Last month, Sageworks analyzed which private sector industries were growing the fastest. Many of these winners are rebounding from slow or decreasing sales during the recession.
Within the “private sector,” an important subset to watch is small business, the Main Street firms with annual revenue equal to or less than $1M. Sageworks analyzed the sales dollars for this group of companies to see in which industries small companies are growing and how their growth compares to the industry’s overall performance.
For certain industries, smaller players are faring better than their larger competitors. For example, small companies in the machinery, equipment, and supplies wholesale industry are growing rapidly at 16.2 percent in the last twelve months; the overall industry is not abysmal at 11.5 percent, but the difference is certainly noteworthy.
Even more impressive is the performance of small grocery stores compared to the larger stores; “mom and pop stores” are stealing the show with 14.4 percent growth compared to 2.7 percent growth in the industry overall. During the recession many consumers were flocking to large grocery store chains that could offer more substantial discounts thanks to their purchase volume. For example, in 2009, small grocers (less than $1M in annual sales) had relatively stagnant sales, decreasing .4 percent. But, that consumer purchasing trend seems to be less prevalent now as consumers return to smaller stores.
In some cases, though, smaller businesses are under-performing compared to the wider industry. Small machine shops, for instance, grew a remarkable 12.8 percent, but the industry as a whole grew an outstanding 20.5 percent. One possible hold up for the smaller stores: they do not yet have the cash flow or capital to invest in the necessary equipment to make them as successful as the larger companies.
What other industries do you think are best suited for smaller companies?
| Percent Sales Growth for the Last Twelve Months | ||
| Industry | Small Business* | All Private Business |
| 4238 - Machinery, Equipment, & Supplies Wholesalers | 16.2% | 11.5% |
| 4451 - Grocery Stores | 14.4% | 2.7% |
| 4841 - General Freight Trucking | 12.8% | 14.0% |
| 3327 - Machine Shops | 12.8% | 20.5% |
| 5414 - Specialized Design Services (Interior, Industrial, & Graphic Design) | 10.5% | 10.6% |
| 4511 - Sporting Goods, Hobby, & Musical Instrument Stores | 9.9% | 4.9% |
| 8113 - Commercial & Industrial Machinery & Equipment (except Automotive & Electronic) Repair & Maintenance | 8.9% | 8.2% |
| 8129 - Other Personal Services (Pet Care & Parking Services) | 8.8% | 9.6% |
| 6216 - Home Health Care Services | 8.1% | 9.5% |
| 6244 - Child Day Care Services | 8.0% | 6.3% |
| *Small businesses are privately-held companies with annual revenue less than or equal to $1M. | ||
| SOURCE: Sageworks, a financial information company, 7.18.2011 | ||
Even more impressive is the performance of small grocery stores compared to the larger stores; “mom and pop stores” are stealing the show with 14.4 percent growth compared to 2.7 percent growth in the industry overall. During the recession many consumers were flocking to large grocery store chains that could offer more substantial discounts thanks to their purchase volume. For example, in 2009, small grocers (less than $1M in annual sales) had relatively stagnant sales, decreasing .4 percent. But, that consumer purchasing trend seems to be less prevalent now as consumers return to smaller stores.
In some cases, though, smaller businesses are under-performing compared to the wider industry. Small machine shops, for instance, grew a remarkable 12.8 percent, but the industry as a whole grew an outstanding 20.5 percent. One possible hold up for the smaller stores: they do not yet have the cash flow or capital to invest in the necessary equipment to make them as successful as the larger companies.
What other industries do you think are best suited for smaller companies?
Sageworks, a financial information company, collects and analyzes data on the performance of privately-held companies and provides financial report analysis.
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