Its All About How You Slice The Numbers
1. Accounting Services
2. Legal Services
3. Dental Services
4. Specialty Design Shops
5. Non-MD Medical Providers
The bottom five were as follows:
1. Assisted Care Facilities
2. Misc. Support Services
3. Beverage Manufacturing
4. Real Estate Services
5. Bakeries
In actuality, the article does not give the most profitable businesses. Rather, it identifies businesses with the highest average profit margin. For example, accounting may have a profit margin of 25%, but if your billing rate is 120/hr, you are way behind a doctor who is making 15.8% of $400/hr.
Additionally, many of the service industries are not scalable. A business that makes software may be able to rapidly scale 10X. Once the software is written, the marginal cost is relatively low. In contrast, it would be nearly impossible for a law firm to go 10X in a couple of years without simply adding additional partners. If the firm doubles in size by doubling the partners, there really is no profit growth, just a bigger pie divided more ways. This is an important factor for an entrepreneur - do you want 100% of a small profit or a small share of a bigger profit. The answer is different for different people, but it is an important question to ask.
Also, these may be averages, but there are plenty of people who have succeeded in the "least profitable" businesses. There are plrenty of real estate agents in Utah have done pretty well over the last five years. Likewise, the guys at XANGO and a few other Utah start ups have shown that beverage manufacturing can be pretty profitable. In fact, I will bet that XANGO outperformed any accounting or law firm in the state over the last 5 years in realized profits - not profit margin.
While the FORBES study should give entrepreneurs pause for reflection, the biggest questions are 1) do you have a good idea? 2) is there a market? and 3) can you execute? If the answer is yes to all three, the odds of being profitable are pretty good.
What I do not understand is how Xango can compete with these experienced companies in the health industry like vitabase, vitaminshoppe, vitacost and others?
Seems like if Xango can make millions on one product, these other companies should be able to make millions on several products and dominate the market.
After all the existing companies have more resources.
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In the game of business you can sell new products or you can just sell them in a different way. XANGO created a new product. While there have been copies, the first company who gets a product to market in a meaningful way has an advantage. They also used a Utah favorite of Multi-Level Marketing to motivate thousands of people to sell the product for them. It worked.
Of course, XANGO is not the only one. Google had virtually no resources but came up with a better way to run a search engine. In a few short years they have rendered other search engines nearly meaningless.
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