Been looking at different sectors to diversify my trading income with a small business venture.
What kind of profit margins are realistic for small businesses across different industries? Retail vs services vs manufacturing - which ones actually deliver decent returns?
Manufacturing margins can reach 15-20% if you focus on niche markets instead of volume. Many small manufacturers succeed by targeting specialized areas.
In retail, aim for high-turnover products or subscriptions. The 3-7% margins in regular retail are accurate, but effective positioning can improve profitability.
Services can scale significantly, but be aware of the time constraints. Building a team can help you break through those limits.
Service businesses typically achieve profit margins of 15-25% due to lower overhead costs. This includes areas like consulting, repairs, and digital services. Manufacturing usually sees margins of 8-12% because of the significant costs related to equipment and inventory. Retail can be challenging, with margins often between 3-7%, unless you find a strong niche. Each sector has its own risks and rewards. Services may offer better returns but require trading time for money. Manufacturing may need a higher initial investment but scales better in the long run. Choose the sector that aligns with your capital and risk tolerance.
Services require less initial investment. Manufacturing eats into profits with high equipment costs upfront.