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What's the Best Business to Go into?

It's common knowledge that Americans spend more money than anyone on their health. What's not so well known is that healthcare companies are more likely than any other kind of business to be profitable. That's according to a tabulation of sole proprietorship income reports by BizStats, which showed that of 18 broad industry categories, businesses providing healthcare and social assistance led all comers with 83.19 percent reporting profits for 2007 (the most recent year in which data are available).

Just slightly behind healthcare were construction firms, of which 82.05 percent finished the year in the black. Of course, there are profits and then there are profits. With average net profits of 20.59 percent construction hardly provides the fattest margins around. Healthcare is quite a bit better at 44.84 percent. But to find the industry with the most robust profits, you have to go to school.

Educational services sole proprietors reported honor roll net profits of 51.29 percent, well ahead of any other industry. Along with a better-than-average 78.19 percent of firms reporting profits, educational services' financial performance indicates the field might be worth a look.

Sometimes you don't have to choose exactly the right business, as long as you don't choose exactly the wrong business. From the standpoint of the percentage of sole proprietors reporting profits, that industry appears to be retail. Just 52.01 percent of retailers -- a bare majority -- reported turning a profit during 2007.

Retailers also had the second-worst net profit, at a razor-thin 11.47 percent. The absolute-worst net profit medal goes to sole proprietors in the accommodations-food services-drinking places category. Although a fairly healthy 64 percent of businesses in the industry reported profits, they managed only an anemic average net profit of 11.37 percent.

Every entrepreneur is different, and every business is different. Retail, for instance, includes food and beverage stores, of which a healthy 70.57 percent reported profits. And not every healthcare business is a slam dunk. When it comes to podiatrists, for instance, a relatively pedestrian 71.12 percent reported profits.

So what's the overall best business? For my money, it's hospitals. With 99.97 percent of hospitals reporting profits, your chance of losing money if you own a hospital is almost nonexistent. And, with a net profit of 54.85 percent, hospital ownership pairs remarkably low risk with equally outstanding profitability.

BizStats has a vast amount of financial detail to drill down into. You can find anything from the average cost of sales for durable goods wholesalers -- 77.89 percent of sales -- to what trucking companies spend on wages -- 16.19 percent. But one of the most interesting items buried in that mound is the fact that the businesses where Americans spend their health dollars are more profitable than those in any other industry.

Mark Henricks has reported on business, technology and other topics for The New York Times, The Wall Street Journal, Entrepreneur, and other leading publications long enough to lay somewhat legitimate claim to being The Article Authority. Follow him on Twitter @bizmyths.

Image courtesy of Flickr user CarbonNYC, CC2.0

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