 billion in the US.
The rise of delivery service and technology integration could further open up restaurants’ customer base and service efficiency.
8. Trade contractors
Sub categories:Electric, plumbing, site prep, roofing, etc.
Residential construction appears to be cooling off, but the need for skilled crafts-persons will be necessary for new projects and renovations alike. Growth is expected to exceed 8% per year in the coming decade, with solar and wind jobs growing the fastest of all (63% and 57%, respectively).
7. B2B operations support
Sub categories:Tele- and video-conferencing, event planning, printing, and much more
This is somewhat of a catch-all category for businesses that provide the services and products that other businesses (and government agencies) need on a daily basis. The industry’s performance has been mixed in the past year, but we see no reason why small businesses couldn’t use nimbleness and creativity to outperform publicly traded competitors.
These corporate and government contractors may not be household name brands, but they help other companies focus their efforts and resources on their core business.
6. Specialty retailers
Sub categories:E-commerce and brick-and-mortars
E-commerce has only expanded over the last decade, but brick-and-mortar stores still make up 90% of retail revenue, and sales of consumer durable goods (like toothpaste and toilet paper) tend to remain strong regardless of the business cycle.
Direct-to-consumer brands that were born online, like Casper and Warby Parker, are opening physical stores, and Amazon rolled out its AmazonGo cashierless grocery stores. Meanwhile, a survey from the small business retail platform Faire.com found 72% of US consumers prefer giving and receiving gifts bought locally.
Retailers of all types are shifting to convenience and experience-based models, which can call for a hybrid approach of online and in-store strategies.
5. Management consultants
Sub categories: Strategy, operations, finance, compliance, diversity and inclusion, ESG, etc.
Management consulting is the industry for experts who can tell businesses how to run more efficiently. As long as businesses are growing and expanding, there will be a high demand for consultants, both individuals and firms.
IBISWorld market research shows the consultancy industry made $259 billion in 2019 and is is growing at 3.4% per year.
Consulting is a natural opportunity for corporate executives looking to go independent and leverage their career experience outside their employment.
4. Programmers and developers
Sub categories:App development, programming, etc
Programming and app development span across all industries, so they’ll continue to see steady growth, especially in the so-called software-as-service space. With projections of 175 zettabytes of data stored by 2025 and new computing power at our fingertips, helping companies harness it could be a profitable business.
3. Certified professionals
Sub categories:Lawyers, architects, engineers, and accountants
Otherwise known as the the Professional, Scientific, and Technical Services sector, this category has some of the highest numbers of high-earning small businesses (as you might expect, given the education and credentialing required).
Of course, you can’t become a lawyer or architect overnight, but there is steady demand for these skills that could be rewarding for a private practitioner. This industry sees high employment rates (2.5% vs 3.5% unemployed) and above-average earnings year after year.
2. Health professionals
Sub categories:Private practice doctors and dentists
In the same vein as above, private or group practice health providers see some of the highest earnings for their size, with more than 34,000 medical and dental firms reporting between $1 million and $5 million in revenue.
US health spending is expected to reach $6 trillion by 2027, and physician and clinical services spending is expected to increase 5.4% per year on average.
We break doctors and dentists out separately from other licensed professionals because healthcare is one of the most resilient sectors of the economy this late in the business cycle. If you have the education, credentials, and experience, 2020 could be a good year to open your own offices.
1. Health and wellness
Sub categories:Home health aides, physical trainers, fitness gyms, individual and family services
Demand for health services is growing rapidly, whether through home health aides, wellness brands, or prescription delivery companies. According to the Bureau of Labor statistics, 8 of the top 12 growing job categories are health-related.
We chose this category to lead the rest because of its large and growing demand and its resiliency against economic downturns. As mentioned previously, US health spending is expected to reach $6 trillion by 2027, and the Global Wellness Institute says the industry is worth $4.5 trillion worldwide.
Additionally, the diverse opportunities to serve a growing need means some niche categories have lower barriers to entry. Some of the most exciting businesses we’ve reported on have some connection to improving health outcomes, and it’s clear the addressable market is huge.
You don’t need to be a medical doctor to help people live better, healthier lives.