In this article, we will look at 30 low-cost business ideas with high profits. You can skip our detailed analysis of tech layoffs and resulting spike in business registrations and head over to 7 Low Cost Business Ideas With High Profit.
The United States saw a record-breaking employee resignation in the year 2022, as 50.5 Million people resigned from their jobs. This labor trend, also known as the “Great Resignation,” was because of low pay, lack of schedule, and motivation. At the same time, new business applications in 2022 were up by 44% from 2019, with more than 5 million businesses created. In addition, A survey by Gusto found that inflation is the main driving force behind new business creation in 2022. This is a striking deviation from previous economic downturns, which discouraged people from leaving their jobs and starting new businesses.
Small-scale businesses are essential for the US economy. The Small Business Administration notes that small companies generate 1.5 million jobs annually, accounting for 64% of new job creation in the United States. Small-scale businesses also contribute to 44% of US GDP.
This upward trend in new business creation is also being called America’s startup surge. Unsurprisingly, African Americans were on the frontier of this startup surge. Third Way notes that there was a 103% increase in new business applications filed between 2019 and 2021 in counties with Black majority. In addition, in counties with more than 75% Black residents, applications for new businesses increased at a rate of 198%.
Along with the voluntary resignations in 2022, there were also many tech layoffs, which continued in 2023. Some of the companies that made large-scale layoffs included Meta Platforms, Inc. (NASDAQ:META) and Alphabet Inc. (NASDAQ:GOOG). However, a survey by Clarify Capital found that 63% of tech workers found their own companies post-layoffs. In addition, tech workers also reported an annual salary increase of $13,000, on average, post layoffs.
With the backdrop of America’s Great Resignation and Startup Surge, it is worth looking at the current trends in small businesses. A Survey by Guidant Financial found that 58% of small businesses in 2022 were independent, nonfranchise businesses. 27.22% of business owners started their business from scratch, while 31.76% started it by purchasing an existing turnkey location. At 15.05%, the largest industry category for small business owners was retail, followed by food and restaurant at 13.71%.
As a new entrepreneur with a limited budget, it is worth looking at low cost businesses with high profit. The tools available today make it easier to get started on a small budget and expand in the future. For example, if you want to get into the retail business, instead of building a brick-and-mortar storefront, you can sell online on Shopify Inc. (NYSE:SHOP)’s platform.
Shopify Inc. (NYSE:SHOP) lets you create your store with integrated payment gateways. You would not even need a web developer to create your e-commerce store using Shopify Inc. (NYSE:SHOP)’s website-building platform. Many businesses also sell their products using Meta Platforms, Inc. (NASDAQ:META)’s Facebook marketplace. In addition, Facebook and Instagram ads are effective at showing your products to the right people.
A large number of online startups rely on these ads to attract potential customers to their websites. This is corroborated by the fact that Meta Platforms, Inc. (NASDAQ:META)’s Facebook Ad revenue is expected to hit $153.76 Billion in 2023, making it the third consecutive year that Facebook’s Ad revenue has surpassed $100 Billion. Meta Platforms, Inc. (NASDAQ:META) also remained one of the top contributors in some of the high-performing hedge fund portfolios. RiverPark Large Growth Fund made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q2 2023 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): META shares, continuing their rebound, were the top contributor for the second quarter. The company reported 1Q23 results, beating revenue expectations and lowering guidance for operating expenses and capital expenditures, while increasing revenue expectations.”
Facebook ads are among the many tools available to attract visitors to your website. Alphabet Inc. (NASDAQ:GOOG)’s Google search algorithm brings organic visitors to your website. A technique, known as Search Engine Optimization, helps the website appear in Google search of relevant users. Alphabet Inc. (NASDAQ:GOOG)’s Google search engine has the largest share of the search market, but other search engines, such as Yahoo and Bing, are also useful in bringing the desired traffic. In addition, Alphabet Inc. (NASDAQ:GOOG)’s Google also lets you place several types of ads to bring paid traffic to your website.
Copyright: sifotography / 123RF Stock Photo
Methodology
We curated the list of low cost businesses with high profits using seven (1,2,3,4,5,6,7) of our previous profitable business articles. We made a list of all the profitable businesses recommended by these sources and noted their average net margin. Then, we used trusted sources like Step by Step Business, Starter Story, and Fin Model Labs to determine the average startup cost. For this list of low cost business ideas with high profits, we limited the maximum average startup costs to $20,000. Finally, we ranked businesses according to their profit margins. For businesses with the same net margins, we outranked those over the others which had a lower average startup cost.
30 Low Cost Business Ideas With High Profit
30 – Pet Food Business
Profit Margin – 20%
Average Startup Cost – $13,936
Pet Food Business is one of the most profitable low cost businesses. However, before marketing your product, you need to submit your business registration, licensing, and notification information to the FDA. You also need to meet your state and FDA requirements on various aspects, such as ingredients and manufacturing.
29 – Food Gift Basket Business
Profit Margin – 20%
Average Startup Cost – $11,015
Market Research Future notes that the personalized gift market, which was valued at $28.4 billion in 2022, will reach a market valuation of $42 billion by 2030. Given the high profit and low startup cost, a food gift basket business is an attractive option for budget-constrained entrepreneurs.
28 – Cleaning Services
Profit Margin – 20.75%
Average Startup Cost – $5,500
According to Verified Market Research, the cleaning service market is projected to grow at a CAGR of 5.3% from 2023 to 2030. It was valued at $66.65 billion in 2022 and is projected to grow to $101.98 billion by 2023. You can choose to start your business and brand from scratch or franchise some of the well-known companies.
27 – Errand/Concierge Service
Profit Margin – $21.40%
Average Startup Cost – $19,267
As per Starter Story, you can start a concierge service for as low as $62. However, if you plan on operating a brick-and-mortar front for your business, plan on spending an average of $19,267 on essentials such as a POS system, office furniture, security equipment, and tools.
26 – In-Home Caregiving Service
Profit Margin – 23%
Average Startup Cost – $7,000
According to the Population Reference Bureau, by 2060, 24% of the total US population will comprise seniors. This presents a good opportunity for an In-home caregiving business. However, starting this business requires obtaining relevant licenses and certifications, as per your state’s rules.
25 – Ice Cream Shop
Profit Margin – 25%
Average Startup Cost – $19,815
While the average startup cost for a brick-and-mortar ice cream shop is $19,815, you can get started with a few hundred dollars if you plan to sell online. Alternatively, you can also start an ice cream stand or truck.
24 – Stock Brokers
Profit Margin – 26%
Average Startup Cost – $19,815
Before starting a Stock Broker firm, you must file the necessary regulatory forms and register with regulatory bodies such as the Securities and Exchange Commission. In addition, the success of your business will also depend on your contracts with clearing agents, who will ensure that your transactions are successful.
23 – Tax Preparation Services
Profit Margin – 26%
Average Startup Cost – $13,950
As a tax preparation services business, a significant portion of your costs will go towards tools such as CRM software. However, as per Starter Story, you can get started with as low as $12.
22 – Bookkeeping And Accounting Services
Profit Margin – 26%
Average Startup Cost – $12,272
If you have the relevant qualifications, a Bookkeeping and Accounting services firm can be a great option. With America’s Startup Surge, many new small businesses will require outsourced bookkeeping services since they may not be able to afford it in-house.
21 – Gourmet Popcorn Business
Profit Margin – 30%
Average Startup Cost – $19,815
While the average startup cost of a Gourmet Popcorn Business is $19,815, you can get started with much less if you sell only online. Alternatively, you can set up your popcorn store, or kiosk.
20 – Mobile Car Wash Services
Profit Margin – 30%
Average Startup Cost – $19,267
The startup cost of a mobile car wash business will vary greatly depending on whether you rent the trailer or buy it. In addition, you would also need to hire technicians with relevant certifications.
19 – Personal Chef Business
Profit Margin – 30%
Average Startup Cost – $18,308
According to Step by Step Business, you can start a personal chef business with as low as $2,000. This setup would be based on equipment already available at home. However, as you expand, you will have to buy or rent a commercial kitchen with professional equipment.
18 – Career Coaching Services
Profit Margin – 30%
Average Startup Cost – $11,992
With the recent layoffs and the Great Resignation, an increasing number of people will be looking for career coaching services. With this business, you can start on your own and expand in the future.
17 – Selling Hot Sauces
Profit Margin – 30%
Average Startup Cost – $7,000
Like candle making business, you can sell hot sauces directly to customers through a website or retail and convenience stores. According to Market Research Future, the global sauce market is projected to grow from $58.23 billion in 2023 to $89.37 billion by 2033, exhibiting a CAGR of 5.5%.
16 – Cookie Business
Profit Margin – 30%
Average Startup Cost – $6,825
According to Step by Step Business, you can get started with your cookie business for as low as $4,550. Some of the trends in the market include a shift towards healthy cookies and ready-to-bake products.
15 – Candle Making Business
Profit Margin – 30%
Average Startup Cost – $1,360
While the average startup cost of candle making business is $1,360, you can get started with $500. You can choose to sell your products through retail stores, or directly to the customer through platforms like Shopify Inc. (NYSE:SHOP).
14 – Baby or Pet Sitting Services
Profit Margin – 33.70%
Average Startup Cost – $3,075
The baby or pet-sitting services business is one of the low-cost businesses with high profit margins, but it comes with its own set of challenges. Gaining customer trust and building your brand is one of the challenges that you will need to overcome. In addition, you may also be required to work on weekends.
13 – Cloud Mining Business
Profit Margin – 37%
Average Startup Cost – $13,936
Cloud mining is profitable if you go for a trusted cloud mining service. One of the major currencies mined through cloud mining is Bitcoin. To learn more about Bitcoin mining, visit Top Trends Shaping Bitcoin Mining in 2023.
12 – Dog Walking Business
Profit Margin – 40%
Average Startup Cost – $19,267
If you are passionate about dogs, the dog walking business is one of the low cost businesses with a high profit margin. Some of the startup costs you will incur include licensing and permits, marketing, and insurance.
11 – Airbnb Hosting
Profit Margin – 40%
Average Startup Cost – $18,308
The startup cost of starting an Airbnb hosting business will vary greatly depending on whether you are renting or buying a new property, or subletting your current residence. The business can be especially profitable if your Airbnb is near a tourist attraction.
10 – Healthy Snacks Business
Profit Margin – 40%
Average Startup Cost – $13,936
One of the trends in the food market is the shift toward healthy options. You can start a healthy snack business from your home and sell through a website. Alternatively, you utilize retail channels to sell your products. Focus on creating an original healthy snack mix to reap the most profit.
9 – Pet Grooming
Profit Margin – 40%
Average Startup Cost – $6,825
According to Fortune Business Insights, the global pet grooming and accessories market is projected to grow at a CAGR of 6.9% from 2023 to 2030. The market is valued at $72.5 billion and is expected to reach $116.23 billion by 2030. While the average cost of starting a pet grooming business is $6,825, you can get started with as low as $3,550.
8 – Cake Business
Profit Margin – 40%
Average Startup Cost – $4,500
The cake business is 8th on our list of low cost business ideas with high profit. If you want to set up a bakery or start a baked goods store, a cake business can provide an easy foot in the door. The healthy profit margin of 40% and low startup cost make it easier for new entrepreneurs to start this business. You can start this business from the comfort of your home, or rent out a commercial kitchen.
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Disclosure: none. 30 Low Cost Business Ideas with High Profit is originally published on Insider Monkey