January 30, 2015 ColorFuzion

Privately held businesses finished strong in 2014, growing revenues and profits for the third straight year.

The U.S. stock market had a good year in 2014, but privately held companies are giving the public market a run for its money.

Private companies in the U.S. are entering 2015 with strong revenue growth and profitability, having grown sales at an annual rate of 8.6 percent in 2014, according to data from financial information company Sageworks. Looking at statements collected over the past twelve months, private companies are also seeing their highest net profit margins in three years, at 6.6 percent.

“The preliminary numbers indicate that private companies had another strong year,” says Sageworks analyst Libby Bierman.

While manufacturing and wholesale companies haven’t quite returned to their stellar growth from 2012, they continued to generate healthy sales growth, and both sectors are seeing profit margins improve from two years ago. Construction companies, on the other hand, saw their rate of growth increase in 2014.

The most recent data is consistent with performance since 2012, as private companies have been growing revenues and profits for the last 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,” says Sageworks chairman Brian Hamilton. “Slowly but surely, we’re finally seeing the broader U.S. economic indicators catch up to private company growth.”

Private companies drive over 50 percent of GDP and 65 percent of new job creation in the U.S., according to data compiled by the U.S. Small Business Administration.

In 2015, many entrepreneurial-minded Americans may be preoccupied with a different New Year’s resolution: the goal of starting their own business.

“Now may be as good of a time as ever to take the plunge into entrepreneurship,” says Sageworks analyst James Noe. “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.”

Below is 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 startup money and may have low barriers to entry, as long as you have the right domain knowledge,” says Noe.

Sageworks isolated private-company industries that are growing sales at a very healthy rate and typically require little upfront investment. “A lot of these industries can be started with a computer and an apartment,” Noe says. “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 startup operations in 2015.

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