The people's voice of reason
The people's voice of reason
These suggestions are based on recent business trends and do not guarantee a profitable outcome.
Running your own business can be an appealing prospect. Working for yourself comes with a number of benefits, from setting your own schedule to seeing your income grow along with your business.
But how do you decide on the best type of business for you? The good news is that, while having a passion project is great, you can pursue your entrepreneurial dreams even if you don’t have a specific obsession you’re pursuing. There are many different kinds of businesses that can be both enjoyable and profitable to run.
SoFi shares several lucrative business ideas to help you find the one that fits your skill set and work style.
Key points
When your business is profitable, its revenue (meaning its gross proceeds) is higher than what you have to pay to run it, including operating costs, employee salaries, inventory, rent, and more. There are three types of profit that businesses may track:
It’s important to measure your business’s profitability regularly, both on an ongoing basis (like monthly or quarterly) as well as at the end of each year. This can help you assess the health of your company and let you know if you should make any changes to your business plan.
There are many things that can impact your company’s profitability. Here are a few of the most common ones you’ll come across when you’re considering the best business to buy.
The cost of financing also affects how much revenue stays in your business. Before borrowing any funds, either to buy or operate a company, consider using a business loan calculator to estimate your monthly payment and the total cost of the loan.
Starting a small business that offers a service is often profitable because you can receive recurring income by repeatedly selling your service to the same customer base. That’s also why a service-based company may be the best business to buy, too. Some common types of service-based businesses are:
Online companies can be some of the most profitable businesses because the startup costs are often relatively small compared to brick-and-mortar models. You may be able to get started with as little as a laptop, a WiFi connection, and a website builder. Once you begin bringing in clients, get started on opening a business checking account, and you’re good to go. Online businesses include:
It’s entirely possible to launch a successful business from the comfort of your own home, even with minimal specialized skills. Options include:
Make your entrepreneurial dreams come true even without a cash flow loan or other type of small business financing. Below are some ideas that don’t require a lot of upfront funds.
Typically, it takes a substantial amount of capital to get a franchise started, whether you pay with cash or a startup business loan. If you’re interested in a franchise, here are some profitable business types.
What’s the best business to purchase or start for someone in your situation? Follow these guidelines to start your selection process.
Consider your interests: It’s hard to sustain an entrepreneurial lifestyle if you’re not excited about the work you do. So don’t try to force an industry that doesn’t fit your skillsets or really appeal to you. Instead, pick something you’ll enjoy doing day after day.
Determine your ideal business model: Everyone has their own goals for starting a business. Maybe you want to work from home to spend more time with family. Or maybe you have a product idea you can’t wait to launch in person. Choose a business that works for your lifestyle goals as well as your interests.
Create a business plan: Once you’ve narrowed down your list of potential business ideas, it’s time to research the market. A business plan can help you determine the steps it will take to launch and maintain your new company. Be sure to include challenges and opportunities you’re likely to come across on your journey.
Estimate your upfront costs: The final step for choosing a profitable business is to estimate the costs and figure out how you’ll pay for them. Maybe you have enough savings to dip into, or maybe you’ll want to apply for a small business credit card. Just be realistic with your budget and plan for unexpected costs.
Profitability isn’t just one and done. Once you’ve found the best business to purchase — or you’ve got your brand-new business up and running — make sure you’re constantly tracking your profit margins (the difference between your company’s revenue and its costs of operation, expressed as a percentage) and identifying ways to improve your bottom line.
One major issue that impacts profitability for many companies is operating the business without a plan. You need both short-term and long-term goals in order to have a clear understanding of what success will look like for you in terms of both revenue and profitability.
In addition to tracking your goals, make sure you track your finances as well. Reviewing revenue and expenses every month gives you full transparency into how well your company is performing. If you’re churning through cash without seeing revenue improvement, it may be time to adjust the company’s course.
No matter what route you take, a small business loan may help you achieve your goals and reach profitability faster. Fortunately, there are a variety of loans on the market to help with each stage of your business, whether it’s during its inception or as you scale for long-term growth.
What are some profitable small businesses?
When you’re looking for the most profitable small business to run, a lot depends on your lifestyle, schedule, and interests. Dog walking, bookkeeping, and drop shipping are good low-investment options for a service-based business that you can fit around other obligations until you decide to scale. Alternatively, if you have access to capital, buying into a franchise may be a smart move.
What businesses make money the fastest?
If you need to make money quickly, you can look for a business that has low startup costs and meets an ongoing demand. This could be something as simple as junk removal, lawn care, or flipping products on Facebook.
What is the most profitable business to start with little money?
The key to having a profitable business is to determine what people need and are willing to pay for. Service-based companies often have low investment costs, but the kind that will work for you depends on your market and what you’re willing to do. Some potentially lucrative business ideas: If there are laundromats near you, you could consider offering a traveling laundry service. Alternatively, you could walk or watch people’s pets.
How can I calculate my business’s profit margin?
To calculate your profit margin, determine your company’s expenses and subtract them from your revenue. For example, if you’re selling scarves, subtract the cost of the goods sold and your operating expenses from your total revenue — the percentage of difference between that number and your revenue is your profit margin. For instance, if your profit margin is 25%, you’ve netted $0.25 for every dollar that came into your company.
What industries have the highest profit potential?
Scalable industries tend to have the highest profit potential. If you are drawn toward a specific niche, ask yourself how it could grow year to year. If you’re unable to answer that question, you may want to consider something else.
This story was produced by SoFi and reviewed and distributed by Stacker.
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