5 Slow-Growing Small Business Industries
Business + Economy

5 Slow-Growing Small Business Industries

If you’re considering a job offer or looking to launch your own business, you should avoid the slowest-growing industries, most of which are related to manufacturing, wholesale and retail.

Financial information firm Sageworks recently analyzed private-company financial statements and identified 15 industries that have had either negative or minuscule sales growth over the past year. “Individuals looking for good business ideas and companies looking for strong investment opportunities may have cause to be wary of these industries,” said Sageworks analyst Libby Bierman, in a press release.

Related: 5 Fast-Growing Small Business Industries

The average privately-held company is currently growing sales at a rate of nearly 9 percent a year, while the industries in Sageworks’s list are growing sales at a rate less than 4 percent per year.

These slow-growing industries are ones to avoid:

Metal and Mineral: Sageworks cites several metal-related industries, including metal and mineral merchant wholesalers, an industry where sales fell by 1.4 percent in the 12 months ended Aug. 31 and the one that fared the worst in its list. Metalworking machinery manufacturing is another industry that you should avoid, as sales grew only 1.4 percent.

Gas Stations: Revenue barely budged for most gas stations owners in the country, as sales increased by only 0.1 percent in the 12 months ended Aug. 31. Privately-owned gas stations also typically have some of the smallest profit margins within retail, according to Sageworks.

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Grocery Stores: As more consumers are shopping for groceries at large supermarket chains or online, most independent grocery stores are struggling. Sales increased by 3.2 percent in the past 12 months.

Jewelry, luggage and leather goods stores: Increased competition in these retail categories including from consumers switching to online shopping, have resulted in poor revenue growth in the past year, when sales grew 1.7 percent.

Paper and Paper product Merchant Wholesalers: With everything going digital and an increasing number of consumers and companies switching to paperless, it’s no wonder this industry isn’t growing. Sales increased by only 2 percent in the 12 months ended Aug. 31.

To be sure, entrepreneurs should consider revenue growth in concert with other financial metrics, including cash flow, liquidity and profitability, to fully understand the health of a company and of an industry, but slow revenue growth is an early red flag of a slow-growing industry.

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