In this article, we take a look at the 5 most profitable small businesses in 2023. For more such businesses, go to 10 Most Profitable Businesses in 2023.
5. Retail Distribution
Average Net Margin: 16.5%
Retail distribution is one of the most profitable businesses to consider at a small scale in 2023. Retail distributors are companies that act as intermediaries between manufacturers and retailers. Their primary function is to purchase products in bulk from manufacturers and then sell them to retailers, typically in smaller quantities, for resale to end customers. Earnings in the retail distribution industry have grown 8% in 2022, and are projected to grow 3.7% per annum over the next few years. The net margin in retail distribution averages at 16.5%.
4. Information Technology
Average Net Margin: 16.62%
Information technology industry includes services like software development/maintenance, digital marketing and data analytics, among others. It is another highly profitable small business, with a net profit margin averaging 16.6%, according to NYU Stern School of Business.
An advantage that small businesses have in the IT industry is the ability to quickly adapt to changing market trends and customer needs. Smaller teams can be more nimble and agile than larger corporations, which allows them to develop and release products more quickly. They can also be more customer-focused, providing personalized services and support that larger companies may not be able to offer.
3. Event Management
Average Net Margin: 20%
Event planning is another one of the most profitable small businesses in 2023, with an average net margin of 20%. Event-Management companies typically charge 15-30% of the total event budget.
As people resume in-person gatherings and events in 2023, demand for event planning services is expected to grow. The US market currently stands at around $3 billion, with more than 61,000 planners in the market, as per stepbystepbusiness. The covid-19 pandemic severely damaged the industry, as lockdowns all over the world prevented any kind of gatherings from taking place. However, with the lockdowns gone, the industry is on the path to recovery.
Event-planning businesses can generate significant revenue from event fees and vendor commissions. With the right organizational and marketing skills, event planning businesses can enjoy strong profit margins.
2. Home Cleaning Services
Average Net Margin: 28%
Home cleaning services are a profitable small business, with net profit margins of up to 28%, on average. As people prioritize cleanliness and hygiene, demand for home cleaning services is something that we can’t see going down for the foreseeable future. Home cleaning businesses can be started with relatively low capital investment and have the potential to generate steady revenue year-round. On average, they make around $100,000 profit per annum in the US.
1. Pet Services
Average Net Margin: 40%
Pet services such as grooming, pet-sitting, and dog-walking are profitable small businesses, with net profit margins of around 40%. As pet ownership continues to rise, the market size will also increase. According to the grandviewresearch, the market was at $24.92 billion as of 2022 and growing at a CAGR of 9.1%, it is expected to hit $50.1 billion by 2030.
This is a very huge number for something that the general populace perceives to be a small market. FEDIAF’s recent report pointed out that 33% of all European households own a pet. Pet services businesses can be started with relatively low capital investment and have the potential to generate steady revenue year-round.
Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also take a peek at Top 20 Beer Companies in the World and 12 Questions to Ask Before Early Retirement.
