If you’re considering a new business opportunity in 2020, you should know the industries that experts have picked as the best for growth and the locations that show the most promise.
Business Insider aggregated data from numerous sources, including the U.S. Small Business Administration, to create its own rankings. They reviewed variables such as reported revenues, business size, capital requirements, and economic forecasts to create a list of the best industries in which to start a business in 2020. As for locations, the list of the best states in which to start a business in 2020 was created based on past growth, diversity, and economic trends.
The Best Locations
Deciding where to locate your business is a critical factor in the company’s success. While you may be able to sell ice to Eskimos, the demand for your chilly product in Alaska may not be that great. Instead, consider one of the top five states as a place in which to start a new business in 2020:
Washington. The Evergreen State is the fifth-best state in which to start a business, according to Business Insider. The state has approximately 609,000 small businesses and has enjoyed a 2016-2018 growth rate of 6.4%. The six-month growth forecast for Washington is predicted to be 2.15%.
California comes in fourth with more than four million small businesses. Its growth rate (2016-18) was a very healthy 6.5%, and its forecasted six-month growth rate is nearly 2% (1.93%). This state has the highest net gains in small businesses, despite its growth rate a few percentage points lower than the top pick on the list.
Utah. Third on the list is the Beehive State with its 288,000 small businesses and a 6.7% growth rate (2016-18). Utah’s six-month growth forecast is 2.7%. Significantly, the small businesses in Utah receive more SBA dollars lent per capita than any other state in the nation.
Colorado. Number 2 on the list is Colorado with more than 630,000 small businesses. The Centennial State’s 2016-2018 growth rate was 6.8%, and its six-month growth forecast for the first half of 2020 is 1.37%. Despite Colorado’s six-month growth forecast being the lowest in the rankings, it’s still ahead of inflation and the same as the total US growth rate.
Texas. The best location, according to Business Insider is the Lone Star State—Texas. There are roughly 2.7 million small businesses in the state, and the growth rate from 2016 to 2018 was a robust 9.5%, Experts predict a six-month growth forecast of 1.88% in 2020. In addition, Texas has one of the highest net gains in small businesses and is very strong for women- and minority-owned companies.
The Best Industries
When considering a new business, getting a leg up in a growing industry is critical. There’s no sense spending your efforts and money on manufacturing fax machines and VCRs, when we know that it’s not where the money is. Or the prospective customers. Lt’s review the top five industries or skills to be in demand in 2020.
Management Consulting. One of the top five industries for 2020 is management consulting, which encompasses subcategories such as strategy, operations, finance, compliance, and diversity and inclusion. Management consulting is just that: an industry where corporate experts advise businesses on operating their companies more efficiently. It’s terrific opportunity for corporate executives who want their own company and can draw on their career experience with larger organizations. The consultancy industry brought in $259 billion in 2019 and is growing at 3.4% per year, according to research from IBISWorld.
Programming. You can bet that technology will make any list of growing industries because it’s a skill set that spans all areas of business. The category of programmers and developers also includes app development, virtual reality, CyberSecurity, and software-as-service. Helping companies with specific technology needs may be very lucrative. You can add artificial intelligence (AI) to the tech industry, as the annual global AI software revenue is forecast to grow from $10.1 billion in 2018 to $126.0 billion by 2025!
Professional, Scientific, and Technical Services. Certified professionals who require specialized training and certification are the third best area for growth in 2020 and include positions such as attorneys, architects, engineers, and accountants. This category has some of the highest numbers of high-earning small businesses. And although there are some additional years of study required to become an attorney or rigorous examinations for CPAs, this industry has high employment rates (2.5% vs. 3.5% unemployed) and above-average earnings every year.
As we near the top, if you guess, technology to be on the list, you nailed it. Another safe bet would probably be healthcare. That’s because the top two spots involve this industry. Healthcare in the United States is expected to reach $6 trillion by 2027, and physician and clinical services spending is expected to increase 5.4% per year on average. The Global Wellness Institute says the industry is worth at least $4.5 trillion worldwide. The Bureau of Labor Statistics found that eight of the top 12 growing job categories in the country are health-related. The healthcare industry is expected to grow by 5.4% annually until 2022.
Private Practice Doctors and Dentists. These health professionals in private or group practices see some of the highest earnings for their size. There were more than 34,000 medical and dental practices reporting between $1 million and $5 million in revenue. Those with the right education, credentials, and experience may want to consider starting their own practice this year.
Health and Wellness Workers. The top pick in Business Insider’s list incudes home health aides, physical trainers, fitness gyms, as well as individual and family services. The demand for health services is growing swiftly, as mentioned earlier. As our population ages, Baby Boomers are requiring home health aides, wellness brands, and conveniences such as prescription home delivery.
The healthcare industry tops the list due to its large and growing demand and its resiliency against economic downturns. Plus, there are a wide range of opportunities to serve a growing need, with some specialized categories with few requirements for to entry, meaning you don’t need 12 years of post-secondary schooling to tap into this market with a great business concept.
For example, if you put cannabis (CBD) in the healthcare category, there are many opportunities for companies that grow, manufacture, and sell marijuana products. No doubt more than a few of Colorado’s 630,000 small businesses are in the legal marijuana industry where the state has generated more than $1 billion in total state revenue. The total U.S. cannabis market is projected to reach $22 billion by 2022.
When thinking about starting a new business, consider the states and industries discussed in this article for a better chance of success. Doing your due diligence will pay dividends.