Construction, B2B services and farming drive double-digit growth
Last fall, Sageworks, a Raleigh, N.C.-based financial-information company, released its list of the 10 fastest-growing small business industries. The list highlights double-digit growth sectors in the last year for companies with annual sales below $5 million. The top 10 industries are:
1. Oilseed and grain farming – wheat, corn, soybeans (19.5% growth)
2. Building finishing contractors – drywall, painting, flooring (15%)
3. Real estate agents and brokers offices (14.6%)
4. Architectural, engineering and related services (14.2%)
5. Management, scientific and technical consulting services (13.9%)
6. Computer systems design and related services (13.4%)
7. Other fabricated metal product manufacturing – metal valves, ball bearings (11.9%)
8. Utility system construction – water, sewer, oil, gas, electricity (11.3%)
9. Specialty food stores (11%)
10. Foundation, structure and building exterior contractors – concrete, roofing, siding (10.6%)
Three larger industry trends can explain these growth spurts.
1. Construction Makes a Comeback
Six of the fastest-growing sectors are in construction-related areas, showing just how important the comeback in construction has been for small businesses. The delay in growth merely made the gains more pronounced.
“There has been a huge rebound—albeit from historically low levels—in both single- and multifamily residential construction,” says Kenneth Simonson, chief economist at the Associated General Contractors of America in Arlington, Va. Some growth areas have multiple influences. Utility construction growth, for instance, could be associated with new housing and fracking alike, Simonson says.
2. B2B Services Expand
The recession has given way to an increase in sales growth for some industries related to B2B services, including high growth in consulting and computer services, says Sageworks analyst Libby Bierman. Numerous factors account for this—starting with high unemployment and low startup costs that are causing more entrepreneurs to branch out on their own. “We’ve been reporting slowing sales growth in private companies, but the top 10 fastest-growing small business sectors are still achieving up to double-digit growth rates, which can be hard to attain,” she adds.
Oilseed and grain farming saw 19.5% growth in the past year.
3. Crops Grow
The biggest winners? Soybeans and wheat, which posted nearly 20 percent sales growth. “The U.S. saw a pretty significant drought in the last year,” says Bierman, which may have led farmers to increase their prices or less demand from competitors. But recent developments in biotech-enhanced seeds could be aiding the expansion. Market research company MarketsandMarkets recently reported that the global oilseed and grain seed markets are projected to grow from $33.3 billion in 2012 to $64.1 billion by 2018.