The Swyft Filings State of the Industry Report provides an overview of business trends by looking at the number of newly-created businesses by industry type between 2016 and 2017. Each year, Swyft Filings helps tens of thousands of companies with filing and compliance in all 50 states. By combining proprietary data and external industry factors, Swyft Filings found two major trends currently driving change and strategy moving into 2018: empowered consumers and technology shifts.
Overwhelmingly, the hot trends of 2017 highlight the importance of curating and individualizing services to better meet the growing demand of the informed consumer. While some industries are thriving in providing consumers with a unique experience, others are less primed to keep pace.
In this report, you'll find a breakdown the growth rank and volume rank of each industry tracked in the Swyft database. And on the right side of this page, the State of Swyft State Report, which monitors the year-over-year growth of 18 major industries in all 50 U.S. states, is available for download.
Growth Rank:#11 (33.9%) Volume Rank:#17
The accommodations industry, which includes traditional hotels and vacation rental companies, saw 33.9% growth in new businesses formed in 2017 compared to 2016, according to the Swyft Filings database. Though several new trends, like using mobile apps for reservations, have quickly disrupted accommodation and hospitality businesses, the industry hasn't seen major growth. In comparison to other U.S. industries, it ranked last in overall volume of new businesses formed last year.As home vacation rentals become more widely-accepted amongst travelers, due to the popularity of companies like Airbnb and VRBO, they're taking a more substantial portion of the traditional market and providing new challenges for hotels and bed and breakfasts. A 2016 report from CBRE Hotels shows that Airbnb accounted for over 9% of reservations in 10 U.S. markets. According to this report, Airbnb also nearly doubled its units annually, whereas hotels saw a mere 1.1% growth rate.Many short-term renters are forming LLCs for liability protection and possible tax savings.
Growth Rank:#1 (72.3%) Volume Rank:#3
The number of construction businesses formed in 2017 grew by 72.3% compared to 2016, making construction the fastest growing industry in the U.S. The construction growth rate is nearly twice the total growth when looking across all industries in Swyft’s database (42.1%). Additionally, it moved from the fourth largest to third largest industry in total number of new business filings, trailing behind only the retail and consulting industries in total volume.Steady growth has inspired confidence within the industry. According to USG + the U.S. Chamber’s Commercial Construction Index, 95% of contractors expect revenue to stay the same or increase in the next 12 months. But even while the industry is growing, construction companies face a substantial labor problem. Many business owners are seeing a generational shift in interest in construction work. According to a 2017 report by the Associated General Contractors of America, construction industry employment “would be rising in more states if contractors could find enough qualified workers.”Construction companies are finding themselves in competition for young, skilled labor with emerging industries, like computer science, that require a college degree. And an influx of young people are choosing a college education over immediately joining the workforce. The college enrollment rate of graduating seniors grew by nearly 30% between 1975 and 2013, establishing a precedent for students looking for work which requires a degree.To combat the labor shortage within the construction industry, states have developed their own creative solutions to entice new workers. Minnesota, for instance, launched a program for high school students to offer career opportunity resources and training programs in the construction industry. Arizona is addressing the shortage by launching a program called Framing our Future, which refers former inmates and others who have come in contact with law enforcement to the Arizona Contractors Association.
Growth Rank:#15 (26.5%) Volume Rank:#1
The consulting industry saw a 26.5% year-over-year increase in new businesses formed, making it the fourth lowest in annual growth. That is near half the growth rate when looking at all tracked industries within the Swyft database. Despite slower growth, the consulting industry is a powerhouse in total volume. Consulting had the highest total number of businesses added in both 2016 and 2017. The sheer volume is partially due to the wide net cast by this business category, including various specialties like corporate strategy, to HR, and IT consulting.Cybersecurity, in particular, is boosting demand for consulting businesses. According to Source Global Research, U.S. spending on cybersecurity advice is the fastest-growing segment of the management-consulting industry. At the global level, leading research firm Gartner calculated that the worldwide cybersecurity market alone hit the $17.8 billion mark, with the U.S. accounting for approximately 40% of the market.
Growth Rank:#6 (47.5%) Volume Rank:#5
2017 was a strong year for the entertainment industry. According to the Swyft Filings database, the industry saw 47.5% year-over-year growth of new businesses formed in 2017. It's the sixth fastest growing industry amongst those tracked by Swyft.Increasingly formidable competition has led to advancements across various sectors of the entertainment industry. And unlike the accommodations industry, the competition seems to be bolstering businesses rather than hindering them. Home video via on-demand streaming services garnered $107.9 billion and the box office grossed $11 billion in 2017, according to SelectUSA. As on-demand streaming secures a stronger hold of the market, movie theaters have responded by adopting digital screens, issuing discounted membership options, and providing other unique offerings for one-of-a-kind viewing experiences.Similar trends can be seen amongst other major sectors of the entertainment industry: music, books, and video games. As streaming services gain more traction and entertainment businesses have more channels for content distribution, publishers and other creative professionals are taking advantage of lower production costs afforded by digital technologies.
Growth Rank:#17 (24.5%) Volume Rank:#14
The financial industry is the second-slowest growing industry with an increase of 24.5% growth in new business filings, according to Swyft Filings. This sluggish growth is due, in part, to the limitations many financial firms face with legacy technology systems. Entrenched technologies stymie growth and prevent finance businesses from adapting to new technologies. According to a 2017 PwC report on financial services trends, only 7% of financial services CEOs in the U.S. feel their firms are “very prepared” for innovation.Financial technology, also referred to as fintech, provides innovations for financial institutes to increase efficiency, both internally and for customers. Though consumers throughout all industries have shown a strong desire for quick access to, and control of, information, employing such technologies in the financial industry is not without its complications. Technological innovation provides benefits, whether beneficial to the vast majority or not, for multiple sides: businesses and consumers; institutions and individuals; regulators and criminals looking to take advantage of vulnerable systems. As a result, implementing such changes has become more complicated than ever for the financial industry.
Growth Rank:#8 (43.9%) Volume Rank:#10
The food service industry ranks in the top 50th percentile for year-over-year growth in 2017, with 43.9% growth in number of businesses formed. The shift from traditional dining services to delivery and fast service offerings is shaking up the food service business. Thanks to expanding franchises, fast-food restaurants continue to grow throughout the U.S. According to Statista, the fast-food industry alone is currently worth $198.9 billion, with the expectation that the value will increase to over $223 billion by 2020. And the face of fast food is continuing to change, too. Informed consumers have propelled trends of financial and ingredient transparency.Additionally, novelty and health-focused offerings have continued to increase in popularity, from Flaming Hot Cheeto donuts to locally-sourced fast food chains. Technology has played a role in reinforcing such items, as millennials use social media to document interesting meals and goods and, thus, drive demand. Expect to see more capture-worthy distribution methods, too, like food trucks and pop-up events.
Growth Rank:#2 (60.1%) Volume Rank:#9
The health care industry is the second-fastest growing industry for both 2016 and 2017, according to Swyft Filings data, with a 60.1% growth rate in number of new businesses formed.The U.S. spends more on health care per capita annually than any other nation, and much of this can be attributed to the medical device market. According to SelectUSA, the U.S. boasts a medical device market worth $140 billion, responsible for the largest share in the world.As patients seek out a more personalized health care experience, doors are opening for new business entrants from industries such as retail, telecommunications, and technology. The emergence of new patient-centric businesses influenced a shift in the health care industry from a fragmented structure to integrated models. This means patients are taking an active role in their own health care, serving as partners with organizations, schools, doctors, and social care providers.Mobile technologies are already allowing patients to be monitored wirelessly from devices like electrocardiograms, pacemakers, and defibrillators, which previously required an in-person visit. In recent years, patients have shown greater interest in their health and are more willing to self-manage. Empowered consumers want to know more and do more for themselves by leveraging mobile health care, new technology, and an ever-increasing wealth of information.
Growth Rank:#17 (24.6%) Volume Rank:#16
With a new businesses growth rate of 24.6%, the insurance industry is one of the slowest growing industries of 2017, according to the Swyft Filings data. The growth rate for insurance businesses is nearly half the total growth across all other industries. Major changes in technology, legislative uncertainty, and evolving consumer needs and expectations have continued to disrupt insurance businesses.As use of technology and trends for personalization become more prevalent across other industries, the insurance industry is following suit, too, if slowly. Consumers are expecting greater service using mobile devices and apps. By staying connected to the policy holder through technology, insurers are able to provide a more custom experience and increase customer retention.An additional layer of uncertainty in the insurance market, particularly car insurance, surrounds advancements in autonomous vehicles. When autonomous cars are the norm, will insurance claims be the responsibility of the car owner or the auto manufacturer? Industry experts, lawmakers, and drivers are now required to grapple with such questions where lines are often blurred, as such laws and regulations affect everyone. With an insurance industry that is notoriously sensitive to risk and uncertainty, this could mean imminent, fundamental changes to the car insurance sector of the insurance industry.
Growth Rank:#9 (38.3%) Volume Rank:#15
The manufacturing industry saw 38.3% growth of new businesses formed formed since 2016, and will continue to grow as manufacturers innovate ideas for use of new technology for their position in the supply chain. In an effort to implement smarter products and processes, many manufacturing businesses are leveraging technology for increased efficiency and accuracy. Manufacturing Machinery manufacturing, specifically, plays a major role in the distribution and implementation of technological advancements throughout the manufacturing industry. According to SelectUSA, it's one of the largest sectors of the manufacturing economy in the country. By providing process controls and other automation technologies, machinery manufacturing enables other sectors of the industry to boost the productivity of their equipment. But not all manufacturers will be able to do this effectively. Outdated technology and business models have the potential to hold some businesses back.
Growth Rank:#5 (54.1%) Volume Rank:#7
The professional services industry is growing in rapid succession, with 54.1% growth in new businesses from 2016 to 2017. Professional services, such as accounting, legal services, and engineering, thrive in the U.S. marketplace, which marketresearch.com says accounts for 40% of the global market. This strong hold can be attributed to a bevy of reasons. For starters, the U.S. maintains a strong education system and therefore is home to a highly-skilled workforce. Also, the U.S. corporate sector is diverse and large. And finally, there are effective intellectual property rights. All of these factors boil down to one common denominator: stability. For the reasons listed above, amongst many others, conditions are stable enough in the U.S. to support a multitude of professional services businesses.Technology and modularization are making waves in the professional services industry, leading to more firms going virtual, as well as offering curated individual services other than one-size-fits-all bundles. The benefit of going virtual ultimately boils down to cutting overhead. In an industry where employees are typically paid high salaries, staying competitive by lowering prices for clients requires give from somewhere. With smaller physical offices and a shift towards more contract employees, revenue can be increased while simultaneously slashing costs.
Growth Rank:#14 (26.9%) Volume Rank:#4
The real estate industry sees some of the largest number of newly-formed businesses compared to other industries in the U.S. It's also, however, one of the slowest growing with 26.9% year-over-year growth in newly-formed businesses. A majority of the trends currently influencing the real estate industry—including housing, retail, work spaces—are attempting to meet the demands of generations who want and need things they haven't previously. Baby boomers are staying in their houses longer than years past; millennials are looking for affordable starter homes in urban cities; generation z wants more structured workplace environments and capture-worthy retail experiences.The combination of an increase in homeowners who want to stay in their houses longer, and the millions of millennials and gen z generations seeking out their first or second homes, has led to a country-wide housing shortage. This leaves plenty of room for homebuilders to embark on more developments that focus on factors commonly associated with the demands of these younger generations: energy efficiency and affordability.After so many years focusing on the needs and wants of millennials, the real estate industry has recently shifted its focus to that of generation z—and they're looking for something very different than the generations before them. Whereas millennials craved collaborative, open workspaces, research shows that generation z wants more structured work environments with private offices and spaces for seclusion that allow for uninterrupted concentration. Additionally, for a generation so drawn to capturing and sharing experiences via social media, retailers are now pressured to create spaces ideal for taking pictures and videos. While these changes mean trying to understand a new generation of young individuals, it also provides opportunities for new marketing channels and creative endeavors.
Growth Rank:#12 (32.9%) Volume Rank:#12
According to the Swyft Filings database, the rental and leasing industry grew 32.9% year over year and ranked 12th in highest number of new businesses compared to other industries tracked. With the risks and liabilities that come along with purchasing expensive machinery, technology, and even office furniture, many companies opt to lease such tools and products, leading to higher demand for the rental and leasing industry.Three industries, in particular, have played a major role in continuing to bolster the rental and leasing industry: manufacturing, construction, and trucking. According to IBISWorld, the nonresidential construction subsector influences and boosts equipment rental businesses. As both the construction and manufacturing industries continue to rapidly grow (see more information in industry sections above), demand for equipment rental grows alongside it.The trucking market is looking to leasing not because it's growing too quickly, but as a result of aging fleets that require major maintenance and adjustments, according to Truckinginfo. A shortage of drivers, concerns about shifting towards more environmentally-friendly automobiles, and increased prices for new equipment have negatively impacted trucking companies over the past few years, making way for the leasing industry to step in as a, even if temporary, solution for trucking businesses in need of updated fleets.
Growth Rank:#7 (44.2%) Volume Rank:#2
The number of retail industry businesses formed in 2017 grew by 44.2% from the previous year. Retail saw the second largest number of new businesses form in 2017, according to Swyft Filings. New technologies, like the Marketplace app from General Motors (allowing consumers to make purchases and reservations from car dashboards), offer new ways for retailers to reach consumers in never-before leveraged—or existing—channels. As is typical for any industry undergoing radical, transformative changes, this moment either presents an opportunity to grow in new and innovative ways or to get stuck in outdated business models.To not just survive, but thrive in today's retail marketplace, businesses are being stretched to offer more than just products. They're having to face trends pushing them to encapsulate lifestyle-focused experiences, brick-and-mortarless shopping experiences, offer affordable and speedy shipping options, and build interactive and enticing online presences via social media, apps, and websites. And similarly to the food service industry (find more information in the industry section above), retailers are needing to address the consumer desire for transparency. Modern consumers are asking more and more of retailers, and as retailers meet and exceed these needs, there continues to be room for growth. Based on the growth represented in the Swyft database, it can be discerned that many retailers are stepping up to the challenge.
Growth Rank:#4 (55.8%) Volume Rank:#11
The Swyft Filings database shows that new businesses formed in the social assistance industry grew by 55.8% in 2017. It now ranks as the 11th largest industry for volume of new businesses. The Bureau of Labor Statistics outlines that the social assistance industry encompasses many sub sectors, including services pertaining to individuals and families, vocational rehabilitation, child day care, food and housing, relief, and emergencies.The foundation of this industry is rooted in helpfulness, which is never without demand. In 2017, natural disasters left thousands of families displaced, without their belongings, and sometimes without work. Even before hurricanes ravaged the south or wildfires spread across California last year, the International Displacement Monitoring Centre reports that 1,107,000 people were displaced in the U.S. in 2016 alone.Much of the social assistance industry's ability to grow stems from how much funding the government allots to various social programs and organizations.
Growth Rank:#18 (19.6%) Volume Rank:#8
Given that technology is a driving force for so many industries (i.e. retail, health care, etc.), it's seemingly counterintuitive that the technology industry, according to the Swyft database, is the slowest growing industry at 19.6% for newly-formed businesses. There are, however, major factors causing difficulties for new businesses in tech. For instance, many businesses in other industries are beginning to model themselves after software companies to take technology into their own hands. Additionally, major tech platforms, like the "Big Five" (Amazon, Apple, Facebook, Google, and Microsoft), monopolize the marketplace, making it difficult for new entrants to carve out a space in the industry.One of the greatest shifts bestowed upon the tech industry in 2017 was that of taking ownership of offline responsibilities. As New York Times "State of the Art" columnist Farhad Manjoo said in regards to the responsibilities and influences of the Big Five, "Thinkof these platforms as the roads, railroads, and waterways of the information economy…For years, despite their growing power, tech platforms rarely garnered much scrutiny, and they were often loath to accept how much their systems affected the real world… In 2017, that changed." Manjoo sites the allowed spreading of misinformation as an example of a turning point when the actions (or lack thereof) of tech giants influenced the future of the U.S.So while the integration of technology isn't just the secure, but the necessary thing for a majority of businesses across all industries to see growth, the tech industry itself is undergoing a complex, competitive, and tumultuous season.
Growth Rank:#3 (59%) Volume Rank:#6
The transportation industry is the third fastest growing industry according to the Swyft Filings database, with a 59% year-over-year growth rate in the number of new of transportation businesses formed in 2017. The growth of the transportation industry, which includes logistics services, air delivery, freight rail, maritime, and trucking subsectors, is highly related to the growth of other industries. From warehousing to construction to retail, and even the rental and leasing industry (see more information in the industry section above), the transportation industry connects them all.A combination of factors are currently changing the face of commercial transportation: consumers expect to receive goods faster and with cheaper rates than ever before; traditional trucking companies can no longer procrastinate in finding a solution for outdated, expensive-to-maintain fleets; the ELD (electronic logging device) mandate, which was created with the intent of keeping owners and operators honest about hours of service, went into effect in December 2017. The ELD mandate has given rise to a number of issues for trucking businesses, especially small-to medium sized ones, involving training, adjusting to new systems, and overall financial stress.Overwhelmingly, the core of these obstacles are rooted in traditional trucking, specifically, and other commercial transportations businesses' struggle to ditch models that are quickly becoming not just outdated, but eminently obsolete. For many years, these traditional businesses have mostly resisted these changes. Their main competitors weren't modernizing, so why should they? The vulnerability this creates for them is the entrance of newer businesses that are more willing, or able, to form with models based in modern technology, as they are more likely to take up their share of the market and push traditional businesses out.
Growth Rank:#10 (38%) Volume Rank:#18
The warehousing industry saw 8% year-over-year growth for new businesses formed in 2017, according to the Swyft database. There's an abundance of opportunity for growth in this industry, with the influx of online shoppers and current lack of warehouse space to adequately support it. This, in turn, creates opportunities for other industries, too, like construction (to build more warehouses), real estate (to manage where these warehouses are built), transportation (to move products to and from warehouses), technology (to automate warehouse distribution centers), manufacturing (to provide machines that can implement automation), and retail (to decrease brick-and-mortar spaces and increase online sales).Warehouses have traditionally been located near major urban hubs and ports, but not close enough to facilitate last-mile delivery, which has increased in years past due to growing consumer demand. This demand, which was at one time considered the exception, is quickly becoming the rule—and an increase in city-based warehouses is needed to meet it. Amazon, which has the first-to-market advantage, has made it imperative for other retailers and shipping businesses to follow suit in order to survive.
Growth Rank:#13 (32.3%) Volume Rank:#13
The wholesale industry, which saw 32.3% growth in newly-formed businesses in 2017, has recently been met with many challenges. In the Swyft database, it ranks 13th (out of 18) for growth of new businesses in comparison to other industries tracked. Some of the challenges stem from properly addressing how to recruit millennials, maintaining and implementing technology that stands up to new customer demands, and figuring out how distributors can build revenue while simultaneously cut costs.An increasing demand for transparency has presented new opportunities in the industry. More recent entrants have arisen to give the industry somewhat of a face lift. Brands like Everlane and Glossier, for instance, cut out the middleman by following wholesale strategies. To further bank in on this market, they've presented themselves as brands with a knack for transparency and encompassing a niche (but not too niche), attractive lifestyle. When doubled with more affordable prices, this techniques has shown to draw in younger audiences.Essentially, wholesale retailers are having to navigate uncharted waters as various industries converge and new forms of competition are surfacing. Consumers have quickly become accustomed to the luxury of purchasing anything in bulk at the click of a button on their various devices. Competitors in the B2B space, too, are taking similar approaches by offering online-only wholesale deals with low overhead, minimal infrastructure, and an opportunity to exploit the newest and best digital technologies.
SwyftFilings.com analyzed over 55,000 new businesses between the years of 2016 and 2017. By looking at the number of new businesses in each industry that were incorporated in 2016 versus 2017, Swyft Filings determined new business growth. Swyft Filings also looked at number of businesses incorporated in each industry to determine the total volume of each industry’s new businesses. The two rankings used are based on:
Growth Rank: Percent change in new businesses formed in 2016 vs. number of new businesses formed in 2017. #1 has the largest percent increase in new businesses formed compared to the previous year.
Volume Rank: The overall volume of businesses formed in 2017 (#1 having the most new businesses formed).
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