15 of the most profitable businesses in 2023
Key takeaways
- You can get an idea of the most profitable small businesses by checking the size of the industry and its growth rates
- Becoming a business owner means researching to confirm that there’s a market for your business idea
- A variety of business ideas can come from this list, including professional services, retail, private healthcare practice or leisure and hospitality
Entrepreneurship can be an exciting venture for individuals, especially when you see your vision take shape and form. But you want to ensure your business can succeed in the long run.
Running a successful business begins with a profitable and scalable business idea and then performing your own research about that specific business and its business model. From there, you can create a business plan that outlines the strategies and steps you will take to help your business reach its goals.
In this guide, we focus on the most profitable business industries, with data to back up those business ideas’ potential for success and growth.
Most profitable businesses by industry
The Federal Reserve Banks surveyed small businesses in 2022 through the Small Business Credit Survey to discover how businesses apply for funding. Nearly 8,000 businesses responded, giving a solid picture of the most popular industries that employer firms choose when going into business.
Those industries include:
| Industry | % of employer firms that responded to the 2022 Small Business Credit Survey |
|---|---|
| Professional services and real estate | 20% |
| Non-manufacturing goods production | 18% |
| Business support and consumer services | 15% |
| Retail | 13% |
| Healthcare and education | 13% |
| Leisure and hospitality | 11% |
| Finance and insurance | 6% |
| Manufacturing | 4% |
Source: Federal Reserve Banks’ 2022 Small Business Credit Survey*
1. Professional services and real estate
Professional services is a broad field that’s any service given to another business or business professionals. Professional services could include graphic design, marketing, search engine optimization, data and information services, scientific research, accounting or consulting.
According to IBISWorld, a data research company, management consulting brought in a total of $365.8 billion in 2022. The industry grew by 2.1 percent that same year. Consulting is often offered by small business owners who work with multiple businesses in a specialized field of expertise, such as marketing or business development.
Data scientists are also in demand. According to the U.S. Bureau of Labor Statistics’s Occupational Outlook Handbook, the data scientist industry is projected to grow 35 percent from 2022 to 2032. The median salary for a data scientist is $103,500. In this industry, a small business owner could work as a data scientist for one or multiple companies, performing data research and analysis for companies needing to make decisions or establish authority (such as for media relations).
Real estate is another popular industry. Real estate agents can work for themselves or a real estate agency. According to Payscale, in 2023, the average real estate agent made $55,346 per year.
2. Non-manufacturing goods production
Non-manufacturing goods production includes agriculture, forestry, marine, oil and gas production, utilities, transportation and warehousing industries, according to the Federal Reserve’s Report on Employer Firms. These industries collectively make up 18 percent of the responses to the survey, accounting for over 1,400 small businesses.
According to the U.S. Department of Agriculture, agriculture and related industries make up 5.4 percent of the economy, bringing in a hefty $1.2 trillion in 2021. If you want to enter the agriculture industry, you will need significant real estate, equipment and products you want to sell. You may want to buy a farm that’s already in production to further grow or sustain the business. Fortunately, you can get federal and state farm grants or farm loans to help you through the startup phases.
Another option is storage or warehouse distribution, which can serve as passive or partially passive income. To do this, you’ll need a storage center or space and accept customers who want to store their items in your storage units. Or you can start a warehouse that sources products from different businesses and distributes them. According to IBISWorld, this industry made up $34.6 billion in 2022, increasing 3 percent year-over-year.
3. Finance and insurance
Financial industries touch many areas of life, from personal budgeting to business lending to wealth and asset management. Because of its far-reaching effects, the finance industry makes up a huge part of the economy.
The finance and insurance industry made up 8.3 percent of the gross domestic product in 2020, according to SelectUSA, which is part of the International Trade Administration. The gross domestic product is comprised of the products and services that make up the American economy.
According to Statista, regional banks are the most profitable financial business, realizing 30.31 percent in profits as of January 2023. Money centers have nearly 27 percent profit margins, and nonbank and insurance services see 26.32 percent profits.
If you’re starting your own business, you can break into the financial services industry in various ways. For example, you could open your own insurance agency as a broker for major insurance companies. Or you could become a Certified Public Accountant (CPA) and open your own business, providing accounting services for small businesses. You could also get certified to become a financial advisor or wealth management professional.
Here’s a list of the most profitable financial industries according to Statista:
| Industry | Profit margins |
|---|---|
| Regional banks | 30.31% |
| Money centers | 26.96% |
| Financial services (nonbank and insurance) | 26.32% |
| Investments and asset management | 24.93% |
| Real Estate Investment Trust | 23.77% |
4. Business support and consumer services
Business support and consumer services include administrative roles that support business efforts as well as remediation services like oil and chemical cleanup and waste management. These industries are what the Federal Reserve Banks refers to as business support and consumer services in its Report on Employer Firms.
While this broad section made up 15 percent of the businesses that responded to the 2022 Small Business Credit Survey, administrative roles aren’t the most booming industry. According to the U.S. Bureau of Labor Statistics, secretaries and administrative assistants are expected to decline by 10 percent from 2022 to 2032, whittling down the job market by 332,600 roles. The average administrative assistant makes $44,080 per year.
Businesses can increasingly outsource administrative tasks to self-employed individuals, which can save a company money while giving a small business owner a prime market. If you’re interested in an administrative role, consider working with multiple small businesses to bring in enough work.
5. Retail
Retail involves any business that sells products or services to a customer, including storefront and online businesses. The retail industry makes up $3.9 trillion of the gross domestic product, according to the National Retail Federation.
That number is nearly three times that of agriculture, making retail the single largest private industry to employ Americans. The National Retail Federation forecasted that retail would make up over $5 trillion in 2023, growing between 4 percent and 6 percent.
To dive into retail, you simply need a product or business idea that you want to bring to market. Then, you can open a shop online or in your local community. Online stores have the advantage of getting started with minimum overhead costs, while brick-and-mortar stores can offer in-person events to engage the community and gain new customers.
6. Healthcare and education
Healthcare is a booming industry, accounting for 18.3 percent of the gross domestic product in 2021, according to the Centers for Medicare & Medicaid Services. It’s projected to have an average growth rate of 5.4 percent from 2021 to 2031. The gross domestic product is forecasted to grow an average of 4.6 percent.
In 2021, healthcare spending grew by 2.7 percent. Medicare spending grew by 8.4 percent, Medicaid spending by 9.2 percent, and private health insurance spending grew by 5.8 percent.
While you might not think of healthcare as a natural choice for small businesses, there are independently owned medical practices, including general medicine, dental practices and mental healthcare consulting.
Education is similar in that the industry includes public and private institutions and online learning developed by fintech companies like ABCMouse.com, Desire2Learn and Blackboard Inc. According to Vantage Market Research, the education industry is expected to grow from $1.2 trillion in 2021 to $1.5 trillion by 2028, with an approximate growth rate of 4.3 percent. If you want to educate, you could create learning games for students or a website for them to learn about specific topics like science, math or art.
7. Leisure and hospitality
Getting into the leisure and hospitality industry could be as simple as listing a room in your home on Airbnb. Or it could mean opening a hotel or offering travel experiences like horseback riding, zip lining, cooking or art classes.
According to the U.S. Bureau of Labor Statistics, the leisure and hospitality industry is expected to add 23.1 percent of new jobs entering the American economy from 2021 to 2031, making it the fastest-growing industry.
8. Manufacturing
Manufacturing is a profitable industry as it offers wages 8.8 percent higher than the overall wages of the private sector, according to the National Institute of Standards and Technology. The industry contributed to 12 percent of the total gross domestic product in 2021, bringing in $2.3 trillion. Manufacturing accounts for 9.6 percent of employment in America.
Specifically, shipbuilding sees high profitability, with profit margins of 21.55 percent, according to Statista. Entrepreneurs who like working with their hands could consider opening their own manufacturing company, producing goods they can sell to other businesses or distributing to warehouses and stores.
Most profitable small businesses by growth potential
According to Guidant Financial, some of the top industries with high growth potential are listed below, based on their growth since 2018 and 2020.
Guidant Financial used approvals for SBA loans as the benchmark for a successful industry. The percentages represent the growth in SBA loan approvals in that industry.
| Industry | Growth since 2020 | Growth since 2018 |
|---|---|---|
| 1. Nonresidential buildings, storage units and warehouses | 80.73% | 90.42% |
| 2. Gas stations | 57.68% | 64.77% |
| 3. Alcohol | 50.53% | 18.99% |
| 4. Hotel and accommodation services | 47.12% | 18.57% |
| 5. Insurance | 23% | 16.85% |
| 6. Automotive services | 29.27% | -8.69% |
| 7. Landscaping | 20.74% | -0.61% |
Source: Guidant Financial Top 10 Small Business Industries to Start in 2022
Bottom line
The success of a business depends on a variety of factors, including a profitable market for your business idea. You can get an idea of which businesses are most successful by looking at the profitability of other businesses currently in the market.
Once you’ve narrowed down your choices, you can look at specific competitors and how they position themselves in their messaging and advertising. Think of ways to differentiate yourself from your competitors, giving you solid ground to stand on when starting your small business.
Frequently asked questions
-
While profitability depends on a variety of factors, including the popularity of different products or types of services in your area. But the retail, financial and healthcare industries are some of the most profitable businesses you can start. For example, the retail industry was forecasted to reach nearly $5 trillion in 2023, according to the National Retail Federation.
-
The cheapest small businesses you can start are businesses that involve using your skills or digital products rather than producing a physical product that you have to take to market. The reason is that you won’t need to buy raw materials or equipment to start that business. Examples include writing, social media marketing, consulting or accounting services.
-
You can make passive income by selling a product or offering a service that doesn’t require you to be physically present to keep the business running. You can do this by starting nearly any business and outsourcing the work to employees or freelancers. Or you can sell products like digital books or services like renting out a room or guesthouse on Airbnb. These businesses may require some upkeep, but the idea is that you’re making money even when you’re not present with the business.
*The Federal Reserve Banks and the Federal Reserve System cannot vouch for the data or analyses derived from these data after the data have been retrieved from fedsmallbusiness.org.
