10 Hottest Industries to Buy a Business in Right Now (2015)
Low risk and positive growth patterns make these 10 industries perfect for buyers.
If there was ever a time to make your move from Corporate America to Entrepreneurship, this is it. Our economy is in a financially secure place where small business growth and development is being fostered by increased consumer spending, lenient lending requirements, and forecasted industry trends. Recession recovery has been tough, but statistically, the American economy is finally back to where it was pre-recession and on track for a very bright future. Gas prices are down (and have actually saved Americans over $14 billion dollars, according to MarketWatch), job creation is soaring while unemployment rates remain at a steady low, banks are more permissive with lending conditions and small businesses are flourishing at rates we have not seen since around 2006. With good financials and positive industry outlook, buying a business in these 10 sectors might be the recipe for success your entrepreneurial spirit has been looking for.
Direct & Digital Marketing Services
2015 Projected Growth: 5%2015 Employment Growth: 2.2% annually, 22% by 2022.2014 Net Profit Margin: 5.3%
The Digital & Direct Marketing Services industry exploded in 2014 with a sales growth of 10.1%, as more consumers began using the internet to purchase services and products. Small business owners are seeing the importance of digital marketing as a way to reach millennials and younger generations. In 2014, there was huge growth in display (32%), mobile marketing (24%), and social media marketing (27%). While not surprising to see a spike in social, experts were not expecting the 2.7% increase in direct mail, which is typically seen as a dying form of marketing, but could be making a comeback.
Growth factors for Direct & Digital Marketing Services include multi-channel marketing, mobile display and search options, social media, and email personalization. Top Rank Online Marketing shows that 46% of consumers have used social media to assist in purchasing decisions, increasing the importance of social media platforms in marketing campaigns. Email marketing programs have also increase personalization options to assist in better reaching prospects through email blasts. While such a heavy emphasis is placed on digital marketing, many firms do not have the capacity to properly manage a marketing program, thus increasing the need for an outsourced marketing department.
Health & Medical
2015 Projected Growth: 4.9%2015 Employment Growth: 2.6% annually, 29% by 2022.2014 Net Profit Margin: 11.7%
The Health & Medical industry within the United States is massive; the spending in this sector alone accounts for about 17% of GDP, according to the Centers for Medicare and Medicaid Services. Healthcare spending is predicted to increase annually by 4.9% between 2014 and 2018 and create almost 5 million new jobs by 2022. While there is high competition in this industry, hard work can pay off with profit margins as high as 11.7% in some medical-related fields.
Driving growth factors for the Health & Medical industry include the increase of chronic/lifestyle diseases (such as cancer), treatment and technology advances and the need to approach the care of our elderly. Around 10,000 Americans turn 65 per day, raising the need for health services and utilities for our Baby Boomers. Because of this factor, the Home Healthcare sector is expected to grow by 60% by 2022, and Nursing & Residential Care facilities are looking at a 24% increase by that time.
Security Systems Services
2015 Projected Growth: 4.1%2015 Employment Growth: 1.8% annually, 11% by 2022.2014 Net Profit Margin: 5%
The Security Systems industry has seen a major increase in revenues since recovering from the 2009 economic downturn and is expected to continue expanding. According to SDM’s 2015 Industry Forecast Study, the total size of the security sector was near $75 billion in 2014 with a sales growth rate of 14.4%. Due to a wide variety of offerings in this industry, integrated systems packages including features such as weather updates, medical alerts and pool movement detection are trending as a customer acquisition tool. Security firms are also using recent digital security breaches as a new form of revenue, which can prove to be incredibly profitable as corporations strive to protect data and remain updated with the latest security programs. Increased consumer spending due to elevated disposable income is leading people to invest more in protecting their personal assets, especially if the primary breadwinners are away from the home during the day.
Experts are forecasting that as the Baby Boomer generation ages out of the workforce and into retirement, there will be a spike in spending in the Security Systems Industry. Since the 65+ population will inevitably begin spending most of their time at home, they will want to feel safe, leading to a jump in home systems purchases. Experts at research firm IHS are also predicting the security market within the public school system will increase to almost $5 billion by 2017.
Construction
2015 Projected Growth: 9%2015 Employment Growth: 2.6% annually, 24.3% by 2022.2014 Net Profit Margins: 6.3%
Construction is considered a mega industry within the United States economy and is forecasted to account for $612 billion in revenue in 2015. Construction was one of the industries to be hit the hardest during the recession but now that consumers have additional income to spend, the industry is picking up and predicted to experience 9% growth over the next year and create as many as 2.6 million news job by 2022.
In 2012, Barack Obama approved the “Fix-It First” policy, targeting over 70,000 substandard bridges and tunnels in the United States for repair. In North Carolina alone, the cost to repair these bridges is estimated to be as high as $16 billion dollars, according to the NCDOT. In addition to heavy highway expenditures, experts are predicting a 15% increase in Commercial Building as well as Single Family dwellings for the next year.
Information Technology & Computer Services
2015 Projected Growth: 5.4%2015 Employment Growth: 2.6%, annually, 22% by 2022.2014 Net Profit Margin: 6.9%
The IT & Computer Services sector has become one of the largest mega sectors within the U.S. economy, responsible for an estimated $685 billion in spending in 2014 and projected for $725 billion in 2015. The IT & Computer Services industry casts an incredibly wide net and can encompass everything from cloud-computing to managed services to software publishing, and as technology is developed, this industry is continuously evolving with it.
Experts predict driving growth factors for the IT sector to be security, E-commerce, cloud computing, and ‘The Internet of Things’. ComputerWorld estimates a 46% increase in spending on computer security systems in 2015 and a 42% increase in cloud computing spending. The Internet of Things (IoT) is being hyped as the next big thing in the world of Information Technology, and would allow everyday objects to connect to the internet and identify with other objects, achieving greater value by ultimately sharing information with manufactures and operators. IoT is expected to become a trillion dollar industry within the United States, with GE estimating it has the potential to add up to $15 trillion to the global GDP over the next two decades.
Industrial Equipment Distribution
2015 Projected Growth: 4%2015 Employment Growth: 2.4% annually, 34.9% by 2022.2014 Net Profit Margins: 16.4%
Due to an influx in several other industries, such as material handling, beverages, automotive and manufacturing, the Industrial Equipment sector has experienced tremendous growth, with SageWorks listing it as one of the top grossing industries of 2014. One of the largest revenue streams to this industry is Material Handling, which exceeds $156 billion dollars in revenue per year and employs more than 700,000 people. Global Industry Analysts are predicting the Material Handling market to be worth about $100 billion dollars by the end of 2015, which equates to an increased spending budget for Industrial Equipment.
As mentioned before, the Construction market is expected to increase by 9% in the next year and ultimately become valued at over $170 billion dollars. Most construction companies do not own their own equipment, they rent or lease from Industrial Equipment Distributors. Between Construction and Material Handling, the Industrial Equipment Industry can expect to see billions of dollars in spending. This does not even scrape the surface of spending from the food & beverage, aerospace, automotive and mining industries. With all this spending fueling the industry towards success, the real advantage is the 16.4% average profit margin.
Transportation/Logistics
2015 Projected Growth: 3%2015 Employment Growth: 1.4%, annually, 14.8% by 2022.2014 Net Profit Margins: 7.7%
The Transportation & Logistics industry has grown exponentially over the last few years and experts are predicting even more growth and higher revenues for the future. Logistics is a vital industry to our nation’s economy, and over 80% of all communities in the U.S. rely on logistics for their needs. In a country with a population of around 300 million, 10 million of these people in in some way employed by the trucking sector alone.
The American Trucking Association predicts that the overall revenue for the industry will increase by nearly 66% and overall tonnage will increase by 24% until 2022. The Transportation Industry accounted for $603.9 billion in revenues in 2011, which represents 80% of the nation’s freight bill. Experts are predicted a 6.6% growth rate in intermodal transport as well by 2016. This industry has an immense amount of job security as well, as the old saying goes “if you bought it, a truck brought it” holds true for the Transportation industry.
CPA, Tax Preparation & Accounting Firms
2015 Projected Growth: 6%2015 Employment Growth: 1.1% annually, 11.4% by 2022.2014 Net Profit Margins: 19.8%
The Accounting industry, specifically businesses covering tax preparation and CPA services, is considered to be one of the best industries to purchase a business in, as experts are forecasting extreme growth and increasing net profits over the next decade. Industry officials are predicting an overall 6% growth in Accounting Services and recent reports show that on average, firms are making as high as 19.8% profit margins. Businesses within the accounting field are expecting a high growth percentage due to increasing tax and government regulation in business.
Due to the rapid retirement of America’s Baby Boomers, Accounting firms are finding themselves in a very rare, but advantageous position. 10,000 boomers retire every day and not as many millennials are seeking careers in accounting. This makes finding the next generation of leaders increasingly difficult, and because of this, the Accounting industry is seeing a higher level of M&A transactions being used for expansion. This trend allows firms to grow and expand simply by purchasing other firms, and in addition to expansion, firms can increase their service offerings. Buyer demand is high in this field, but once someone breaks into this field, the possibilities are endless.
Employment & Staffing Services
2015 Projected Growth: 5%2015 Employment Growth: 2.2% annually, 24% by 2022.2014 Net Profit Margins: 16%
The Employment Services industry, which includes everything from temporary help services to employment placement agencies, has grown rapidly over the past 10 years, filling almost 5.1 million jobs as of 2014 and raking in profits as high as 28%. Generally, staffing agencies focusing on light industrial and clerical positions bring in profits around 16%, whereas staffing the IT, healthcare and professional realms see profit margins as high as 28%.
As more businesses trend towards flexible hours and remote employees, the need for staffing agencies continues to grow, with an estimated growth rate of 5% for 2015. The Staffing industry also relies heavily on unemployment rates for success, but at the same time, only thrives when our national GDP does. Historically, when America flourishes financially, so does the employment sector, and when America’s GDP dips, the industry follows suit. The unemployment rate in the U.S. is down 1.1% from last year and our GDP is expected to increase by 2.6%, stabilizing the staffing industry and guiding it towards prosperity.
Manufacturing
2015 Projected Growth: 4%2015 Employment Growth: -.05 annually, 6.6% by 2022.2014 Net Profit Margin: 5.9%
Manufacturing is the lifeblood of America; hundreds of smaller sectors make up this mega-industry within our market. According to the Manufacturing Institute, if the U.S. Manufacturing sector were its own country, it would rank 10th largest in our global economy! While there are massive conglomerates within this industry, 94% of all manufacturing businesses in the United States have fewer than 100 employees. If these small manufacturing businesses survived the 2009 Recession, statistics show they are thriving now and on track for continued growth over the next 10 years. Due to the overwhelming contributions that Manufacturing makes to our GDP and businesses around the world, we’re adding it to our list of best industries to purchase a business in this year.
MAPI predicts that manufacturing production will increase 4% in 2015 and 3.6% in 2016, especially as manufacturing continues to move back to America from China and if fuel prices stay low. This industry can see profit margins as high as 5.9% and is expected to grow by 4% in 2015. While revenues and growth look good, employment in this industry continues to struggle as it is slow to recover from the economic downturn. Within Manufacturing, the Cement & Concrete Products field is expected to see an increase of 3.1% in job growth and Veneer, plywood, and engineered wood product will see 2.7%. Manufacturing is another industry that will be severely affected by the retirement of Baby Boomers. Deloitte and the Manufacturing Institute predict that by 2025, 3.4 million jobs will need to be filled due in part to retiring boomers. The future for Manufacturing only looks bright, especially for an aspiring entrepreneur looking to manage a small business.