{"id":1111,"date":"2012-08-28T03:00:33","date_gmt":"2012-08-28T10:00:33","guid":{"rendered":"https:\/\/masonmyers.com\/?p=1111"},"modified":"2015-01-28T12:58:44","modified_gmt":"2015-01-28T20:58:44","slug":"business-profitability-chart","status":"publish","type":"post","link":"https:\/\/masonmyers.com\/business-profitability-chart\/","title":{"rendered":"Chart of Most Profitable Industries &#8212; Increase Your Odds of Business Success"},"content":{"rendered":"<h2>Profitability Differences<\/h2>\n<p>Building a business is a lot of work.\u00a0 Thus, it makes sense to build your business in an industry where the fundamental dynamics are a little more in your favor.\u00a0 Or, evolve your business to improve its fundamental characteristics by studying the best.<\/p>\n<p>This hit home for me during my strategy classes at Harvard Business School with Jan Rivkin.\u00a0 Early in our strategy class, he put up this chart that compared profitability across selected industries.\u00a0 It made it obvious that we could bang our heads against the wall for decades as an airline or car company and never achieve reasonable profits.\u00a0 It is much better to focus ones efforts where the odds of success are much greater.<\/p>\n<h3><a href=\"https:\/\/masonmyers.com\/wp-content\/uploads\/2012\/08\/profdiffchart4.png\"><img decoding=\"async\" loading=\"lazy\" class=\"aligncenter size-full wp-image-1165\" title=\"profdiffchart4\" src=\"https:\/\/masonmyers.com\/wp-content\/uploads\/2012\/08\/profdiffchart4.png\" alt=\"\" width=\"640\" height=\"443\" srcset=\"https:\/\/masonmyers.com\/wp-content\/uploads\/2012\/08\/profdiffchart4.png 640w, https:\/\/masonmyers.com\/wp-content\/uploads\/2012\/08\/profdiffchart4-300x207.png 300w, https:\/\/masonmyers.com\/wp-content\/uploads\/2012\/08\/profdiffchart4-150x103.png 150w\" sizes=\"(max-width: 640px) 100vw, 640px\" \/><\/a><\/h3>\n<h4>A Few Observations from the Chart:<\/h4>\n<ul>\n<li>Since the data was through 1995, I imagine that Internet based business and Software-as-a-Service (SaaS) business models are probably even better than prepackaged software.<\/li>\n<li>With pharmaceuticals being the only industry in this chart over 25%, I imagine that their profitability levels have declined since the mid-1990s&#8217;.<\/li>\n<li>I was surprised that restaurants are in the middle of the pack because conventional wisdom is that restaurants are difficult businesses.<\/li>\n<li>To me, it reinforces the idea that gross margins are critically important.\u00a0 While I am sure Walmart probably has strong profit margins, the chart makes it appear that products\/services with high gross margins make it much easier to achieve higher profit margins.\u00a0 Sort of obvious, but worth stating.<\/li>\n<\/ul>\n<p>Because we all only have so many hours to focus on business and everything requires dedication and intense effort, focusing your activity where the odds are best for success is an idea I have heard expressed in similar ways over the years.\u00a0 Venture capitalists can be heard to say that they prefer companies focused on a big problem in a large and growing market.\u00a0 Some vc&#8217;s think the size of the market is the most critical piece of assessing a business (part of the never-ending debate of whether the team or the market is more important).\u00a0 In buying or <a title=\"Greybull Stewardship Accredited Investors, Limited Partners | Financial Return On Investment\" href=\"https:\/\/greybullstewardship.com\/investor-partners\/\">investing in businesses<\/a>, it can be heard that it is as much work to buy a small business as a large business, so you might was well focus on buying larger businesses.<\/p>\n<p>How does your industry compare to the chart?\u00a0 How does your business compare to its industry?\u00a0 Are there things that you can do to improve your company to make it more like the industries that have higher profitability?<\/p>\n<p><strong>Related Posts<\/strong><\/p>\n<ul>\n<li><a title=\"Economies of Scale \u2014 Fundamentals Through Graphics\" href=\"https:\/\/masonmyers.com\/economies-of-scale-business-fundamentals\/\">Chart on Economies of Scale<\/a>, August 14, 2012<\/li>\n<li><a title=\"Elusive Moats of Competitive Advantage \u2014 Definition by Morningstar\" href=\"https:\/\/masonmyers.com\/competitive-advantage-morningstar-moat\/\">Elusive Moats of Competitive Advantage<\/a>, April 10, 2012<\/li>\n<li><a title=\"Assessing the Width of Your Business Moat (To Sell or Not To Sell)\" href=\"https:\/\/masonmyers.com\/business-moat-assess-width\/\">Assessing the Width of Your Business Moat (To Sell or Not To Sell, a series)<\/a>, May 14, 2012<\/li>\n<li><a title=\"Coca-Cola vs. Wine (Perfect Business, Financially Speaking)\" href=\"https:\/\/masonmyers.com\/perfect-financial-business-coca-cola\/\">Coca Cola vs Wine (Perfect Business, Financially Speaking)<\/a>, May 8, 2012<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<div class=\"postmeta_wrapper\">\n<div class=\"postmeta classifications small\"><span class=\"post_categories\">Categories:<a href=\"https:\/\/masonmyers.com\/category\/charts-graphs\/\" rel=\"category tag\">Charts &amp; Graphs<\/a>, <a href=\"https:\/\/masonmyers.com\/category\/competitive-advantage-and-differentiation\/\" rel=\"category tag\">Competitive Advantage &amp; Differentiation<\/a>, <a href=\"https:\/\/masonmyers.com\/category\/investment-and-business-models\/\" rel=\"category tag\">Investment &amp; Business Models<\/a><\/span><br \/><span class=\"post_tags\">Tags:<a href=\"https:\/\/masonmyers.com\/tag\/business-strategy\/\" rel=\"tag\">Business Strategy<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/buy-a-business\/\" rel=\"tag\">Buy a Business<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/buying-a-business\/\" rel=\"tag\">Buying a Business<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/competitive-advantage\/\" rel=\"tag\">Competitive Advantage<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/financial-results\/\" rel=\"tag\">Financial Results<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/financial-strategy\/\" rel=\"tag\">Financial Strategy<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/harvard-business-school\/\" rel=\"tag\">Harvard Business School<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/moat\/\" rel=\"tag\">Moat<\/a>, <a href=\"https:\/\/masonmyers.com\/tag\/profits\/\" rel=\"tag\">Profits<\/a><br \/><\/span><\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Profitability Differences Building a business is a lot of work.\u00a0 Thus, it makes sense to build your business in an industry where the fundamental dynamics are a little more in your favor.\u00a0 Or, evolve your business to improve its fundamental characteristics by studying the best.&hellip; <a class=\"more-link\" href=\"https:\/\/masonmyers.com\/business-profitability-chart\/\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[163,5,18],"tags":[89,131,57,38,44,84,68,39,51],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Business Models, Profitability | Competitive Advantage | Mason Myers Business Blog for Owners, Investors<\/title>\n<meta name=\"description\" content=\"Business owner &amp; investor Mason Myers writes about successful businesses models, profitability, and competitive advantage on his business blog.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/masonmyers.com\/business-profitability-chart\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Business Models, Profitability | Competitive Advantage | Mason Myers Business Blog for Owners, Investors\" \/>\n<meta name=\"twitter:description\" content=\"Business owner &amp; investor Mason Myers writes about successful businesses models, profitability, and competitive advantage on his business blog.\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/masonmyers.com\/wp-content\/uploads\/2012\/08\/profdiffchart4.png\" \/>\n<meta name=\"twitter:creator\" content=\"@masonlmyers\" \/>\n<meta name=\"twitter:site\" content=\"@masonlmyers\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Mason Myers\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/masonmyers.com\/business-profitability-chart\/\",\"url\":\"https:\/\/masonmyers.com\/business-profitability-chart\/\",\"name\":\"Business Models, Profitability | Competitive Advantage | Mason Myers Business Blog for Owners, Investors\",\"isPartOf\":{\"@id\":\"https:\/\/masonmyers.com\/#website\"},\"datePublished\":\"2012-08-28T10:00:33+00:00\",\"dateModified\":\"2015-01-28T20:58:44+00:00\",\"author\":{\"@id\":\"https:\/\/masonmyers.com\/#\/schema\/person\/efbf4e28b9f46a9b2ae855d03197ab3f\"},\"description\":\"Business owner & investor Mason Myers writes about successful businesses models, profitability, and competitive advantage on his business blog.\",\"breadcrumb\":{\"@id\":\"https:\/\/masonmyers.com\/business-profitability-chart\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/masonmyers.com\/business-profitability-chart\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/masonmyers.com\/business-profitability-chart\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/masonmyers.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Chart of Most Profitable Industries &#8212; Increase Your Odds of Business Success\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/masonmyers.com\/#website\",\"url\":\"https:\/\/masonmyers.com\/\",\"name\":\"Mason Myers Blog\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/masonmyers.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/masonmyers.com\/#\/schema\/person\/efbf4e28b9f46a9b2ae855d03197ab3f\",\"name\":\"Mason Myers\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/masonmyers.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/87932f33f3b27a6574032d65b17644d1?s=96&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/87932f33f3b27a6574032d65b17644d1?s=96&r=g\",\"caption\":\"Mason Myers\"},\"url\":\"https:\/\/masonmyers.com\/author\/mason-myers\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Business Models, Profitability | Competitive Advantage | Mason Myers Business Blog for Owners, Investors","description":"Business owner & investor Mason Myers writes about successful businesses models, profitability, and competitive advantage on his business blog.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/masonmyers.com\/business-profitability-chart\/","twitter_card":"summary_large_image","twitter_title":"Business Models, Profitability | Competitive Advantage | Mason Myers Business Blog for Owners, Investors","twitter_description":"Business owner & investor Mason Myers writes about successful businesses models, profitability, and competitive advantage on his business blog.","twitter_image":"https:\/\/masonmyers.com\/wp-content\/uploads\/2012\/08\/profdiffchart4.png","twitter_creator":"@masonlmyers","twitter_site":"@masonlmyers","twitter_misc":{"Written by":"Mason Myers","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/masonmyers.com\/business-profitability-chart\/","url":"https:\/\/masonmyers.com\/business-profitability-chart\/","name":"Business Models, Profitability | Competitive Advantage | Mason Myers Business Blog for Owners, Investors","isPartOf":{"@id":"https:\/\/masonmyers.com\/#website"},"datePublished":"2012-08-28T10:00:33+00:00","dateModified":"2015-01-28T20:58:44+00:00","author":{"@id":"https:\/\/masonmyers.com\/#\/schema\/person\/efbf4e28b9f46a9b2ae855d03197ab3f"},"description":"Business owner & investor Mason Myers writes about successful businesses models, profitability, and competitive advantage on his business blog.","breadcrumb":{"@id":"https:\/\/masonmyers.com\/business-profitability-chart\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/masonmyers.com\/business-profitability-chart\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/masonmyers.com\/business-profitability-chart\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/masonmyers.com\/"},{"@type":"ListItem","position":2,"name":"Chart of Most Profitable Industries &#8212; Increase Your Odds of Business Success"}]},{"@type":"WebSite","@id":"https:\/\/masonmyers.com\/#website","url":"https:\/\/masonmyers.com\/","name":"Mason Myers Blog","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/masonmyers.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/masonmyers.com\/#\/schema\/person\/efbf4e28b9f46a9b2ae855d03197ab3f","name":"Mason Myers","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/masonmyers.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/87932f33f3b27a6574032d65b17644d1?s=96&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/87932f33f3b27a6574032d65b17644d1?s=96&r=g","caption":"Mason Myers"},"url":"https:\/\/masonmyers.com\/author\/mason-myers\/"}]}},"_links":{"self":[{"href":"https:\/\/masonmyers.com\/wp-json\/wp\/v2\/posts\/1111"}],"collection":[{"href":"https:\/\/masonmyers.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/masonmyers.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/masonmyers.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/masonmyers.com\/wp-json\/wp\/v2\/comments?post=1111"}],"version-history":[{"count":29,"href":"https:\/\/masonmyers.com\/wp-json\/wp\/v2\/posts\/1111\/revisions"}],"predecessor-version":[{"id":1145,"href":"https:\/\/masonmyers.com\/wp-json\/wp\/v2\/posts\/1111\/revisions\/1145"}],"wp:attachment":[{"href":"https:\/\/masonmyers.com\/wp-json\/wp\/v2\/media?parent=1111"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/masonmyers.com\/wp-json\/wp\/v2\/categories?post=1111"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/masonmyers.com\/wp-json\/wp\/v2\/tags?post=1111"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}