With the U.S. economy's slow growth in recent quarters, it may seem like nobody's seeing much business, least of all small firms. But Sageworks, a financial information company, recently found several industries in which small businesses (annual sales below $5 million) have grown at double-digit rates over the past 12 months.
Some of the industries have made Sageworks' list of fastest-growing industries before. Management consulting services and computer systems design companies are often involved in other firms' efforts to improve strategy or transform their technology in order to boost efficiency or sales, so it's not surprising that their sales have increased, said Sageworks analyst Libby Bierman. "And since they're in the service business, these types of small companies don't have to invest in a lot of equipment or hire lots of employees before they can start bringing in revenue," she said.
Others make sense when you look around many neighborhoods. Specialty food stores (think olive oil shops and organic food stores) have grown 11 percent.
One industry that may seem less than glamorous has been the rock star of small business growth of late. Farmers of oilseeds and grains, such as corn, soybeans and wheat, posted nearly 20 percent sales growth in the last 12 months, according to Sageworks' data.
"It might be attributed to price inflation that resulted from the 2012 drought or just increased demand across the board for their goods," Bierman said. Corn and wheat prices both hit multi-year highs in the July-August 2012 timeframe as the U.S. faced its second year of drought, but prices have since fallen.
As Sageworks has seen in some of its other research, privately held construction companies have benefited from the improvement in the housing market over the past year or so. Six of the 10 fastest growing industries among small businesses are tied to construction. "Contractors, real estate agents, architecture firms and even the manufacturers that supply those companies all fit into the supply chain or process of building," Bierman said. "When hammers started swinging again, these industries benefited, and their top lines show that positive impact."
Bierman noted that Sageworks recently reported privately held companies overall are growing sales more slowly than in the previous two years, with annual growth rates at less than 4 percent so far this year (vs. double-digit rates in 2012 and 2011).
"Since we are seeing a general slowdown in private-company revenues, this list of fastest growing, small business industries is a shining spot in the privately held portion of the economy," Bierman said. "Double-digit growth can be hard to attain."
Sageworks, a financial information company, collects and analyzes data on the performance of privately held companies and provides industry benchmarking data.