The 2018 economic forecast is promising, with early projections showing the United States growing 2.7 percent over the next year. In addition, BizBuySell data revealed a record number of small business transactions in 2017, with few signs of slowing down this year.
Looking to take advantage of the strong for-sale market, a growing number of entrepreneurs are turning their attention toward three rapidly growing industries: healthcare, marijuana and hospitality.
Before committing to one industry, business owners should consider the future predictions for each of these rising industries:
Demand in the healthcare industry is expected to grow. As millions of Baby Boomers continue to age, the expected demand for healthcare providers is set to dramatically increase by 2026. The Bureau of Labor Statistics estimates four million new jobs will be created by 2026, with additional growth in specific professions like home health aides, and healthcare listings have seen over a 60 percent on BizBuySell's for-sale page in the past year. Unlike other industries that disappear as trends evolve, healthcare is a lasting industry that provides services every individual will need to access as they grow older.
Legal reforms pave the way for marijuana businesses in certain states. While not yet legal everywhere, marijuana has emerged as a profitable business venture in 29 states and Washington, D.C. Despite a continued federal prohibition, the industry netted $9 billion in sales in 2017, and legal marijuana is expected to bring in around $21 billion in 2021. Cannabis-related pages on BizBuySell, for example, have received five times as many views in February of 2018 compared to one year ago, suggesting that entrepreneurs are exploring opportunities within the legal marijuana industry.
The millennial desire to travel drives the future of hospitality. As leisure demand among millennials increases, the hotel business is projected to hit $170 billion in gross bookings through the end of 2018. A recent report reveals millennials cite full-service hotels as their first choice for accommodation, despite increasing competition from online marketplaces like Airbnb. Per BizBuySell's own records, the number of views for hotels and motels has more than doubled when comparing January 2017 and January 2018.
While these industries are trending up, each comes with its own set of challenges. Hotel owners, for example, need to find ways to remain profitable during the low season if the majority of their profit is driven by vacationing millennials. A hotel in Miami might experience a surge in bookings during March and April as college kids prepare for spring break, but see a dip in reservations when millennials head back to school in September.
In healthcare, small business owners need to keep an eye on changing government regulations, like the elimination of cost-sharing reduction payments which offsets health insurance costs. Small business owners in the healthcare industry are more pessimistic than most, with 44 percent expecting that changes to government regulations will have a negative impact on their business within the next 12 months.
Federal law plagues the marijuana industry, despite the legalization of marijuana at the state level. Marijuana still remains illegal at the federal level and forces many marijuana businesses to continue operating as cash-only enterprises. This creates a number of issues for small business owners who must navigate how they will compensate employees and vendors, and even how to store and protect their earnings. Contributing to the marijuana distributor's growing list of concerns is tax rule 280E, which prevents growers from filing tax deductions and pushes effective income tax rates to as high as 90 percent.
2018 brings a new set of opportunities in several rapidly growing industries that are prime candidates for entrepreneurs. While healthcare, marijuana and hospitality all have their own sets of challenges, they also show strong potential for small business ownership. In spite of these obstacles, the entrepreneur willing to take risks and unafraid to tackle one of these three industries should be handsomely rewarded.