10 Businesses to Start Now to Be Rich in a Decade

Starting a business is always a gamble. Even if you have lots of money to work with and a product or service that will benefit consumers, it’s hard to say whether your business will take off. It’s even harder to predict how things will look a year from now, let alone 10 years into the future.

A lot can happen in a decade, and most businesses don’t even make it that far. Indeed, half of small businesses fail by their fifth anniversary. We sought to find out whether certain types of businesses are more likely to stand the test of time, and the answer is yes.

If you were to start a business today in one of the 10 most lucrative industries we’ve profiled below, not only is the business likely to be around a decade from now, it is also likely to grow fast and generate strong profits.

Here are some key findings from the report:

• Technology, health, and energy are the top three businesses to start now to be rich in a decade.
• Health is biting at tech’s heals, with nearly the same level of investment and expected job growth and slightly higher output.
• Within the energy sector, mining, oil, and gas are set to have the largest growth in jobs and output over the next decade.
• Surprisingly, “legacy industries,” such as retail, construction, and hospitality, made the top 10.
• Technology leads the pack primarily because this sector overlaps with other industries. Transportation tech, fintech, and health tech are all thriving sub-industries.

Keep in mind that this study is about the most lucrative industries, not the biggest industries. The focus of our study was not on the current size of an industry, but on the forecasted growth in that industry over the next several years. The 10 industries below are expected to generate high levels of job growth, revenue, and output in the next decade.

To come up with our rankings, we aggregated and analyzed data from the U.S. Bureau of Labor Statistics (BLS), market research firms, and investment firms.

Ranking: The 10 Best Businesses to Start Now to Be Rich in a Decade

1. Technology

Best sub-sectors: Cloud computing, machine learning/AI, and big data

It shouldn’t come as a surprise to see technology leading our list. Technology is at the heart of nearly everything we do and experience these days. What’s most interesting is how the tech landscape has changed over the last few years and how it’s shaping up for the next decade.

A decade ago, tech investors mainly invested money in communication tools, social networks, and software as a service. Now, the universe of companies that call themselves technology companies has grown tremendously. Every product or service can have an online distribution channel, and venture capitalists are now investing in beauty brands, fashion labels, and accessories. At the same time, tech investors are putting money into a smaller number of deals, giving rise to giant funding rounds that can make a founder wealthy almost overnight.

Small business owners that enter the tech industry should focus on making their product or service user friendly. In a world full of different gadgets and software, customers crave seamless experiences and are drawn to companies that save them time.

In our ranking, the tech industry performed well across the board. Granted, certain tech sub-sectors are showing slower projected job and output growth compared to a decade ago, but the trends across the industry are positive. At 44%, the tech sector soaks up nearly half of venture capital investment. Tech products and services also command a high profit margin of 12.4%. Output in tech is set to increase from $356 billion in 2016 to $482 billion in 2026—a 135% increase.

2. Health

Best sub-sectors: Biotechnology, health data management, and personalized health

The health sector stands to be one of the largest industries of the future. Health is quickly becoming a highly diversified industry with tons of opportunities for small business owners.

Traditional health care facilities, like hospitals and primary care practices, are facing closures and declines in profitability. Aspiring entrepreneurs should focus on convenient, personalized, and data-driven health. Spending on health care currently accounts for $3.3 trillion, a whopping 18% of the U.S. economy. Companies can cash in by figuring out new ways to manage the millions of records and data points that make up the health sector, and personalizing health care in line with other types of consumer experiences.

Ross Blankenship, an investor in more than 40 biotech and healthcare companies, says that personalized health is key to the industry’s future.

“The most likely big-time ‘success story’ in the next decade will be health care and biotech companies that personalize both drug and emergency health care treatments. Imagine a world in which you enter an emergency room and you walk into an area for immediate treatment because all of your data has been stored in the cloud and allows for rapid response and identification within seconds of entry.”

Our data shows that nearly a quarter of venture capital dollars go to the health field, second only to tech. And over the last decade, health care stocks have posted gains of 185%. The health field has strong projected job and output growth. Back in 2006, the health field accounted for 15 million jobs, but it’s expected to make up 23 million jobs in 2026.  Over that same time period, output is expected to increase 136%, even faster than the tech sector.

3. Energy

Best sub-sectors: Oil and gas, mining, fracking, and sustainable energy

The energy sector rounds out our top three best businesses to start now to be wealthy in a decade. The driving forces behind the energy industry are calls for more sustainability and efficiency, public policy issues, and increases in demand with population growth.

Nations around the world are shaping the future of the energy sector, making this an especially good opportunity for international businesses. For example, France and Norway both recently announced ambitious plans to end the use of diesel and gasoline by 2040. There are also opportunities for synergies between the energy sector and other industries. For example, scientists and engineers are exploring the possibility of “energy trading” via technology-enabled devices.

Most people think that only the renewable energy sector has a bright future, but the need for fossil fuels is still high, according to Vincent Scatena, chief marketing officer of Industrial Motor Power Corp.:

“Despite the politics behind oil and gas, the strong domestic growth in this sector is a reflection of global need. Nearly all countries agree that moving toward renewables is a necessary long-term strategy, but the fact remains that natural gas is an extremely well-suited, in-between fuel solution given its low emissions and large availability.”

Revenues in the energy sector, particularly in the sectors of mining and oil and gas extraction, are expected to grow 8.1% over the next five years. That’s higher than any other industry in our analysis. Output in the mining sub-sector will grow 133% from 2016 to 2026, and job growth is forecast to be positive, as well. The BLS tabulated 626,000 employees in 2016 for the mining sector, compared to 717,000 projected for 2026. While this doesn’t seem like a huge numeric increase, the rate of change rather than the size of the industry is most important in this analysis.

4. Media

Best sub-sectors: Gaming, virtual reality, and streaming television

Most of us think of media as something to be consumed, but it can be a great industry for business owners. Media covers a broad range of sub-sectors, from legacy media like television to newer channels (think streaming media, virtual reality, and gaming).

The media industry is going to be the site of a lot of change and convergence in the near future. For instance, consumer brands, streaming channels (e.g. HBO Go, Netflix, Hulu), and traditional cable and network TV are all battling it out to create content with the biggest audiences.

Across the board, consumers are demanding more video and interactivity, so we’ll see a big spotlight on video games. There’s a close tie-in here with our most lucrative industry—technology. As technological capabilities increase, so will video media content and virtual reality. Virtual reality and gaming are growing faster than any other form of media, surpassing even TV.

The media sector rounded out our top five industries for high output. In 2006, the output in the industry was $235 billion, compared to a projected $357 billion in 2026. The industry—thanks to the growth of VR and gaming—also accounts for nearly a 10% share of venture capital dollars. But hefty profit margins were the biggest factor that placed the media industry near the top of our list. Legacy media such as broadcast media has profit margins of 18.25%, and internet media has profit margins of 19.7%. That was higher than any other industry in our ranking.

5. Consumer Retail

Best sub-industries: Ecommerce, pop-up retailers, and personalized retail

Consumer retail rounds out the top half of our list. While our sources differ slightly in terms of how consumer retail is defined, most sources counted both online and physical retail.

Aspiring retail business owners will reap the largest gains if they can figure out a way to a mix online and brick-and-mortar retail. Brick-and-mortar commerce still accounts for more than 90% of retail revenues. And online power players, like Everlane, Casper, and Warby Parker, are adding retail locations to appeal to consumers in person. Digital channels like OmnyPay allow consumers to purchase goods directly from advertisements and through mobile scanning apps. There are simply more opportunities for people to purchase goods than ever before, and the lines between browsing and consumption will likely continue to blur over time.

If you look at revenue and profit margin, the numbers for the retail sector don’t look very strong. Net profit margins hover around 2.61%. The expected revenue growth over the next decade is just 1.20%. However, merchants cash in with volume. Output is expected to grow from $1.5 trillion in 2016 to nearly $2 trillion in 2026, which equates to 128% growth. And retail stocks have gained 187% over the last decade, making this an industry to watch.

Steve Waters, the founder and CEO of market intelligence firm SMB Intelligence, thinks the rise of retail should be attributed to the “come back” of brick-and-mortar stores:

“We have seen a dramatic shift in retail small business owner mindset in the last few years—buoyed by what I believe is an increased pride of place. The mindset has changed in many places from one of ‘escaping’ … to a dogged determination to stay and make their own community better. This shift in mindset is driving a new, highly localized retail resurgence, particularly with the large availability of retail space in many regions.”

6. Construction

Best sub-industries: Residential housing, big infrastructure, and construction tech

Construction is another legacy industry like retail that will account for a surprising level of growth going into the next decade. This industry struggled in the aftermath of the 2008 recession but has since sprung back. Don’t just imagine bulldozers and hard hats. Current policy issues and technology are changing the face of the sector.

There are opportunities for business owners in the areas of residential and commercial construction. According to a report from McKinsey, one-third of the world’s urban population—1.6 billion people—could struggle to secure safe, affordable housing by 2025. Chronic housing shortages in places like California and Seattle already contribute to a higher cost of living for millions of people.

This represents a huge opportunity for business owners in residential construction. On the commercial front, dozens of infrastructure projects are underway or planned around the country. And technology companies are also trying to make construction less costly and more efficient.

Matt Man, the founder of Indus.ai, a construction intelligence platform, believes that the industry’s future will center around increasing efficiency:

“General contractors are appointing innovation officers to propel advances in things like AI, machine learning, 4D BIM, and other tools that can move the construction industry into the next phase of life. With AI, users can understand where bottlenecks form on site, improve site safety, and even receive alerts around inefficiencies that are costing time and money. It’s only a matter of time before AI and other ‘next gen tools’ are a standard—not a luxury—in construction.”

Construction projects take a lot of manpower, which is why the construction industry has been adding jobs at a fast clip and will continue to do so. The industry employed 6.7 million people in 2016, and this is expected to increase to 7.6 million jobs in 2026. After health care, tech, and energy, the construction industry posed the highest projected output growth of 131% between 2016 and 2026. Other numbers, like stock gains and forecast revenue, aren’t as strong for construction, but the fundamentals of output and job growth make this an important industry of the future.

7. Hospitality

Best sub-industries: Hotels and sustainable food providers

The hospitality industry—which includes hotels, restaurants, and leisure—offers myriad opportunities for entrepreneurs. The hospitality industry has always evolved to keep in touch with consumers’ changing preferences. And as the spending power of millennials grows and globalization increases, business owners in the hospitality industry will again have to keep pace.

Room-sharing services like Airbnb and VRBO are the biggest threat to the hospitality industry. Airbnb now claims 4 million listings worldwide, more than the top five hotel brands combined. This is a big threat to traditional hotels, but now cities are enacting stricter laws that will level the playing field. Hoteliers are also trying to generate revenues beyond tourism by serving as a location for corporate events and meetings. With restaurants, the trend that business owners should focus on is sustainability, with more consumers opting for organic foods and vegetarian options.

Jamar Johnson, founder of Otravel.ai, a travel platform that accepts cryptocurrency as a form of payment, thinks that innovation in other areas, such as accepting payments, will drive the hospitality industry in the next decade:

“Innovation plans an increasing role in the field of service and is especially important for the tourist sector. For hotels, restaurants, airlines, and other players in the hospitality ecosystem, some of the factors which will shape the outlook of the sector are helping to create memorable consumer experiences and competitive travel options.”

The hospitality sector posted the second-highest stock sector gains in our analysis over a 10-year period—214%. It had the third-highest forecasted revenue of 2.40%. And despite competitors like Airbnb, the profit margin for hotels has stayed at a healthy 11%. Both output and job growth are expected to be on an uptrend over the next several years. Estimated output is particularly impressive at a projected 118% by 2026.

8. Finance

Best sub-industries: Fintech and cryptocurrency

Finance is one of those legacy industries that often lags behind the times in terms of innovation. However, startups now compete with traditional financial institutions like banks and brokerages. This is setting up the industry to offer some unique solutions for consumers.

The number one thing that people want from their financial institutions is ease of use. Business owners in this space should focus on making complicated financial topics approachable and easy to understand. Banks are already responding to the opportunity by teaming with startups to increase access to their products. For instance, Chase now partners with alternative loans provider OnDeck, and banks are partnering with platforms like Fundera to provide SBA loans. Some financial services providers like Square are even accepting bitcoin as a form of payment.

Cryptocurrency is a finance subsector which moves fluidly among the top-ranked industries. For instance, Johnson’s Otravel system is one of the first hospitality and transportation platforms to accept bitcoin. Plus, cryptocurrency is already being utilized in real estate for peer-to-peer property and rent transfers.

After media and entertainment, the finance industry had the highest average profit margin. Finance and insurance stocks posted a 66% gain over the last 10 years. Revenue and job growth are expected to be quite strong in this industry, and output is expected to grow from $1.7 trillion in 2016 to $2.2 trillion in 2026, a 126% increase.

9. Real Estate

Best sub-industries: Online brokerages, online design services, and real estate tech

Real estate, an industry that’s closely linked to construction, is going to make big gains over the next decade. The bulk of revenue and output in this industry comes from agents, property managers, and other people and companies providing real-estate related services. However, the BLS also includes other types of companies in this sector, such as equipment rentals and rentals of consumer goods.

After the 2008 recession, the real estate industry took a big hit, but it has recovered well and been on an upswing since then. Cities are growing faster as people concentrate in urban clusters, and that poses opportunities for companies and individuals focusing on the urban environment. As technology becomes more central to real estate, it’s replacing some of the work done by agents and other individuals. However, it’s also giving rise to other types of opportunities in the real estate sector, such as flat-fee online brokerages.

According to Leon Goldfeld, the CEO of online brokerage Yoreevo, real estate has a lot to gain in the next decade mainly because it’s been late to innovate:

“The real estate industry will experience significant growth over the next decade. This is true because it has been left behind in terms of innovation, giving it the most room for upside. Specifically, the real estate brokerage industry currently suffers from severe inefficiency. Brokerage fees have increased significantly … while the service the industry provides has lessened. Revenue, job, and output growth will be a byproduct of the success of disruptors, and the companies that benefit the most will be the ones that help the consumer the most.”

In our analysis, the real estate industry didn’t pose any outstanding wins in any one category, which is why it falls toward the bottom of the top 10. However, this sector had pretty strong numbers across the board. Profit margins in this industry are at almost 10%, and stocks gained 56% over the last decade. Output and job growth are both expected to be positive over the next decade. Output is slated to grow 126%, putting real estate on par with finance for this data point.

10. Transportation

Best sub-industries: Autonomous vehicles, electric vehicles, and smart cities

Visit any news site, and you’re likely to read a story about the future of transportation. Whether it’s the latest news about Tesla, policy battles over high-speed rail, or a story about airline delays, transportation is all around us. People are seeking ways to increase their mobility in interesting and efficient ways.

In the next decade, mobility systems will be connected, data-driven, and automated. Smart, autonomous vehicles are generating the most buzz in the industry at the moment. Business owners who participate in the autonomous vehicle industry will be part of a $3.6 trillion industry. Today, 99.9% of cars on the streets are not equipped with autonomous technology. However, over the next decade, we will start seeing more and more autonomous vehicles. And of course, along with driverless cars come changes to urban planning, delivery systems, and other related industries.

Revenue in the transportation sector is slated to grow 2.2% by 2023. While this doesn’t seem like much, just looking at this data point alone puts transportation in the top five industries. Projected job growth in transportation is about average, but where the industry does well is in terms of expected output over the next several years. In 2016, output within the transportation industry accounted for $909 billion. In 2026, the output is forecast to rise to $1.1 trillion, a 124% increase.

Our Methodology: How We Ranked the Most Lucrative Industries

We relied on a diverse set of data sources to rank the best businesses to start now to be wealthy in a decade. These consisted of government sources and sources from nonprofit organizations and market research companies. Once we gathered the data from different sources, we assigned a different weight to each data category to come up with our final ranking.

One of the biggest challenges we faced in ranking these industries is that different sources used different naming conventions for industries. The BLS uses the North American Industry Classification System (NAICS) and has a detailed breakdown of different sectors and sub-sectors. However, most of the non-government sources didn’t rely on NAICS. As an example, the BLS, relying on NAICS, includes equipment rental, consumer goods rental, and real estate in a single category. The other sources treat real estate as a standalone category.

In addition, since the BLS projections formed the basis of our rankings, we were limited to the industries that they included in their own analysis. For instance, the BLS didn’t include data on solar energy companies in their industry breakdown by employment and output, though solar is expected to be a fast-growing subsector of the energy industry in the next several years.

What also complicates the ranking is that the BLS assigns and classifies businesses with only one NAICS code according to their main business activity. This is significant since many businesses overlap multiple categories. Examples include health care tech and transportation tech There’s a tendency for business owners to classify themselves as tech to make their business more marketable. This likely inflates the numbers for the tech sector and underestimates the numbers for the other sectors.

Here are the data we collected and the weight assigned to each category:

Forecasted Revenue by Industry (25% of Score)

Source: IBISWorld US Industry Reports, 2023 projections (most recent available)

• The higher the revenues an industry is expected to produce, the more points we allocated to that industry.
• This category merited significant weighting since forecasted data on revenue was available, and revenue ties directly to an owner’s ability to profit from the industry.

Forecasted Output by Industry (25% of Score)

Source: Bureau of Labor Statistics, 2026 Projections (most recent available)

• The higher the expected output in a given industry in 2026, the more points we allocated to that industry. BLS defines output as the amount of goods or services workers are able to produce in an industry, relative to the amount of resources devoted to production.
• This category merited significant weighting in our analysis since forecasted data on output was available, and output ties directly to an owner’s ability to profit from the industry.

Venture Capital Investment by Industry (20% of Score)

Source: Martin Prosperity Institute (2016) and Statista (2018)

• This category measured the share of venture capital dollars going to each industry. The more money going to a certain industry, the more points we allotted to it.
• We allotted medium weight to this category. Forecasted data wasn’t available, but the current level of VC investment is a good predictor of long-term demand. VCs expect 10x or greater returns over a three- to five-year period, when the companies they invest in start generating cash.

Forecasted Employment by Industry (10% of Score)

Source: Bureau of Labor Statistics, 2026 Projections (most recent available)

• Faster job growth in a given industry worked out to higher points for that industry.
• This category received a slightly lower weighting in our analysis because higher job growth doesn’t always equate with bigger profits or more success in a particular industry. For example, the technology industry will add relatively few jobs over the next decade due to automation. However, output and revenue levels in the industry are high, making this overall one of the most lucrative industries for aspiring business owners.

Stock Performance by Industry (10% of Score)

Source: Fidelity Investments Sectors & Industries Data (2018)

• We looked at the 10-year historical gain or loss for stocks in different industries. The higher the gain, the more points we allocated to the industry.
• This category received a lower weight because of the volatility and recency bias of the stock market. The stock market is a good indicator of demand for a given industry, but recent changes in the market can cause big declines or increases in stock value that are not necessarily representative of what will happen over the next decade.

Net Profit Margin by Industry (10% of Score)

Source: CSIMarket Industry Research (2018)

• Net profit margin for each industry was another variable that we considered for our ranking.
• This variable received a lower weight because profit margin is not always an indicator of success. Some industries have lower profit margins but do well because of volume, or their margins are low because they are reinvesting profits back into the business.

Getting Started in One of The 10 Most Lucrative Industries

The 10 industries profiled above are all excellent choices for entrepreneurs. These industries are in high demand from consumers and investors, and projections of revenue, output, and job growth indicate these industries will keep going strong over the next decade. A business owner who ventures into one of these industries today is more likely to surpass the standard business survival rates and round out the decade with a thriving, profitable business.

That said, startups costs and challenges are also higher for popular industries. There are a lot of planning and steps that go into starting a business:

• Legal: Get appropriate business licenses or permits, choose the right business entity, and get an employer identification number.
• Financing: Get the capital you need to start your business with a business loan.
• HR: Find out how to hire your first employees and set up payroll.
• Operations and marketing: Master the day-to-day responsibilities of business ownership, such as branding and marketing your business.

To say that owning a business is hard work is certainly an understatement. But starting a business in one of these 10 industries might give you an advantage and help you along in your journey to entrepreneurial success.  

The post 10 Businesses to Start Now to Be Rich in a Decade appeared first on Fundera Ledger.

from Fundera Ledger https://www.fundera.com/blog/business-to-start-to-be-rich/