How do companies make money? How much do (can) they make? Those questions pop up in the minds of anyone who is contemplating starting a business.
New York magazine wondered, too, and sent reporters out to dig up the facts and stats for a variety of NYC-based businesses, from cab driver to drug dealer to private eye, from four-star restaurant to diner to pizza joint, from department store to quick-copy shop to sex-toy shop.
The results are fascinating and revealing — although keep in mind these are New York City numbers. Your mileage may vary. Remember, too, the figures were provided by the companies themselves. Some may be motivated to fudge the facts a little, either to make themselves look bigger — or to avoid embarrassing questions from the IRS.
A few fun examples:
- For a private eye, men are the best clients. They’re nearly always wrong when they suspect a cheating spouse, but they often won’t believe it and continue the surveillance. Women, on the other hand, are 90% correct when they suspect their husbands of straying.
- Pfizer, the giant drug manufacturer, makes average gross margins of 60% on its products.
- Goldman Sachs’ most-glamorous activity is investment banking, but that’s its least-profitable activity. Trading and investing are best, with 41.5% profit margins.
- Even at $28 per ticket, the MOMA loses money on every admission. Their cost per visitor is more like $56.
So — should you start a business in the one of these fields? If not, what other areas do you see as most promising right now? Why? Let’s discuss in the comments.