Finance

What’s the Most Profitable Business to Start in 2021?

While profit may not be the only impetus for starting a business, it’s certainly among the deciding factors. Whether or not a new business succeeds or fails depends on it’s ability to generate a profit. Building an audience/customer base, marketing, developing a solid business plan are all important elements of the most successful business, and they all lead back to one place. (Do you see where this is going?)

Most Profitable Businesses in 2021

Turning a profit is a lot easier when you’re starting with a profitable business model. So what are the most profitable businesses of 2021? Let’s take a look.

Ecommerce Business

Ecommerce businesses, the blanket term referring to all businesses where products are bought and sold over the internet, are consistently ranked among the best and most profitable businesses to start. Why? Because they’re easy to launch, don’t require the overhead cost of a brick-and-mortar footprint, and it gives you access to a geographically diverse customer base.

Want to learn how to start a profitable online store in 12 weeks or less? Check out the free mini-course.

Dropshipping Business

Dropshipping is a subcategory of ecommerce that refers to businesses that sell products they don’t actually have on hand. Instead, the product is shipped directly from the vendor to the customer. Dropshipping reduces your inventory costs and as a result, increases your net income.

Dropshipping is common in industries where customers expect a broad range of product that might be cost prohibitive for a small business to keep on hand, like bookstores. A lot of local bookstores, for example, might use dropshipping to ship directly from the publisher or a partner like bookshop.org. This allows them to offer a wider selection of books without having to contend with the challenges of storing one or 2 copies of a niche title on the off chance one customer might want it. Be wary of the risks of dropshipping, which include quality control, branding, and customer service.

Vacation or Home Rental

Vacation and home rentals are more popular than ever. The home rental business has boomed as a result of the COVID-19 pandemic. What’s driving the increase in demand? Some travelers are looking for drivable destinations, opting to seek out somewhere secluded where they can achieve some R&R. Others are gravitating toward individual vacation rentals instead of traditional hotels in order to mitigate risk by eliminating exposure to other guests. With the mass transition to working from home, still others are seeking a space where they can work away from the distractions of family. As much as we’d all like to put the pandemic behind us, signs point to vacation and home rentals to remain a top-notch business opportunity for the foreseeable future.

Online Business Course

Professionals are consistently looking for ways to sharpen their skills and advance their careers, providing a profitable business opportunity for savvy entrepreneurs who want to turn their expertise into passive income. Courses that cover business finances and accounting, strategy, management, negotiation, sales/marketing training, and public speaking drive consistent demand.

Online Marketing Course

The marketing landscape has been changing, and many businesses and professionals are looking for guidance on how to adapt. Creating an online marketing course covering email marketing, social media management, SEO, or database marketing can generate a profit with minimal investment.

Language Course

Are you a multi-lingual entrepreneur? Consider creating a language course. The language-learning industry has continued to expand. To stand out from the competition, you want to identify your target market. Who is your ideal student? Identifying your niche and narrowing your audience will drive higher conversion and increase profitability. Instead of offering “Beginning Spanish,” consider something more specialized like “7 Days to Business-Trip Spanish.”

Hobby Course

The final sector of the online course industry is hobby-related courses. Think: embroidery, woodworking, or singing. There has been growing demand in recent years for these online courses due to the cost-effective pricing and convenience. The pandemic has increased demand here, too. People who have transitioned to working from home now have more time to explore the topics that interest them. Others have taken stock of what matters to them and are finally gathering the courage to take a stab at beginner piano. As a result, launching a hobby-related course in 2021 is an exceedingly profitable business idea.

Bookkeeping or Accounting Services

Bookkeeping and accounting service businesses maintain consistent demand because everyone has to file taxes, and many either don’t want to or don’t know how to manage tax preparation. If you work in personal accounting, you’ll likely see a boom in the spring as individuals look for help filing their taxes, but there are greater profit opportunities in the small business space. Your average small business owner doesn’t have the bandwidth or the expertise to manage the bookkeeping themselves, and they might not have the resources to hire an on-staff bookkeeper. With a net profit margin of 18.4%, accounting and bookkeeping services is one of the most profitable industries you can go into in 2021.

Graphic Design Business

There is consistently high demand for graphic design services because stellar graphic design can be a market differentiator. In the age of digital marketing and Instagram-friendly advertising, a company’s graphic design is arguably more important than it ever has been. How profitable your graphic design business depends on how much labor you’re putting into the projects compared to how much you’re charging. Graphic designers can run highly profitable companies, but they can also fall victim to scope creep and other revenue-eating practices. To ensure maximum profitability, build your business model to target higher revenue/lower labor projects. You can avoid scope creep and other pitfalls with a clearly outlined consulting proposal. For tips on how to put together a winning consulting proposal, consult our guide.

Social Media Consulting

As we mentioned above, social media marketing is more important than ever. Social media advertising is the second largest market within digital advertising. The global industry revenue of $138.2 billion is expected to grow to $18.4 billion in 2025. A rapidly expanding market combined with the low investment required to start a social media consulting business makes this one of the most profitable opportunities for savvy digital marketers.

Digital Copywriting

Copywriting is more than just pretty words and catchy taglines (though of course, it can still be that, too). As companies look to build their audiences, copywriters with a knack for writing viral or SEO content can rake in the money. What makes copywriting such a profitable small business idea? Digital marketing assets—specifically those related to SEO and social media—can be revenue-generating machines for companies, and they come with the metrics to prove it. If you can deliver real value for a client, you can demand a hefty sum for your work. The best part? There’s virtually no startup cost to get this business off the ground.

Want to start a profitable copywriting business? Take the 7-Figure Copywriting mini-course for free.

Digital Marketing Consulting

Digital marketing is an ever-evolving industry. For many small businesses, keeping up with the latest trends in email marketing or the next Google algorithm update can eat up too many resources. If you have the skills to offer it all—email marketing, SEO, copywriting, social media—you can package it all into a high-profit digital marketing service.

Affiliate Marketing

Affiliate marketing is a business model where a company pays a third party to generate leads or traffic to the company. These days, everyone from Instagram influencers to major news publications rely on affiliate marketing to drive profit. If you have a robust audience…or plan to build one, you can make bank with affiliate marketing. The industry generated $6.4 billion in 2019, and it continues to grow, making this one of the best small business ideas in 2021.

Ready to start growing your audience? Check out the Instagram Domination free mini-training.

IT Support

Listen, we’re just going to say it. Most people don’t know how to use the tech they rely on to do their jobs. If you’ve got the chops, you can run a successful business in IT support. In 2021, the IT services market is anticipated to be $852 billion. Not too shabby.

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Legal Services

Legal services are probably the most profitable of any service business. It’s high profit, consistently in demand, and relies on specialized knowledge. The specialization also allows legal entrepreneurs to focus on the work they like the most whether it’s working in estate planning, catering to a commercial bank, or providing legal services for real estate deals, there will always be a need for legal service.

Auto Repair Business

While some major repairs require a trip to a full auto repair shop, a lot of fixes can be done with a simple set of tools. If you’re a skilled mechanic, you can launch an auto repair service with minimal startup costs and start generating revenue in a flash. Then, when you’re ready to scale, you can open your own auto repair shop and capitalize on those bigger repairs, too.

B2B (Business to Business) Services

Businesses can typically handle higher price points and service fees than end consumers, making B2B services a highly profitable industry. Many of the other businesses outlined here can be marketed to other businesses, including real estate, cleaning services, bookkeeping and accounting, legal services, and marketing.

Real Estate Business

Real estate continues to draw investors because it’s a perennially profitable industry. The perks of real estate include the opportunity to generate passive income along with a business model that relies on the asset that generates the revenue (land or a building) appreciating over time. Real estate does come with risk, and it requires a pretty substantial investment. A really successful real estate business typically relies on a slow-and-steady business model, generating a smaller, more consistent profit stream over a longer period. Be wary of house flipping and other real estate models that can veer into the “get rich quick” scheme, especially if you don’t have experience in the industry. If you have the cash flow and the risk tolerance to make it work, real estate can be one of the most profitable businesses out there.

Software Development

Software development relies on a technical skill set. If you put all your dev skills into proprietary software that can then be marketed to other businesses, you have a highly successful business in the making. Most businesses are in need of technical solutions that they can’t create on their own. While you could also work ad-hoc creating solutions via software consulting, creating proprietary software allows you to market the same product to a wide audience without requiring the project-by-project dev resources, increasing your gross profit.

Data Science Consulting

Data science is an industry driven by expertise. If you can give business leaders the data analytics they need to make informed decisions, you can demand premium pricing. These days data is king, and if you know how to manage data to tell a compelling story, the sky’s the limit. Specializing in a specific platform like a CRM (Salesforce, SAP) or data tool (Microsoft Power BI) can make you stand out to companies looking for third-party advice or expertise for their data tools.

Clothing Resale and Rental

As concerns over climate change and global warming proliferate, there’s more pressure to do something, especially in fashion (the second most polluting industry). The market for clothing resale and rental is massively expanding, and with Gen Z gravitating more towards vintage and reused clothing, trends look like this industry niche will only continue to grow.

Home Improvement Business

The pandemic caused a massive spike in demand for home improvement businesses, and it’s showing no signs of slowing down. There have also been increased material costs due to supply chain issues, squeezing the profit margin a bit, but as supply chain issues level out (as some of them already have) home improvement businesses will continue to be among the most profitable businesses.

Cleaning Service

There has been consistent demand for cleaning services, especially given the COVID-19 pandemic. High demand offers high profit potential. Cleaning services are also scalable, require minimal overhead costs, and they have high levels of customer retention. Given that customer acquisition is one of the highest costs for many businesses, that gives cleaning services an extra boost in the profit department.

How to Start a Profitable Business in 2021

Ready to start your business? Here are some helpful resources to take your business from idea to reality.

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