Over the past year, private companies grew sales 8.6 percent and are seeing their highest net profit margin in three years, at 6.6 percent, according to a new report from the financial information company Sageworks.
The report found that private companies are entering the New Year with strong profitability and healthy sales growth.
“We will continue to gather 2014 statements over the next few months,” said Sageworks analyst Libby Bierman in a statement. “However, the preliminary numbers indicate that private companies had another strong year.”
While manufacturing and wholesale companies haven’t quite returned to their stellar growth from 2012, they continued to grow sales at a strong rate, and both sectors are seeing profit margins improve from two years ago. Construction companies are continuing to grow sales at a strong rate while also seeing their rate of growth increase.
“2014 was a good year for private companies,” said Sageworks chairman Brian Hamilton.
He noted that private companies have been growing revenues and profits for the past three years. “Given the outsized role private companies play in the U.S. economy, we’re surprised it’s taken so long for GDP and the unemployment rate to reflect this performance,” said Hamilton. “Slowly but surely, we’re finally seeing the broader U.S. economic indicators catch up to private company growth.”
The signs are positive for entrepreneurs who wish to start their own businesses in 2015.
“Despite some recent hiccups in the stock market, the economy appears to be churning along at a positive pace, with GDP, the unemployment rate and access to capital all headed in the right direction,” said Sageworks analyst James Noe.
Sageworks has compiled a list of industries with both typically-low upfront investment and above-average revenue growth over the past year. “Not only are these industries hot, but most of them also require little in the way of start-up money and may have low barriers to entry, as long as you have the right domain knowledge,” said Noe. “A lot of these industries can be started with a computer and an apartment. Most of them do not require an official office space or a ton of upfront staffing.” This minimal upfront cost, combined with their above average revenue growth, makes these industries prime candidates for lean start-up operations in the New Year.
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