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Accounting, office leasing ranked among most profitable US industries

Accounting firms, real estate leasing brokers and auto equipment leasing are among the nation’s most profitable industries, according to an annual ranking by Sageworks.

Companies operating in these three industries are seeing average net profit margins greater than 15 percent, or more than double the private-company average.

Also well-represented on the list are companies in the professional services sector and industries related to renting/leasing and health care.

A separate ranking of the most profitable small business industries is also included in the report. That list focuses on businesses with less than $5 million in annual revenue.

When it comes to numbers, accountants are making the most
When it comes to numbers, accountants are making the most

The analysis in the Sageworks report is based on private-company financial statements filed over the 12 months ended August 27, 2015 and uses net profit margin as the metric by which each industry is ranked.

Net profit margin has been adjusted to exclude taxes and include owner compensation in excess of their market-rate salaries — adjustments commonly made to private-company financials in order to provide a more accurate picture of the companies’ operational performance.

While several industries stand out from the pack in terms of their healthy margins, the average U.S. company is also seeing strong margins and performing well overall. Private companies are growing revenues at nearly a double-digit rate year over year; this is one of the healthiest sales growth rates of the past 10 years.

Not only are private companies increasing sales, but they’re also expanding profit margins: the average private U.S. company has a net profit margin of 7.3 percent, a five-year high.

“These companies don’t typically grab the headlines,” said Sageworks analyst James Noe, “but their performance is crucial for the overall health of the U.S. economy, as privately held companies drive the bulk of GDP and job creation in the U.S.”

Noe explained that a healthy bottom line allows these businesses to expand, reinvest in their businesses, and take on extra overhead such as new hires.

“A healthy net margin for the average U.S. business is a very good thing for the U.S. economy,” he said.

This year’s ranking included many familiar industries from previous rankings.

“We update this list annually, and we almost always see certain industries at the top of the list,” said Noe. “Some businesses tend to have healthier bottom lines by the very nature of the industries that they operate in.”

A few notable industries that dropped out of the top 15 from last year: oil & gas extraction, funeral homes, and support activities for mining.

A few notable additions to the list: design services, consulting firms, and auto equipment leasing.

With a few exceptions (warehousing, support activities for mining), the list of most profitable small business industries very closely mirrors the overall ranking.

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