What are the most profitable small businesses?
Calculating the profitability of a business involves more than simply looking at income. It means considering the costs associated with starting up and running a business.
While some people are dedicated to entering a certain industry, others are set on the entrepreneurial lifestyle itself.
We’ve compiled a list of five inexpensive business ideas which drive high revenue in 2021, and tips on how to push profits even further:
Tutoring services
Tutoring services can be an incredibly profitable primary or even secondary income, with virtually no start-up costs. Preparation and lesson time usually take an hour each, depending on the subject. Therefore, tutoring can be completed around other work commitments. Tutoring isn’t just for qualified teachers. Those who wish to use their specialist education (perhaps in science or maths) in a less-conventional way can reap the benefits of educating others.
Payment varies depending on a number of factors: experience, whether lessons are conducted in-person or online, the difficulty of the subject matter, and the education level of the pupil. Associated costs with tutoring include travel, the cost of stationary, or the price of a laptop or a phone if you’re teaching remotely. Premade lesson plans can be purchased online, but if you have extensive knowledge on a subject, this extra purchase shouldn’t be necessary.
Elementary school-level tutoring typically pays $25-45 per hour
High school or college-level tutors earn around $55 per hour[1].
Personal training and strength and development coaching
Personal training or strength and development coaching are also roles where you can monetize your knowledge. Professional personal training courses can cost as little as $400, and up to $2000 [2].
Industry-recognised training carries much more value than free online courses, and are often a one-time payment. Other costs include renting the gym floor and accreditation memberships.
Personal development plans and preparation time are deducted from the hourly wage, so group sessions offer a solution to this. Clients may pay less per person and opt for 2-1 sessions rather than 1-1s, meaning you can prepare one lesson for two clients and receive a larger pay per session over all.
Self-employed fitness instructors generally earn more than personal trainers who are employed by gyms, the average salary is $62,477 [3].
Cleaning or car wash services
House, hospitality, or automotive cleaning services are low-cost and provide high returns. One estimate for in-bay automatic car washes puts the average car wash owner’s annual income at around US$86,500[4]. Returning customers and recommendations are essential for optimising profit, as marketing and advertising will slow business down dramatically if you are continually seeking new clients.
Cleaning is personal. 80% of consumers are more likely to make a purchase from a brand that provides personalized experiences [5], so adding a special touch provides an extra incentive to return and recommend. Epos Now's car wash POS platform supports these personalizisations, as well as other loyalty schemes and custom communication with customers.
Other ways to maximise profit in this field is to sell additional add-ons for an increased fee. Examples include air fresheners, furniture protectants, and hand sanitizers.
Food and drink trucks
Food trucks generally boast much higher profit margins than sit-in restaurants. On average, it costs roughly $425,000[6] to open a restaurant, and $35,000-$100,000[7] to open a food or drink van. Typical projections may be slightly lower since trucks can hold less inventory and have smaller kitchens. However, operating costs are much more affordable.
Taking coffee vans as an example, gross profit margins on raw materials may be as high as 93.5% [8]. Operating with a trustworthy stock taking system is one way to increase profit even further, since coffee itself sells for rather cheap, around $2/3 per cup. Strategic management and advertising, with a reliable food truck POS system, will also maximise the opportunities for success and growth.
Food vans are growing in popularity. Since more than 2.5 billion people claim to eat from a food truck every day [9], it’s no surprise that they projected to be one of the most profitable business ventures in 2021 [10].
Technology based roles
A business with a slightly higher startup cost, technology companies are the fastest growing companies in the world [11].
Some may assume that the size of the technology industry alone makes it a barrier to entry. However, IT is in very high demand globally as more companies seek to innovate and move with the times. On average, IT services boast an 11.9% profit margin. Roles in the IT sector are among the highest paid jobs in the world as of 2021 [12]. Online hardware sales are increasingly common. 38% of US shoppers have purchased electronics online within the last year alone [13].
Growing your e-commerce website with a with a reliable Electronics store POS system will provide a fantastic ROI: decreased customer waiting times; instant visibility of stock at any location, physical or online; swift online transactions with major payment providers; and optimised branded web pages to create a truly omnichannel experience.
Innovation boosters for small businesses
All businesses, whether they’ve been operating for 1 year or 10 years, share one goal: make profit.
Closely monitor money flow
Investing in a reliable inventory management system offers an extremely high return on investment. Epos Now’s systems provide full insights into how items are selling, what’s generating the most profit and which items are taking up space on the shelves. You can also monitor stock in real time and compare this to projections. Understanding where there are errors or shrinkage is critical when aiming to reduce waste and boost profits.
Gaining insight into where there is waste and surplus and understanding which products/services are generating the most profit will allow you to meet the demands of your customers with ease and save you a lot of money in the long term.
Calculate a fair wage for yourself and your employees
When running a business, you may think that your salary will be parallel with your company’s profit. This may be partially true for businesses which monetise the owner’s knowledge or abilities - like tutors and personal trainers. Other entrepreneurs’ personal income can massively vary for a number of reasons. Figuring out how much money to reinvest into the growth of your business, and how much to pay yourself as a small business owner, will dictate its future success.
If your company is successful and is able to hire employees, strategic staffing is essential. Implementing an intelligent retail POS system, which provides reports on peak hours and days will help you decide when to schedule staff. Increasing the rota to cover busy periods will keep staff and customers happy, while figuring out when less staff are needed, will reduce operating costs. Epos Now also offers integration with payroll, meaning every employee receives their wage on time.
Have a USP
Creating bespoke loyalty schemes will not only give your customers a unique experience, but will add an extra incentive to return to you for future service. Your unique selling point should place you ahead of the curve, whilst remaining cost effective.
Bain and Company report that increasing customer retention rates by 5% increases profits anywhere from 25% to 95% [14]. Clients want to feel special and valued. By offering customised details and packages they are 84% more likely to return to your business [15].
Epos Now systems provide the option to bespoke customer profiles, allowing you to add custom details, set specific pricing and send personalised communication to new and existing clients.
Essentially, all businesses can only be successful if they are generating more revenue than they are spending on costs. These are some of the most profitable small businesses in terms of low operating and startup costs, high possibility of growth and expansion, and best paid wages.
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