The Best Small Business Opportunities for 2020
Looking to launch a business this year? Welcome to our list of the best small business opportunities for 2020, chosen from across a variety of industries. To make the list, these businesses must:
- Have the potential to be profitable now and for many years in the future
- Be resilient in uncertain economic times
- Not require a Ph.D. or decades of experience. Some require trade school training, a university degree, or an apprenticeship, while others need only some prior experience and a passion for the industry
- Not demand large amounts of startup capital, but only what every startup business requires: dedication, hard work, perseverance, and a desire to succeed
Most of these are also great opportunities for home-based businesses.
None of these is a get-rich-quick scheme. If your goal in life is to become very wealthy, chances are you won't get there as a small business owner. But you'll have a chance to generate a healthy income, be your own boss, and make all the decisions. You could potentially have a more flexible lifestyle. Building something from the ground up can make starting a business very rewarding in itself.
Here are our picks for the best small business ideas based on current trends in business and demographics, in no particular order.
Fulfillment by Amazon Sales
The Fulfillment by Amazon (FBA) program allows sellers of products to market their wares through Amazon, the largest online retail platform in the world.
Amazon takes most of the headaches out of running an online retail business. In exchange for fulfillment and monthly storage fees, it handles storage, packing, shipping, returns, and customer service queries.
Sellers are responsible for shipping their products to an Amazon fulfillment center and for creating their product listings on their Amazon store. Once listings are live and sales are made, the seller begins receiving their portion of the proceeds on a weekly basis.
FBA sellers source products for their Amazon stores in a variety of ways, such as:
- From original product ideas that the seller gets manufactured to specifications
- From local or national wholesalers
- From overseas bulk discount suppliers such as Alibaba
- By arbitrage—purchasing discounted items online or from retail stores and reselling them for a profit
If you wish to start a product sales business, the Amazon FBA program is an ideal way to get into the online retail marketplace.
It's unfortunate that nowadays many neglect considering skilled trades as a career choice, in part due to the erroneous belief that trades are poorly paid. In fact, skilled tradespeople are generally well paid and enjoy satisfying careers.
In manufacturing alone, it's estimated that almost 53% of job openings left by boomers will go unfulfilled by 2028. These shortages will reach across many trades, and create a huge demand for talented workers in trades, such as:
- Carpentry and general construction
- Plumbing, pipefitting, and steamfitting
- Electrical and electronic control systems
- Heating, ventilation, air conditioning, and refrigeration (HVAC)
- Machinists and metalworkers
The nature of skilled trades makes them ideally suited for self-employment:
- Many have fairly high salaries and strong demand for experienced tradespeople in most locations.
- Most trades can be operated as home-based businesses as the work is performed at the customer job site.
- Compared to many businesses, startup capital costs are relatively low for most skilled trades, and most cannot be automated to any degree, ensuring future job security.
- Demand exists everywhere. Many experienced tradespeople take advantage of opportunities in remote or overseas locations to command much higher levels of compensation.
Why not take advantage of the demand and consider one of the skilled trades as your next business opportunity?
Software Engineering and Development
Software engineers and developers create, test, and maintain software on a variety of platforms, from mainframes to mobile devices. According to the U.S. Bureau of Labor Statistics, the demand for software developers is expected to increase by 21% through 2028, and the median pay in 2018 was $105,590 per year.
The nature of the software development industry makes it ideal for contract employment. Many software engineers start out as salaried employees and eventually become self-employed contractors. Cloud computing and ease of remote access make software development an ideal home-based business.
Other high-demand, well-paid opportunities in the information technology sector include:
- Systems analysts
- Hardware and software technicians
- Network engineers
- Security specialists
Meal Kit Sales and Delivery
Meal kit services are becoming increasingly popular with busy people who don't have the time to shop and prepare healthy meals and wish to lower their environmental footprint by reducing food waste. The meal kit industry in the U.S. is expected to reach $11.6 billion in sales by 2022.
Customers select recipes online, and meal kits with pre-chopped and measured ingredients, along with instructions for cooking and final preparation, are delivered to their homes on the chosen date. Listed information such as calorie counts allows consumers to adhere to dietary requirements.
Meal kit suppliers often avoid large wholesalers and source ingredients from local farms, creating business opportunities for small to mid-size growers, ranchers, and seafood suppliers. Opportunities may also be available for delivery-service providers to collect ingredients from producers and deliver the end product to customers' homes.
Virtual and Augmented Reality
Virtual reality (VR) and augmented reality (AR) represent a huge leap forward in immersing the user in a realistic sensory experience. Hardware and software vendors are working furiously to bring new VR products to the marketplace, and the industry is growing rapidly—the global market is expected to expand by 34.5% from 2019 to 2025.
The potential uses of virtual reality for business or pleasure are practically limitless. For example:
- 3D movies: Movies are already being developed in 360-degree VR.
- Real estate marketing: Imagine searching for a new home and being able to take an online VR walkthrough of an advertised house from the comfort of your desk chair.
- Gaming: VR is revolutionizing the gaming industry, with new VR titles being released on an almost-weekly basis.
- Team-building exercises: Shake up team building events with a group VR experience.
- Social media VR interaction: Friends will be able to interact in a virtual online space.
- Training: VR can inject a much higher degree of realism into training scenarios. Businesses such as UPS are launching new delivery driver training programs using VR.
- Meditation: VR is ideal for customized meditation
VR "escape rooms" and lounges (where groups of people get together to play VR games or go on VR adventures or solve group puzzles) are experiencing phenomenal growth. If you are tech savvy and interested in the technology, virtual reality could be the business opportunity for you.
The self-storage industry continues to be a booming business across North America, fueled by a more transient workforce, downsizing homeowners, the general trend for people to accumulate more and more possessions, and reality shows such as "Storage Wars." In some locales such as New York, demand has exceeded supply by as high as 300%.
Ironically, the trend for businesses to reduce or eliminate storefront space has also contributed to the demand for storage space. Plumbers and electricians, for example, can store tools and equipment in self-storage at a much lower cost.
Modern self-storage requires a climate-controlled environment, lighting, and security. Initial capital costs for land and building construction are high but can be easily financed from rental income, assuming there is a steady demand for storage space in your area.
Trachte Building Systems has free web-based calculators for determining the profitability of self-storage based on demand, estimated capital expenses, operating expenses, and rental income.
Remodeling contractors are hard to find, and the good ones are always busy. Home renovation is one business that always seems to do well, even in uncertain economic times. If construction is in your blood and you think you would enjoy making clients' home renovation dreams come true, why not turn it into a business?
According to HomeAdvisor's 2018 State of Home Spending Report, homeowners spend an average of $7,560 per year on home improvements. That's a lot of business for carpenters, painters, electricians, plumbers, drywallers, roofers, tilers, and other tradespeople.
The home renovations business is ideally suited to self-employed individuals for a number of reasons:
- Most renovations are performed on a contract basis.
- Startup capital investment for tools and machinery is typically much less than required for new construction.
- Business premises are not required as the work is performed at the customer location.
Remodeling contractors provide services as individuals, general, or subcontractors. They can also specialize in a particular area, such as bathroom or kitchen renovations, or niches such as restoring historic structures, improving energy efficiency, or solar installations.
To be a successful renovation contractor, you should have:
- Extensive experience in building construction, with hands-on expertise in at least one of the trades and knowledge of the others
- Good contacts within the industry, so if needed you can call in sub-contractors to get specialty work performed in a timely fashion
- Up-to-date knowledge of the local building codes and safety regulations
- Licensing and certification (if required in your jurisdiction)
- Good organizational skills
Bike Sales, Service, and Rentals
Given the health and environmental benefits, it's no wonder that bicycling has become the second most popular outdoor activity in America by frequency of participation. According to The League of American Bicyclists, U.S. bike commuting grew by 43% nationwide between 2010 and 2017.
Anything that’s healthy, popular, good for the environment, and heavily promoted by the government is a pretty good business bet. In addition to traditional pedal-powered bikes, e-bikes have become very popular. E-bikes can be pedaled without electric power or use electric power to assist, and sales are expected to rise to over 40 million units by 2023. Regular pedal bikes can even be converted to e-bikes with a special kit.
If cycling is your passion and you want to become an entrepreneur, this may be the perfect business opportunity for you.
Senior Care Services
Senior care services continue to rank as one of the best business opportunities. Demographics play a big role. The first baby boomers hit age 65 in 2011, and the entire baby boomer generation will have reached age 65 by 2030. By 2050, seniors will make up a quarter of the entire U.S. population. Unfortunately, although they are expected to live longer than previous generations, it's also expected that they'll spend more years in sickness, according to a report on senior’s health by the nonprofit United Health Foundation.
Fortunately, baby boomers are a wealthy demographic compared to previous generations. For the most part, they can afford to pay for the services necessary to maintain their lifestyles. This includes continuing to live at home in their own communities. According to research by the American Association of Retired Persons, 76% of people age 50 and over have this goal.
Many affluent seniors suffer from various health and mobility issues and are increasingly uncomfortable or unable to drive their own vehicles. They may find it difficult or impossible to take care of household chores such as landscaping, cleaning, cooking, or caring for their pets. Others travel extensively and require house sitting or pet sitting and property maintenance services. All in all, a wealth of opportunities exist for entrepreneurs who want to work with seniors. If you're not interested in starting your own business from scratch, various senior care franchise opportunities are available, too.
Think an independent coffee shop serving espressos, lattes, and cappuccinos can't compete with Starbucks? Think again. A new coffeehouse recently opened in my little town and it has been packed with customers from day one. The owner attributes his success to:
- Being in a convenient location for vehicle, cycling, and foot traffic
- Offering a pleasant atmosphere, including an outdoor patio
- Serving high-quality beverages made from small-batch specialty coffees, served by properly trained baristas
The market for gourmet, high-end specialty coffee continues to grow, making plenty of room for independent shops. The percentage of adults drinking specialty coffee daily rose from 14% to 41% between 2001 and 2017, according to the National Coffee Association. Perhaps you can find a niche in this market.
Facilities Support Services
Facilities support or management services are catch-all terms that encompass the full range of facilities services for businesses, including:
- Building maintenance
The industry is expected to grow by 13.6% from 2017 to 2024. If you have a background in maintenance or construction and good organizational skills, why not consider a business as a facilities support services coordinator?
Markets on Wheels: Food Trucks
Food trucks have expanded far beyond the confines of fast food in recent years, and they show no signs of stopping. At a growth rate of 6.8% from 2014 to 2019, food trucks are outpacing the average for the foodservice sector.
For example, enormously successful Clover Truck of Boston ran a fleet of trucks that provided a seasonally changing menu offering vegetarian meals made from mostly locally sourced, organic ingredients (and actually, they do serve french fries). It was so successful they've converted the business into all brick-and-mortar locations now.
GMonkey runs an "eco" food truck that uses biodiesel for fuel and serves delicious vegetarian fare to residents of Durham, Connecticut. If you've got a wild idea, there's probably a food truck concept to fit it.
Gain the Necessary Education, Skills, and Training
There are no shortcuts to starting your own business. You'll have to acquire any necessary academic credentials and the skills and training to take advantage of some of these opportunities. Working as an employee or apprentice in your chosen field for a while can give you the training and business skills and experience necessary to start your own business. It can also help you make a name for yourself and develop a list of clients and customers ready to patronize your new business.
Develop a Solid Business Plan
There are many reasons why having a solid business plan is a good idea. The work involved in writing your business plan, which includes examining your market, will tell you whether your business idea is feasible in your locale. A business plan is also essential if you need startup capital such as debt financing from a bank or equity financing from investors.
A great idea is just the first step in launching your business in 2020, but it's an important one. Without a winning concept, all the planning in the world won't make your business successful.