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The fastest-growing industries for small business
Raleigh, N.C., October 22, 2013—Sageworks, a financial information company, recently conducted an industry financial analysis of small businesses (annual sales below $5 million) in the U.S. and found several have grown at double-digit rates over the past 12 months.
Some of the industries have made Sageworks’ list of fastest-growing industries before. Management consulting services and computer systems design companies are often involved in other firms’ efforts to improve strategy or transform their technology in order to boost efficiency or sales, so it’s not surprising that their sales have increased, said Sageworks analyst Libby Bierman. “And since they’re in the service business, these types of small companies don’t have to invest in a lot of equipment or hire lots of employees before they can start bringing in revenue,” she said.
Others that showed up in the financial statement analysis make sense when you look around many neighborhoods. Specialty food stores (think olive oil shops and organic food stores) have grown 11 percent.
One industry that may seem less than glamorous has been the rock star of small business growth of late. Farmers of oilseeds and grains, such as corn, soybeans and wheat, posted nearly 20 percent sales growth in the last 12 months, according to Sageworks’ industry data.
“It might be attributed to price inflation that resulted from the 2012 drought or just increased demand across the board for their goods,” Bierman said. Corn and wheat prices both hit multi-year highs in the July-August 2012 timeframe as the U.S. faced its second year of drought, but prices have since fallen.
As Sageworks has seen in some of its other research, privately held construction companies have benefited from the improvement in the housing market over the past year or so. Six of the 10 fastest growing industries among small businesses are tied to construction.
“Contractors, real estate agents, architecture firms and even the manufacturers that supply those companies all fit into the supply chain or process of building,” Bierman said. “When hammers started swinging again, these industries benefited, and their top lines show that positive impact.”
Bierman noted that Sageworks recently reported privately held companies overall are growing sales more slowly than in the previous two years, with annual growth rates at less than 4 percent so far this year (vs. double-digit rates in 2012 and 2011).
“Since we are seeing a general slowdown in private-company revenues, this list of fastest growing, small business industries is a shining spot in the privately held portion of the economy,” Bierman said. “Double-digit growth can be hard to attain.”
About the Data
Sageworks possesses a proprietary database of privately held company financial statements aggregated by industry. Sageworks aggregates private-company financial statements from accounting firms, banks, and credit unions through a cooperative data model with their clients. The data is segmented and can be queried by 1,400 industry codes, 70 financial metrics, company size, and geographic location.
Raleigh, N.C.,-based Sageworks is a financial information company that provides financial analysis and industry benchmarking solutions to accounting firms. Sageworks’ data and applications are used by thousands of banks and accounting firms across North America. Sageworks provides industry data on private companies to U.S. accounting firms at no cost. The company has been named to the Inc. 500 list of the fastest growing privately held companies in the U.S. and to the Deloitte Technology Fast 500.