Which Small Businesses Have Money to Spend?
- 16 Comments
- March 30th, 2009
As the economy recovers, and pent up demand for goods and services starts taking off, you’re going to want to know which small businesses have money to spend.
Obvious targets are the small businesses with the highest profits. Those businesses typically have the highest free cash flows, too. In other words, they have money to spend.
According to Sageworks Inc., here are the 20 industries with the highest EBITDA (earnings before interest, taxes, depreciation and amortization) in the past 12 months, for the period starting 2/16/2008 and ending 2/16/2009. (EBITDA is a proxy for cash flow from operations.)
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Small business with highest EBITDA, 2/16/2008 to 2/16/2009
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And which businesses have the least spending cushion after the long recession? Here are the 20 industries with the lowest EBITDA:
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Small business with lowest EBITDA, 2/16/2008 to 2/16/2009
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A friend of mine just emailed me one of your articles from a while back. I read that one a few more. Really enjoy your blog. Thanks
ReplyInteresting stats. I’m shocked that grocery stores are amongst the lowest. With food being a necessity, these numbers must be the result of families severely cutting back. Somehow I just thought that grocery cutbacks weren’t quite that severe.
ReplyThanks Susan!
Amanda, I think the low numbers for grocery stores simply reflect that there are narrowly thin profit margins traditionally in grocery stores. I’ve always heard that they have a lot of inventory waste (expired produce and bakery goods, etc.) and high operating costs with high utilities, and so forth. So it may not necessarily be that consumers have cut back, just that grocery stores don’t have a lot of cushion in their operating budgets, in general.
– Anita
ReplyWow. Real Estates again. What do you think Anita? Does a real estate business a good choice to start your business based on the data you presented above?
ReplyIMHO Arthur, I think they really are. Consider also the other fact that these assets never depreciate, do they? And yes they are, if and only if, you have the capital.
ReplyI think that hard assets, like real estate could be an interesting market in the future.
ReplyYes Martin. It is always interesting. Imagine how good these assets are because their value never depreciate.
ReplyCurious how these stats may differ by US geographic region (if any)
ReplyGreat info, thank you for sharing. Second time I have been routed to your blog when looking up topics. Nice work!
ReplyAnita,
Have you seen any changes in the trends since last time they checked? It is soon “half time” and more data has been collected. Any industry that is sticking out? Do you see improvements in some industries?
ReplyVery interesting info, Anita. It still holds true, however, that all small businesses have the same fundamental issues – owners are not running their businesses like a true entrepreneur from the strategic level.
Those selling to small businesses can keep this constant need into account as they seek to fill needs.
Great new site, BTW!
ReplyThis means that the business has a good cash flow and very liquid to spend the expenses for the business. A good business has less liabilities. Thanks!
ReplyVery cool, thanks for giving us something to set our sights on. Question: We are attempting to market to small businesses by creating custom branding concepts for them via a conversion app. The app is housed here:
http://mindflashad.com/branding-concept-quiz-design/
The idea is to give people branding ideas before pitching them. Do you feel this is a good approach? We would like a professional’s take on this tactic of converting via app as opposed to form.
Reply@Anita Campbell: True Anita, Grocery has certainly fewer margins, which can only be increased if the buying is in bulk.
ReplyWith small businesses the funny thing is the companies with the higher margins generally have the lower volumes. What does that mean? It means that they may be bringing in more per sale but their overall liquid funds may not be that great. The art here is finding the companies that maintain both a high margin while accommodating larger volumes. If anyone figures out how to find this sweet spot let us know
TJ Mollahan
ReplyShyEntrepreneur.com
Personal care services is a good option for investment, it the basic requirement and also have a good margin. And real state business is can be done as freelancing bases.
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