30 Mar

Which Small Businesses Have Money to Spend?

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

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

Small business with lowest EBITDA, 2/16/2008 to 2/16/2009

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  1. Susan Kishner said on March 30th, 2009 at 3:12 am

    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

    Reply
  2. Amanda said on March 30th, 2009 at 10:18 am

    Interesting 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.

    Reply
  3. Anita Campbell said on March 30th, 2009 at 1:19 pm

    Thanks 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

    Reply
  4. Arthur Bland said on March 31st, 2009 at 4:40 am

    Wow. 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?

    Reply
  5. Rose Anderson said on April 1st, 2009 at 2:19 am

    IMHO 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.

    Reply
  6. Martin Lindeskog said on April 1st, 2009 at 9:53 pm

    I think that hard assets, like real estate could be an interesting market in the future.

    Reply
  7. Rose Anderson said on April 14th, 2009 at 3:12 am

    Yes Martin. It is always interesting. Imagine how good these assets are because their value never depreciate.

    Reply
  8. John Schneeberg said on May 11th, 2009 at 9:02 am

    Curious how these stats may differ by US geographic region (if any)

    Reply
  9. Jennifer Rai said on May 19th, 2009 at 3:47 pm

    Great info, thank you for sharing. Second time I have been routed to your blog when looking up topics. Nice work!

    Reply
  10. Martin Lindeskog said on June 1st, 2009 at 5:46 am

    Anita,

    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?

    Reply

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