The surge in new business formations in recent years has been a notable trend, driven by various factors such as low interest rates, increased digital reliance, and shifts in workforce dynamics. Despite subsequent interest rate hikes, new business formations remain at near-record highs, indicating a growing interest in entrepreneurship. However, many prospective business owners lack visibility into the potential earnings of these new ventures.
To address this gap, Flippa, the largest online marketplace for buying and selling businesses, conducted an analysis of over 25,000 profitable businesses listed on its platform over the past two years. The findings provide valuable insights into the revenue potential of different business types and locations.
According to Flippa’s data, e-commerce, service-oriented, and Software-as-a-Service (SaaS) businesses tend to generate the highest revenues compared to marketplace, mobile app, and content-based ventures. Mature e-commerce businesses, in particular, boast an average monthly revenue of $21,497, with top performers reaching $59,021 and the top 10% earning an impressive $119,141. The success of e-commerce businesses can be attributed to factors such as the shift towards online shopping, new order fulfillment methods, and advancements in digital marketing strategies.
Service-oriented and SaaS businesses also report significant revenue figures, with average monthly incomes of $13,898 and $17,252 for mature ventures, respectively. These businesses thrive on providing specialized products and services tailored to meet specific customer needs, leading to higher price points and recurring revenue streams.
In contrast, marketplace, mobile app, and content-based businesses face challenges in revenue generation due to factors like intense competition, monetization hurdles, and reliance on advertising or subscription models. These businesses may struggle to achieve consistent revenue growth compared to their e-commerce and SaaS counterparts.
The analysis also highlights the top countries and U.S. states by business revenue. Singapore emerges as a global leader in financial performance for online businesses, with average revenues of $60,552, $219,085, and $424,926 for the average, top quartile, and top 10% of mature businesses, respectively. Countries with high average revenue figures typically benefit from robust digital infrastructures, favorable regulatory environments, and high levels of tech adoption.
Within the U.S., Puerto Rico stands out as the top-performing territory for online businesses, reporting average revenues of $65,975, $209,124, and $401,644 for the average, top quartile, and top 10% of mature businesses. Puerto Rico’s attractive tax incentives and economic development programs have attracted a high concentration of high-earning businesses to the island, making it a desirable location for tech companies and entrepreneurs.
Overall, Flippa’s analysis provides valuable insights into the revenue potential of different business types and locations, helping prospective business owners make informed decisions about their entrepreneurial ventures. By understanding the earning potential of various business models and locations, entrepreneurs can better position themselves for success in the competitive online marketplace.
