As a small business accountant and tax practitioner, I know what makes money. Here is the ultimate top 10 small business ideas guide.
I wrote this guide because when I look at other top 10 small business ideas lists, I’m a little disappointed as to the lack of expertise that go into them. Many common small business idea lists seem to contain capital-intensive and low-margin suggestions. Upon making a living day in and day out by preparing taxes and pouring over small business profit and loss statements, I have noticed the obvious trends and the outlying sectors. Some clients have made lots of money and others have not. Here are the top 10 small business ideas that not only work, but make the most money.
Top 10 Small Business Ideas – You Can’t Expect to Make “Easy” Money
I want you to like me, but I will be very straightforward with you. If you are searching for the best business ideas thinking that you can earn a great income by investing a minimal amount of money, skill, time, and effort, then you will NOT likely find what you are looking for. Starting a successful business takes time, commitment, and often some extra education (even if vocational in nature). You must train yourself before you can hold yourself out to the public with services or goods that people need and are willing (and even lining up) to pay for. That’s not so easy.
As a high volume small business tax preparer, I can tell you that the clients who are rewarded the most are generally the ones who put aside searching for instant gratification and get-rich-quick ideas. They are the ones who learned a skill or became highly educated. They patiently worked for others for a few years before going off on their own. For the most part, they all put their noses to the grindstone and showed tremendous amounts of old-fashioned grit. Generally, for most, THAT is what it took for them to attain success in small business and to become a high earner.
Actually, successful small business owners LOVE these “barriers to entry”. A high-profit small business that is super-easy to start up would very quickly be overrun with competition. Everyone would want to take the easy route to making lots of money, of course, and come rushing in to compete with you. Is that the kind of business you want to rely on for a great lifestyle and a sound future for your family? Of course not. Instead, embrace the barriers to entry, figure out what appeals to you, be patient and committed, and go for it with all you have.
The Worst Small Business Ideas
On the contrary, it is always the clients who are looking for a quick entry to a higher income that never seem to get anywhere. From experience, and in my opinion, I will warn against nearly all seminars and online sites that tell you how to make “easy” money. Avoid multi-level marketing, time-share schemes, life insurance sales, day trading, social or door-to-door-type sales, and other such appealing simple entry points. If you are selling something that makes you (and other people) nice commissions, and in actuality it ends up only poorly serving the buyer, it’s not going to last. How could it?
Note that there are lots of legitimate small business ideas that don’t work so well either, but these quick-entry type business ideas that do not benefit the customers first tend to almost never work.
The Top 10 Small Business Ideas List
Disclaimer: Before starting a business or starting on any career path, please do your own due diligence. Consult with a career or a business counselor and thoroughly research your risk. If you form one of these businesses, there is still a good chance that you will not be successful and you could lose a lot of money and/or waste a lot of time.
#1: Air Conditioning Installation and Repair
Why did I list this first? It’s because my biggest client left his day job one day with nothing but a van and a tool-set. He now has 40 employees and takes on giant commercial and government contracts. He made money from day one. He and his team make their own prices and has always had too much business to handle.
Not only is my biggest client this successful in the niche, but several other clients who are doing the same thing are all doing very well. I even have a handy-man client who started specializing in installing portable window air conditioners. I tried to hire him for my own air conditioning installation, but he and his employees were too busy and referred me somewhere else. Then that guy didn’t follow through after providing a quote either – because he was so busy.
I suppose the northern latitude climate equivalent would include HEATER installation and repair.
To get into this line of small business, you will obviously need a basic knowledge of how to install and repair air conditioning units. This will involve a vocational class of some sort, I’m sure. Then you should probably go and work for someone for two years or so to learn the ropes. Real life repair work never goes according to the text books.
So after a class and some experience you could hang your shingle (hold yourself out to do business). Within 3 to 4 years of your humble beginnings, you might be doing pretty darn good.
Earnings of my AC Repair clients vary from $80,000 per year to over $1,000,000 per year (yes that is seven digits).
#2 Engineering, Scientific, or Technical Consultant
This is more like contract work or self employment than it is “small business”, but it is still a great business idea because it is so consistently profitable. These highly educated contractors often get positions with the Department of Defense, large construction, or environmental companies.
The catch here is that you need a pretty advanced education and some experience before you can hold yourself out as a consultant. If you already have a basic bachelor’s degree, you might be looking at a couple years of banging out a masters and a few years of working for a corporation or the military.
The best advantage when you land a contract is that you will likely always have TONS of self employment options and the money is good. VERY good. Many of my consultant clients are grossing $200,000 to $400,000 per year. Plus there are lots of these technical positions out there for those who educate themselves for them.
#3 Practitioner (Psychiatrist, Tax professional, Health Care Professional, Etc.)
One group of absolute top earning clients are psychiatrists. They make SO much money and patients are lined up out the door. They typically make as much as a half million per year. Of course, to be educated at this level is extremely expensive and intensely challenging.
Psychologists, however, also do pretty darn good, with many of these clients earning over $100,000 per year with their own practices.
Other health care professionals, like registered nurses or nurse practitioners also enjoy lots of stable work and stability. This requires quite a bit of education as well. I don’t think many people realize that these positions begin to approach medical doctor levels of education. Of course, medical doctor practitioners do extremely well, and specialist businesses make money that is off of the scale, but this is probably obvious. Also the education that this requires is stressful to even imagine.
Tax practitioners enjoy an extreme low-capital, high-margin profit and loss statement, and the phone will always ring off of the hook in this industry. I became a tax practitioner by taking an H&R Block Tax Class many years ago for like $200. I worked for them for a few years, then I left on good terms to work for a CPA for two years, then I went on to open my own office. It wasn’t easy or fast, but now I’m so glad I put in that time. It was easy to set up and open my first small office, and I didn’t have to go back to college for a master’s degree. The EA exams are pretty tough, but they can be studied for in a few months if you really put the time in.
One advantage of being a practitioner is that you can often work until you are pretty old. I plan to work for as long as I can sit up at my desk. Some might not consider this as favorable, but others believe that working keeps you young and sharp-minded. I agree.
One disadvantage of being a practitioner is that you can’t LEVERAGE as other sales-based businesses can. There will always be lots of customers, which makes the business stable, but you can’t hire someone at a low wage to do the work for you. You will always be limited in how much you can make by how many hours there are in a day. Ultimately, the practitioner gets low-risk stability and modest profits while other business owners see higher risk but larger profit potential.
#4 Restaurant Business
The tough part about starting a restaurant is the capital required for the equipment and the food. Also, the work is very hard. You have to be good, hands on, and aggressive. The average restaurant owner’s take is about $75,000 per year, but bigger restaurants can make MUCH more than this.
Smaller restaurants, such as food trucks, have trouble making profits, so be aware of that and do lots of research before jumping into a small restaurant business. Also, be ready to be totally time-committed to your restaurant. As soon as you look the other way, things will certainly start falling apart. I’ve written a full article on how much small restaurant owners make here.
Plumbers, sprinkler guys, electricians, tile and surface specialists, general contractors – they pretty much all make lots of money. If you have the personality to talk to potential customers and manage your employees you will “make it rain” in these sectors.
My advice is to find a trade that you are good at and that interests you, go work for someone else for a few years, and then try to go off on your own on the side at first. Do not go behind your boss’s back or steal customers. Be honest about your plans as you start taking on your own work and you will likely be “mentored” by your old boss, plus he or she will still likely have work for you if things get slow.
In good years, it’s not uncommon for these self-employed trades to take in $100,000 to $200,000 per year.
#6 Repair Man
This is the “light” version of the contractors and trades-people listed above. My handy man clients actually get LOTS of work and make “not great, but decent” money. This is perhaps a good idea for someone looking to breakaway from the grind of lower level construction jobs or for those who are getting older.
Just be honest with your customers about your abilities and limitations, and don’t be afraid to charge a decent amount for what you might consider to be easy jobs. You can easily quote your prices based on $100 per hour (but don’t come out and tell people that) – though you won’t make nearly that much after expenses. This is another business in where you may not have to quit your “day job” right away until you get a small but steady stream of work.
#7 Insurance Broker
Insurance business owners almost always make great money. The idea here is to be an agent for someone for a few years and learn the ropes. Then I’m sure you need to pass a pretty tough exam. But that should be about it. From there all you need is a desk, phone, and computer. Like tax practitioners, success in entry is more about real life experience and qualifications than about a college education. I have insurance broker clients making over $200,000 per year with very little in expenses. From my experiences with clients, I definitely recommend it.
#8 Real Estate Agent/Broker/Developer/Appraiser/Manager/Lender/Refurbish-er
Anything “real estate” has been doing well lately, but keep in mind that this business sector is cyclical and dependent on the economy. Real estate professionals can expect incomes varying from $50,000 to $200,000. The exams for many of the needed qualifications are difficult, but not extremely harrowing.
If you are good with talking to people then these types of business might be a good idea for you. These business owners must be self governed and motivated, and they must be able to prioritize tasks and manage large to do lists.
#9 Internet/Website/Online Marketing/Computer Technology
This is another business with lots of demand and an under-saturated group of educated professionals.
The hardest part facing the owners of these small businesses is the self discipline required to do the work and follow through. The biggest complaints from customers toward these practitioners is that they tend to be a bit “flaky”.
So if you have the personality and the follow through, you will get a good reputation. Your referrals will increase and you will be able to bill a nice hourly rate for the jobs that you take on. Self-motivation is a must.
Clients of mine who have mastered this aspect of these business make from $80,000 to $150,000 per year. They do not have to deal with employees, they make their own hours, they can work from anywhere, and they are their own boss.
#10 Office Administration Services
Business admin services are almost always in demand everywhere. Small business need to hire others to keep their books, run payroll, pay bills, and solve all sorts of problems. I can’t tell you how often my clients complain that they can’t find any free-lancers to do this work for them.
A few semi-quick bookkeeping and controlling classes and an email address and you can get started. You are only limited by how good you are and how well you can manage data and communicate people. You may be able to hire help and leverage this business a bit too. In my humble opinion, these businesses can quickly build to profits over $100,000 per year.
The Top 10 “Worst” Small Business Ideas
I’m not saying you can’t make a fortune in with these businesses necessarily, but the odds are against you. Here is a quick list.
Food Trucks. There might be some successful food truck business out there but most of my clients in this sector do not make a killing.
Grocery Store. Low profit margins are the problem with food sales. Small grocery owners must compete with Costco and Walmart – and now with Amazon.
Multi-Level Marketing. Watch out for companies like Rodan and Fields, Amway, and Nerium who allegedly make most of their profits form their own agents. Plus all of your friends will become annoyed with you for always trying to sell things to them.
Life Insurance Sales. If it is not good for your customers, it’s not good as a business. Leave the life insurance selling to the financial companies.
Tow Truck Services. Not too bad of a business, actually, but my tow truck clients are just not raking in heaps of dough.
T-Shirt Design and Sales. Cool clients, these starving artists. But they’re starving.
Online Shopping Carts. Shopify and Pay Pal are making lots of money, but I have not met too many that are making money on the other end of the modem.
Blogging. There are definitely some talented and successful free-lance writers out there, but the majority of blogs have trouble cracking $10 per day.
Discount Clubs and Financial Schemes. I have seen lots of clients trying this, but no one I know is scooping lots of income from these. Plus their friends run from them when they see them.
Paycheck Advance Services. These retail businesses require high security, high amounts of capital, and they face lots of fraud. There are ethical and loan sharking concerns about this industry as well. My advice is to “avoid”.
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