The Millionaire Next Door

Profitability of Business Types

In one form or another this is one of the most frequent questions that I am asked:

I was struck by your statement that business schools do not teach their students what type of small businesses are the most profitable. As a current business student, I have to tell this is very true, at least in the case of my school. I wanted to ask if you could direct me to resources that document which small businesses are the most profitable?  Andrew

This young business student is wise in that he is contemplating self employment down the road.  “Note that the average and median net worth, respectively, of households headed by a self-employed person ($919,800 and $248,100) are substantially higher than for those who work for someone else ($169,900 and $52,400).”


It is important to understand that some small businesses are more profitable than others.  But most millionaires who are self employed business owners had some experience within their chosen industry prior to going out on their own.  Most lived a spartan existence so that they could fund their business venture.  Plus they had tenacity and passion for their business.  


Noting these and other caveats the profitability [5 separate measures] of 153 categories of small businesses can be found in Millionaire Women Next Door.  These figures apply to both men and women.  Among my favorite most profitable small businesses [average return on receipts] are management services on a contract basis, .55; engineering services, .44; real estate property managers, .40; medical and dental laboratories, .40; child daycare, .39; barber shops, .38 and janitorial/dust contol services, .33.  However, as mentioned in an earlier blog, you may wish to avoid opening a gift shop, for example, since the average income of the more than 105,000 stores of this type was only $7.70!

1 thought on “Profitability of Business Types”

  1. Marc Anthony Flores

    What I would’ve liked to have known (at 16, when I started wondering about future income sources) is “what industries have the greatest profit/growth potential/franchisability/residual income/equity growth potential,” etc.).

    Not everyone is into ‘holes-in-the-wall’ -type of endeavors!

    My biggest problem in youth was lack of role models/mentors.


    Take care & God Bless

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