TOP 10 most profitable businesses in America… maybe they’re not what you thought (INFOGRAPHIC)
Kevin Sheetz, the CEO and co-founder of Powerlytics, a company focused on using Big Data to deliver “trusted, actionable financial intelligence to manage risk and find growth opportunities”, put forth a new analysis on industry profitability and delivered a straightforward infographic showing the top 10 results… and these results might surprise you.
He describes why he wasn’t satisfied with older reports, particularly reports that either were fraught with bias or didn’t mine the deepest areas where small data samples might not seem worth harvesting, yet collectively may add up in influence to tell a more honest story. Here’s how he describes his reasoning behind doubting previous studies, as posted on his blog:
The problem lies in the data—its collection and analysis. Until our study, data on industry profitability was collected two ways, each of which is systemically flawed. First, there are the self-reported surveys where companies are polled by associations and outside vendors. But self-reporting has proven to be notoriously inaccurate. Second, there are independent, third parties to whom the data is submitted for compilation. In these cases, you have a number of biases involving who choose to (and not to) submit data, as well as the inconsistency in the manner in which the data is submitted, which often makes it difficult to compare. In addition, the sample of an individual industry may be too small, rendering any conclusions effectively meaningless.
He continues to explain the process the Powerlytics Market Intelligence Platform uses, digging down into publicly available data from all of the 27 million businesses that comprise the American economy.
From there, our technology is able to analyze and uncover millions of obscure connections, coming from disparate data sources, in order to provide deep insights into the fundamental workings of the U.S. economy, both from a business and a consumer perspective.
He annotates the report with the following:
For this analysis, Powerlytics excluded financial services and real estate related companies. Profitability was defined as the ratio of EBITDA to sales for 2013. Electrical equipment, appliance and component manufacturing topped the list, with oil and gas drilling and related services and oil and gas extraction coming in close behind.
Although he doesn’t go into depth of the data cleaning and preparation process, nor does he divulge the particular series of statistical analysis applied to come up with the results, his background of over 17 years at KPMG in Knowledge Management and Risk Management long before Big Data came around would probably indicate he has experimented with methods to discover answers in this area enough to arrive at what we expect to be accurate results.
Powerlytics’ other co-founder (and Chief Research Officer), Jose Plehn-Dujowich, spend the last 10 years engaged in academic research and consulting with public and private entities on applications using the same datasets around which Powerlytics has been founded. Jose has a B.S. in management science, information technology from MIT Sloan School of Management, a B.S. in economics from MIT and a Ph.D. in economics from the University of Chicago.
Considering that Powerlytics is in the business of supporting a highly competitive and historically close-mouthed industry, it’s natural that they wouldn’t disclose all of their own secret sauce in arriving at their results. It’s still a valuable insight to realize that the wider and more deeply we can collect, gather and analyze information, even from smaller and formerly “insignificant” samples, the closer we come to better understanding what is really happening in the world.
The Top 10:
Here are the Top Ten Most Profitable Businesses in America, as reported by Powerlytics, with their NAIC3 Descriptions and codes:
- Electrical Equipment, Appliance, and Component Manufacturing – 335
- Support activities for Mining – 213
- Oil and Gas Extraction – 211
- Motion Picture and Sound Recording Industries – 512
- Telecommunication – 517
- Broadcasting (except Internet)* – 515
- Other Information Services – 519
- Social Assistance – 624
- Accommodation – 721
- Pipeline Transportation – 486
*typically referred to as “Mainstream Media”
Not shown on this chart, the lowest (tied) score went to:
- Construction of Buildings
- Motor Vehicle and Parts Dealers
- Gasoline Stations
You can read a more detailed report with NAIC3 codes rating 76 distinct industries on the attached file.