The best businesses to start are usually easy to set up, have low startup costs, high profit margins, low competition, or are in a growing industry. Growing industries mean less competition and more customers. If you’re seeking financing, consider a business idea that’s more likely to receive funding, such as a franchise.
Here are 12 of the best businesses to start in 2020:
1. Skilled Trade Business
Examples of skilled tradesman jobs you can turn into businesses are electrician, machinist, pipe layer, welder, and HVAC technician (heating and cooling tech). A number of sources are predicting that 31 million skilled trade jobs will be vacant in 2020. A very large challenge of filling these jobs is finding skilled workers. There is a huge opportunity to start a business that not only serves customers well, but also trains future skilled trade workers.
One idea for training skilled trade workers is providing apprenticeships within your business. Set up an apprenticeship program, and you will quickly have workers to fill the available skilled trade jobs. Business income will be stable and consistent due to the large number of job openings.
The cost to start a skilled trade-related business varies depending on the type of business you’d like to run. Expect to spend at least $250,000 to open the business, which includes location costs, equipment, inventory, licenses, and payroll.
Income potential can be great with a skilled trade business because there is tremendous demand and opportunity to grow. It isn’t unreasonable to expect to grow the business to over $1 million in revenue during the first five years in business.
2. Landscaping Service
Landscaping businesses are in demand, have relatively low costs, and are easy to start. Once your equipment is fully paid off, it can be very lucrative. The landscaping industry is often filled with companies that provide poor service, which gives you an opportunity to obtain their customers.
An easy way to figure out which neighborhoods are ripe for landscaping opportunities is to go to Google Reviews and Yelp to see which businesses have low ratings (1 and 2 stars). Research which neighborhoods those poorly reviewed businesses serve, and hand out flyers in those neighborhoods. Be sure to do quality landscaping for your first handful of customers, and you’ll build a solid customer base quickly.
The costs to get started with a basic lawn care business are under $5,000 for equipment, licenses, insurance, and marketing. However, a larger landscaping company can cost over $100,000 when you factor in the expense of trucks, trailers, commercial equipment, and an office. With a well-functioning lawn care business, you should be able to pay yourself anywhere from $60,000 to $200,000 per year.
3. Child Daycare Center
A child daycare center is one of the most frequently financed businesses by the Small Business Administration (SBA). The challenge of opening a daycare center is that is does require around a 20% down payment by the borrower, which is a standard lending practice. If you need to finance $125,000 to open your daycare center, you must put down $25,000 to obtain the loan. As an owner of a well-run daycare, you can earn up to $60,000 during your first year.
A benefit of starting a child daycare center is that they often receive government funding if they’re opened in underserved areas. For example, the Head Start Program is a government-funded program that provides early childhood education and services to low-income children and families. Head Start provides funding to qualifying daycare centers.
A downside of opening a child daycare center is the licensing requirements. Your state may require a training class to ensure you’re prepared to care for children at the center. Your state may also enforce a certain number of workers per child watched. To learn about specific requirements for your area, it’s best to visit your state’s official business licensing requirements website.
4. Medical Marijuana Services
The medical marijuana industry has two of the fastest growing businesses from 2018 to 2019. Marijuana growing-based businesses grew 30% and marijuana retail stores grew 27%. As more states legalize medical and recreational marijuana and allow farming within the state, the industry will continue to grow.
It’s a challenge to open a marijuana business because it’s highly regulated and taxed. For example, in many cities, a store must be 1,000 feet away from churches, schools, and residential areas. Additionally, you will need to acquire a state license before opening a marijuana business. States may also charge an excise or sales tax. For example, Colorado charges a 15% excise tax, which is a tax levied against the business.
The cost to start a marijuana dispensary (another name for a store) will be high. Expect to spend at least $150,000 to open a small dispensary. The amount of income you earn will vary depending on location and demand. Due to increased competition, sales for the average store have decreased. You should expect to earn anywhere from $50,000 to over $300,000 a year as a store owner.
5. Open a Franchise
Franchises are one of the best businesses to start because they have a high success rate. It is estimated that 92% of franchises are still operating after five years. When you buy into a franchise, you’re receiving all of the tools needed to make the business a success—branding, business systems, contracts, and support. A franchise can be an easy business to operate because you don’t have to spend years learning how to effectively operate the business.
The main downside to most franchises is the amount of capital it takes to start one. Many franchises charge a franchise fee to open, which can cost tens of thousands of dollars. Additionally, they may also require you to have a certain amount of personal liquid capital, or a net worth more than $500,000.
Franchise Opportunities is a website that connects those looking to purchase a franchise with those looking to sell one. It includes information about popular franchises, such as Jimmy John’s and Allstate, in addition to more niche and affordable franchises.
6. Build an Online Brand
Building an online brand involves growing a following on either a social media platform, an email list, a Facebook group, or a YouTube channel. Often, an online brand’s followers are there for education, entertainment, or both. You can monetize an online brand by selling related products, advertising to followers, and getting a referral fee as an affiliate marketer (when your followers make a purchase).
Building a brand online can result in a high profit margin business. For example, selling an online course can lead to a 95% profit margin—to earn $100,000 in revenue, it only costs $5,000 in expenses.
To start building a brand online, first choose your niche. Are you going to educate and teach people, or entertain them? Once you choose your niche, decide on an online platform. YouTube is great for long-form entertainment and education, while Instagram is geared for short-form entertainment.
7. Solar Power Installation
Revenue from U.S. solar power installation companies grew 39% from 2018 to 2019. Much of that growth is driven by both an improvement in technology and an increase in government subsidies. Additionally, people have a desire to improve the environment and are willing to pay the upfront cost in solar installation for long-term electricity bill savings. It can cost a homeowner anywhere from $14,000 to over $50,000 to have solar power installed in their home.
To start, we recommend getting proper training; solar power installation training costs are usually around $1,000. Additionally, your state may require specific licensing, such as a solar power contractor’s license. To determine if you need this license, it’s best to check with your state’s official business licensing website.
It can cost less than $30,000 to open a solar power installation company; however, that is if you work out of your home and aren’t purchasing solar panel installation equipment in advance of a signed and paid contract. The profit margin for a solar power installation business can reach up to 60%, although government tariffs may decrease this.
A consultant is a person or firm that provides expert advice in a particular area. This is a great business to start because it’s flexible and can have a high profit margin. When consulting, the costs are low, because you are the product. Clients are paying for your knowledge and expertise. Additionally, you can do the job at home and save on overhead costs.
To get started as a consultant, you need a client base. Many consultants get clients through the professional network they’ve built over decades. If you’re someone who needs to grow your potential client base, then you first need to establish credibility.
A hack to establishing credibility in an industry is to write a book. It doesn’t need to be a long book—about 100 pages would be the minimum length. If you don’t want to physically write the book, you could hire a ghostwriter to take your thoughts and ideas and turn them into a book. Once you have a book—and the book provides value—your credibility increases instantly. Additionally, it’s a great way to get speaking gigs in front of potential clients.
As a consultant, you can earn anywhere from $100 to over $300 an hour. To reach the higher rate of pay, you’ll have to prove your worth. When consulting on your first projects, think about how that project can be translated into a story-based case study for your website. For a higher hourly rate, potential clients need to be able to read about your past work and understand the value you can provide them.
9. Massage Therapy
Another top growing industry in the U.S. is the massage business. From 2018 to 2019, the massage therapy industry grew 28%. Recently, it has become easier for massage therapists to find clients with the increase in popularity of websites like MassageBook and apps like Zeel and Soothe. These platforms connect those looking for massages to therapists and companies.
You can start a massage therapy business without spending much money if you choose to not have a physical location. It’s possible to have a mobile business where employees go directly to a client’s home to give the massage. However, if you’re opening a physical location, expect to spend at least $250,000. The Massage Envy franchise states initial investments from franchise owners range from $440,000 to over $1 million.
10. Graphic Designer
If you have a creative and artistic personality, selling graphic design services is a great business to start. Getting started with graphic design has never been easier due to the online platforms that connect graphic designers to potential clients.
For example, 99designs is an online platform that allows graphic designers to submit work as a bid for a job. The client chooses the design they like the most. In addition to having a profile on a platform like 99designs, you also need to have a website showcasing your work and expertise. Many times, clients will discover you on an online platform and then contact you through your website for additional work.
To get started as a graphic designer, it’s important to have a portfolio showcasing your best work. We recommend you specialize in a particular design niche when first starting out. For example, if you specialize in the restaurant industry, you can appeal directly to restaurant owners by marketing creative designs for related items like menus, restaurant flyers, and signage.
Once you have a consistent and full schedule of design work, you can consider hiring your first junior graphic designer. The cost to get started as a graphic designer is minimal. Your expertise and services are the product. You can start getting clients for under $1,000 in expenses and earn anywhere from $30 to over $200 an hour as a graphic designer.
11. Personal Trainer
A personal trainer is a great low-cost and easy business to start. You can start a personal training business with no overhead cost if you operate in free locations such as public places or your clients’ homes. If you do body weight training, you can purchase equipment for less than $400. If you need a location or weights, consider renting out space in a local gym.
The overall cost to start a personal training business is minimal. You don’t need an educational or industry license to start. You may want to purchase marketing materials, such as a website, business cards, flyers, and branded clothing, which can cost under $300.
Additionally, you’ll want to register the business as a legal entity with the state. This protects the business owner’s assets if a lawsuit were to occur against the business. Incfile is an online legal service that registers your business as an LLC for free plus legal fees. We recommend all businesses register as a legal entity—however, personal training has a high risk of client physical injury.
As a full-time personal trainer, you should expect to earn between $40,000 and $100,000 per year. As your training schedule fills up, consider hiring another junior trainer. It may also be a good idea to open a small gym as well as you become more successful. Think big with your personal training business, but start small.
12. Accounting Firm
An accounting business is one of the most stable businesses to start. Every few years, tax laws change. Both people and companies need accounting assistance to be in compliance with the new laws. Additionally, companies need audits in both a growing economy and a recession. Demand for accountants remains relatively consistent.
The cost to start a small accounting business can be less than $20,000. Save money on rent by using an office in a coworking location for you and your small team. A coworking office is a shared location with other businesses. The amount of income potential for an accounting business depends on the amount of billable hours per project. You can charge from $150 to over $300 an hour, depending on the type of services you offer.
If you plan to solely do bookkeeping, you don’t need a degree or official certification; you can still make a decent amount of money but not as much as a certified public accountant (CPA) with a firm. You might also choose to offer tax preparation services only, using one of the big income tax firms, like H&R Block, as a partner. You may need a special certification, especially if you choose to partner with a larger company, but the training can usually be completed within a few months or less.
To get your new accounting business noticed by potential clients, consider creating content to educate your target market about accounting best practices. For example, if you’re specializing in accounting for manufacturers, create blogs, e-books, or videos about how they can efficiently track income and expenses or strategies to help businesses save money on taxes.
Ultimately, the best business to start depends on your skills, interests, and financial situation. If you have funds to invest in a business, consider starting a medical marijuana dispensary or a child daycare. If money is tight, consider starting a low-cost business, like massage therapy or personal training.