Aspiring business owners and investors are always looking for industries that have the greatest potential for profit. While there are no guarantees that any one business will succeed or fail, we can turn to industry trends to find those businesses that tend to have higher profit margins and greater owner earnings. To that end, we dug into revenue and earnings data for the 100 most common types of businesses bought and sold on BizBuySell to find the industries that tend to generate the greatest profits.
The tables below summarize profitability metrics based on financials of businesses sold on BizBuySell over the past five years (from 2020 through 2024), as reported by the broker managing the sale. Business owners and brokers typically include revenue and discretionary earnings, or "cash flow", when listing businesses for sale and submitting final comp data after the sale closes. As such, we use discretionary earnings to calculate profitability across different industries. This differs from net income in that discretionary earnings includes the owner's compensation and personal expenses, so the referenced profit margins represent the total pre-tax cash value the business owner receives from the operation.
Rather than just listing average values, we have carved out three distinct bounds that represent the typical range of profits earned by each type of business. "Low" refers to the lower quartile of earnings or profit margins, below which the bottom 25% of businesses fall. "High" refers to the upper quartile, above which the top 25% of businesses fall. And median refers to the middle of the range. These three values convey a reasonable expected range for each given industry.
Across the broadest sectors, service businesses have remained at the top in terms of profit margins over the past five years, followed by manufacturing. Interestingly, retail businesses have seen improving profit margins despite increasing inflation, while restaurants have been getting squeezed as they struggle with rising food costs and increasingly price-sensitive customers.
In terms of owner profit margins, vending machine businesses top the list at a median of 53%. This is not a surprising outcome, as vending machine businesses have very little overhead, once the locations are running. Accounting businesses and insurance agencies come in second and third, also not surprising since financial services businesses tend to have high operating profits thanks to their sophisticated services, scalability, and low operating costs.
Profit margin is an important metric to consider, but on its own it doesn't give potential owners a sense of volume. For example, vending machine businesses have very high profit margins, but they also tend to be very small in scale, with annual revenues under $100k being typical.
Another, potentially better way to look at profitability is in absolute values. Below, we have ranked businesses by median annual owner earnings. The businesses near the top are vastly different from the list above, with many manufacturing, automotive, and construction related businesses, both of which drive a lot more revenue volume, and therefore owner profit, even though they tend to operate at lower profit margins.
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Which popular businesses did not make a list? Below we've listed - in order of popularity on BizBuySell - the top ten types of businesses that were not included in one of the two ranked lists above, along with owner profit in absolute values and as a percentage of revenue.
| Most Commonly Sold Businesses Missing from Top Profit Generators | ||||||
| Low | Median | High | ||||
| Business | Owner Profit $ | % | Owner Profit $ | % | Owner Profit $ | % |
| Restaurants | $75,000 | 13.2% | $120,000 | 18.4% | $201,657 | 24.7% |
| Service Routes | $75,937 | 15.3% | $115,232 | 18.2% | $235,387 | 26.2% |
| Liquor Stores | $99,900 | 10.3% | $150,000 | 14.3% | $251,000 | 19.9% |
| Coffee Shops & Cafes | $50,000 | 15.4% | $75,000 | 21.4% | $118,532 | 28.8% |
| Bars, Pubs & Taverns | $79,500 | 12.8% | $128,581 | 18.0% | $225,000 | 23.8% |
| Convenience Stores | $70,000 | 11.2% | $111,000 | 16.8% | $180,000 | 24.5% |
| Bakeries | $69,700 | 14.9% | $109,825 | 20.5% | $191,851 | 27.4% |
| Clothing & Accessory Stores | $59,970 | 16.2% | $104,334 | 21.5% | $200,000 | 29.0% |
| Flower Shops | $68,622 | 16.9% | $105,753 | 21.5% | $182,381 | 29.2% |
| Food Product Manufacturers | $87,897 | 15.6% | $158,000 | 21.6% | $318,007 | 33.3% |
| Top ten businesses by number of businesses sold AND not represented in top 50 by profit margins or owner profits. | ||||||
Profitability depends on a wide range of operational and market factors, but generally, the businesses that top our lists have one or more of the following characteristics:
Finally, irrespective of the industry, tight management and operational focus can make any type of business profitable. While data such as included in this report can surface important trends that are worth considering, it should not limit the scope of a business search. Every industry has stand-out businesses that buck the industry trend, so savvy business buyers will look beyond industry expectations to find exceptional businesses that suit their own experience or preferences.
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