The Swyft Filings State of the Industry Report provides an examination of business formation trends by looking at the number of newly-created businesses by industry type between 2017 and 2018. Each year, Swyft Filings helps tens of thousands of companies with filing and compliance in all 50 states.
Our second annual report includes a breakdown of the growth rank and volume rank of each industry tracked in the Swyft Filings database.
In this Report:
1) YoY Growth %: Percent change in new businesses formed in 2017 vs. the number of new businesses formed in 2018.
2) Growth Rank: #1 has the largest percent increase in new businesses formed in 2018 compared to 2017.
3) Volume Rank: The overall volume of businesses formed in 2018 (#1 having the most new businesses formed).
*Negative growth does not indicate a contraction of the industry, but a slowing of growth rate year over year. We would not define these industries to be “in contraction” as they don’t have consecutive periods of declining growth.
Growth Rank:#1 (39.5%) Volume Rank:#16
The accommodations industry saw the strongest year-over-year increases in growth from 2017 to 2018, ranking it at number one out of the 18 industries tracked in Swyft Filings’ database. While the percentage of change was the greatest, the actual volume of new business formations, however, falls near the end of the list at number 16.Many trends have contributed to growth in this industry, such as the rising popularity of alternative accommodations (i.e. vacation rentals), cloud-based operation management software that streamlines operational processes, and the ability to book accommodations last-minute on your phone. Last year, CBRE’s Hotels Investor Sentiment survey revealed that 37% of hotel investors expected capital growth in 2018, compared to the 24% who expected such growth in 2017.
Growth Rank:#9 (4.3%) Volume Rank:#2
While the construction industry saw the strongest year-over-year growth from 2016 to 2017, 2018 didn’t see as significant of an increase in growth. Even so, the industry still ranked second for the overall volume of new businesses formed in 2018.There’s no arguing that the construction industry is a powerhouse. According to Statista, the U.S. is one of the largest construction markets globally. With expenditures exceeding $1.2 billion. One factor leading to the continuous growth of this industry is a recovering economy that’s allowing for projects that were once stalled by the recession to resume again. The accelerating residential market, specifically, is a primary driver.
Growth Rank:#15 (-5.9%) Volume Rank:#3
Consulting, which also held a growth rank of 15 in 2017, is still among the industries accounting for the largest volume of new business formations. One of the main reasons the consulting industry accounts for so many new businesses is that wide net of business types it encompasses, such as corporate strategy, HR, cyber security, and IT consulting.New trends in the consulting industry, like automation, multi-sourcing services, a la carte service offerings that don’t ensure longevity, and performance-faced billing, are forcing existing consulting firms to navigate transitionary phases that may impact future growth. This also creates a space, however, for new, innovative consulting firms to address these trends head-on, laying their foundation in modernity rather than keeping pace.
Growth Rank:#10 (2.7%) Volume Rank:#6
While the entertainment industry didn’t see the same boon in year-over-year growth as in 2017, it still ranks in the top-third of industries for the overall volume of new business formations in 2018. At $735 billion in the States alone, the U.S. media and entertainment industry is the largest in the world. According to the Entertainment & Media Outlook published by PriceWaterhouseCoopers (PwC), expectations are for the industry to reach beyond $830 billion by 2022.Content streaming continues to be one of the largest drivers throughout the entertainment industry, including television, music, video games, and more. And in 2018, content and advertising only got more targeted as entertainment companies augmented customer information with social media and content-consumption habits.
Growth Rank:#4 (9.5%) Volume Rank:#13
After coming in 14th out of 18major industries for change in year-over-year growth from 2016 to 2017, the finance industry ranking fourth in 2018, with a 9.5% increase in new businesses formed in 2018 compared to 2017. In the Swyft Filings database, banking, asset management, venture capital, accounting and tax services, and private equity businesses fall within the finance industry.Spurring growth, the political and economic environment of the past few years has led the way for many new business formations in the industry. According to The Motley Fool, Republicans taking a majority in Congress—and the prospect of decreased regulation, tax reform, and rising interest rates—served as a catalyst for growth in the financial sector.
Growth Rank:#11 (2%) Volume Rank:#10
According to the Swyft Filings database, the U.S. foodservice industry saw a 2% increase in new business formations from 2017 to 2018. Without significant adjustments to macroeconomic influences, like unemployment level and disposable income, net new foodservice business growth remained relatively flat.Major restaurant industry trends in 2018 included hyper-local menus, “clean” ingredients, and chef-driven fast-casual concepts. While fast-casual restaurant sales increased last year, dine-in traffic lagged, with more and more people ordering pick-up and delivery. The casual-dining segment is capitalizing on a mix of social media and technical innovations to capture to-go and delivery opportunities.
Growth Rank:#6 (7.5%) Volume Rank:#8
Health care, ranging from medical supplies and technology to urgent cares and wellness centers, ranked in the top third of industries that saw year-over-year increases in new U.S. business formations. Health care products and services appear to be increasing in demand, despite political volatility surrounding health insurance. Market commentary from Charles Schwab has attributed this demand to an aging population.The medical device market in the U.S. is also a significant driver of growth for the U.S. healthcare industry, with a market size of around $156 billion. This sector of the industry is responsible for nearly 2 million U.S. jobs. As the healthcare industry continues to grow, it increases the percentage of yearly revenues it invests in product innovation, which reflects the industry’s competitive nature.
Growth Rank:#7 (6.7%) Volume Rank:#17
After ranking nearly last for the year-over-year increase of business formations in 2017, the insurance industry pulled ahead in 2018, ranking seventh out of the 18 industries tracked by Swyft Filings. Much like the finance industry, sustained economic growth and rising interest rates contributed to a strong year for insurers.According to Deloitte, data compiled at the end of 2017 suggested that the U.S. insurance industry, for both personal and commercial lines, has been growing at a more rapid pace than its non-U.S. counterparts, likely because of lower unemployment and faster economic expansion in the States. Industry insiders are warning, however, that short-term improvements don’t necessarily mean there won’t be challenges ahead, like the potential for an economic slowdown as early as 2020.
Growth Rank:#14 (-5.8%) Volume Rank:#15
The manufacturing industry didn’t see nearly as strong of business formation growth in 2018 as it had in 2017, which was up 38.3% YoY from 2016 to 2017. It did, however, maintain a consistent volume rank, once again landing at number 15.Despite the increasing demand for equipment needed for industrial activities—like construction projects, oil and gas fields, and large industrial facilities—smaller businesses have struggled to compete with larger companies that offer multiple product lines to cover the full spectrum of industrial operations. Additionally, customers are less likely to stay loyal to a company that isn’t offering innovative products, technology, and digitization.
Growth Rank:#13 (-1.0%) Volume Rank:#7
The professional industry didn’t see quite as much year-over-year growth of new businesses in 2018 as it had in 2017, but was still a strong driver of new business formations overall, ranking in seventh for volume. Professional services include occupations that require special training in the arts and/or sciences. This can include engineers, lawyers, and management consultants.Established businesses in the industry saw a strong 2018, with many services firms recording the highest profits in a decade. This has, in turn, created a competitive landscape that makes growth, or entering the market, more challenging.
Growth Rank:#12 (0.1%) Volume Rank:#4
The real estate industry, which ranked higher for year-over-year growth in 2018 than the previous year, again ranked amongst the top industries for volume of new businesses formed. Growth, in terms of how many new businesses formed in 2018 compared to 2017, remained relatively stagnant.Many of the trends that impacted the real estate industry in 2017 still hold true for 2018, as well. A steady stream of new construction companies, for instance, continue to provide more opportunities for real estate businesses focusing on housing, retail, and workspaces. Continued advancements in technology, and the rapid awareness of consumers, also impact how agents and others in the real estate industry approach day-to-day operations.The Swyft Filings database shows that California, Texas, and New York state saw the largest volume of real estate business formations in 2018, with 17% of all new real estate businesses being formed in California alone.
Growth Rank:#17 (-11.1%) Volume Rank:#12
The rental and leasing industry didn’t see as many business formations in 2018 as it had in 2017, with a -11.1% year-over-year decrease. The industry includes the renting or leasing of automotive equipment, consumer goods, and commercial and industrial machinery and equipment, as well as general rental centers.Storage and warehousing present some of the strongest opportunities for new rental and leasing businesses. According to IBIS World, storage and warehouse leasing in the U.S. has grown by 3.7% in the past five years to reach a revenue of $37 billion in 2018.
Growth Rank:#5 (8.4%) Volume Rank:#1
2018 was an incredibly strong year for the retail industry, ranking fifth for year-over-year increases in business formations and first for the overall volume of new businesses formed. According to SelectUSA, retailers employ nearly 29 million people, while supporting more than 42 million jobs.The retail industry, with its well-established distribution channels and openly competitive market, constantly propels new, innovative business operations. Lately, omnichannel shopping has become a key driver of sales, with some retailers reporting nearly three times the sales from omnichannel shoppers than customers only shopping at a brand’s physical location. Department stores like Macy’s and Nordstrom are investing in the e-commerce side of their business to capture these omnichannel shoppers and beat out online competition.
Growth Rank:#2 (21.7%) Volume Rank:#11
Social assistance ranked second for the largest year-over-year increase in new business formations and ranked eleventh for the volume of new business formed in 2018. The social assistance industry encompasses services pertaining to individuals and families, vocational rehabilitation, child day care, food and housing, relief, and emergencies.In late 2017, the Bureau of Labor Statistics predicted that social assistance was amongst the industries expected to see the strongest job growth in 2018 through 2020, citing that the main influence was the aging of the American population.
Growth Rank:#18 (-14.7%) Volume Rank:#9
The formation of new technology businesses lagged in 2018, resulting in a -14.7% decline in new business formations from 2017 to 2018. The industry came in ninth for the volume of businesses formed compared to the other 18 industries in Swyft Filings’ database.While innovative technologies are a driving force in the growth and success of other U.S. industries, many businesses take on such advancements in-house, rather than outsourcing to traditional technology companies. Additionally, the technology industry is incredibly competitive, with powerhouses like Apple and Microsoft making it more challenging for new businesses to carve out a space in the market.
Growth Rank:#3 (18.8%) Volume Rank:#5
For the second consecutive year, the transportation industry is the third fastest-growing industry, with an 18.8% year-over-year increase in businesses formed in 2018 vs. 2017. Like last year, the continual growth of the industry is still highly impacted by the growth of other industries relying heavily on the transportation of goods and/or people. Growth in the retail industry, for instance, results in increases in shipping activities and boost demand for trucking.A form of transportation bound to make waves in the U.S. is high-speed rail travel. Virgin Trains USA, a company setting out to establish high-speed rail travel throughout the country, is currently focusing on launching routes throughout Florida and, soon, between Los Angeles and Las Vegas. If successful, these trains could have a major impact on how people in the U.S. typically travel and commute.
Growth Rank:#8 (4.4%) Volume Rank:#18
The warehousing industry may be small in volume compared to other industries tracked in the Swyft Filings database, but there’s plenty of opportunity for growth. As the transportation and retail industries continue to grow in the U.S., the demand for warehousing increases, too.Warehousing automation with the adoption of innovative technologies, such as rugged tech that leverages IOT, is constantly improved the efficiency of warehouse operations, making it easier to move product quickly and decreasing oversight.
Growth Rank:#16 (-6.5%) Volume Rank:#14
The wholesale industry lagged in year-over-year growth, with a -6.5% difference in business formations in 2018 vs. 2017. The rank for the overall volume of new business formations compared to other industries, however, didn’t see too much of a decline compared to how it ranked in 2017 (#13).According to Deloitte, the wholesale industry is currently experiencing a rapidly shifting landscape which is affected by a myriad of factors, including accelerating digitization, emerging customer demand, and expanding competition. In an industry that has historically been defined by its cautious expansion, disruptors appear to be leveraging new business models that speak to the shifts in how customers are interacting with distributors.
MetodologySwyftFilings.com analyzed over 70,000 new businesses between the years of 2017 and 2018. By looking at the number of new businesses in each industry that were incorporated in 2017 versus 2018, Swyft Filings determined new business growth. Swyft Filings also looked at the 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:
YoY Growth %: Percent change in new businesses formed in 2017 vs. the number of new businesses formed in 2018.
Growth Rank: #1 has the largest percent increase in new businesses formed in 2018 compared to 2017.
Volume Rank: The overall volume of businesses formed in 2018 (#1 having the most new businesses formed).
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