10 Least Profitable Business Niches

Submitted by Dmitri Davydov on Thu, 2008-01-31 09:22.
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Entrepreneurs start companies for all sorts of reasons. Maybe they have a passion, like being in control, want more flexibility–or even hate their current jobs.

But no matter the inspiration, one thing’s for sure: They’d better make money. A rising revenue line might make for good cocktail conversation, but if you don’t turn a profit–and keep turning one–you won’t be an entrepreneur very long.

With the help of Sageworks, a Raleigh, N.C.-based private-company data provider, Forbes.com has assembled a list of the 10 most and least profitable businesses–on a pretax basis–that aspiring entrepreneurs might hope to launch. Average pretax profits ranged from a juicy 25% to a knee-wobbling negative 7%.

The data were drawn from recent financial statements for nearly 100,000 privately held companies in the U.S.–most with annual revenues under $10 million–and bucketed by Internal Revenue Service classifications. We included only industries for which Sageworks had data from at least 50 companies–750 in all–and eliminated categories too broad to be meaningful.

1: Community Care Facilities - Average Pretax Margin: -7.2%

2: “Other Support” Services - Average Pretax Margin: -2.6%

3: Beverage Manufacturing - Average Pretax Margin: -2.2%

4: Real Estate Related Services - Average Pretax Profit: -2.1%

5: Bakeries And Tortilla Manufacturing - Average Pretax Profit: -0.9%

6: Amusement and Recreation Services - Average Pretax Profit: -0.9 %

7: Motor Vehicle Parts Manufacturing - Average Pretax Profit: -0.7 %

8: Specialty Retailers - Average Pretax Profit: -0.5%

9: Beer, Wine And Liquor Retailers - Average Pretax Profit: -0.18%

10: Travelers’ Accommodations - Average Pretax Profit: 0.26%

[Via - Dane Carlson

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