Every small business owner asks the same question: Am I making what I should be?
The answer depends heavily on your industry. A construction business turning over $2 million might leave its owner with less take-home than a health services practice at half that revenue. Some sectors reward scale. Others reward specialisation. And a surprising number of high-revenue industries leave owners wondering where the profit went.
This analysis ranks Australia's top 20 industries by profitability for small business owners, using the latest ATO small business benchmarks (2022-23, updated March 2025) and ABS Australian Industry data (2023-24, released May 2025). The results challenge some common assumptions about which businesses actually pay.
Measuring what business owners actually take home is complicated. Sole traders draw from profits. Company directors pay themselves salaries. Partnerships distribute income. The ATO and ABS track different metrics that serve as proxies for owner returns.
For this ranking, we use Net Profit Ratio as the primary metric. This measures the profit pool available to the owner after all business expenses, calculated as: (Total business income minus Total expenses) divided by Total business income. The ATO publishes these ratios by industry for businesses up to $15 million turnover.
This ranking draws on three data sources:
The ranking weights net profit ratios most heavily, with OPBT trends providing context on sector direction. Industries are grouped by typical SME revenue bands ($100,000 to $2 million) and employee counts (1-19).
Important limitation: Margin ranges in this ranking are derived from ATO benchmark patterns and industry data. Actual margins vary significantly by turnover band, location, and business model within each industry.
Total industry OPBT fell 8.6% in 2023-24, declining by $60 billion. But this headline figure masks dramatic variation between sectors.
Mining saw OPBT fall 27.4% (down $66.7 billion) as commodity prices moderated from 2022-23 highs. Agriculture dropped 35.4% (down $9.6 billion) as weather conditions and input costs squeezed margins.
Meanwhile, Transport, Postal and Warehousing surged 103.3% (up $19.4 billion), driven partly by asset revaluations but also reflecting genuine sector strength. Professional Services grew OPBT by 9.9% to $72.6 billion. Construction lifted 11.4% to $58 billion. Rental, Hiring and Real Estate Services grew 9.4% (up $6.5 billion in EBITDA terms).
For small business owners, the relevant question is not total industry profit but profit margins at the SME level. A $500 million mining operation and a $500,000 trade business face entirely different economics.
The high-margin, high-demand leader. Health care tops the ranking with consistently strong margins across general practice, allied health, and specialist services.
Low inventory requirements, recurring patient relationships, and limited capital expenditure combine to deliver high owner returns. The sector added 6.6% more businesses in 2024-25, the fastest growth of any industry, yet demand continues to outstrip supply in most health professions, supporting pricing power.
Private practices with established patient bases and efficient billing processes regularly achieve margins above 25%. The constraint is typically practitioner time rather than market demand.
Low overheads, high billing rates. Accounting, legal, consulting, and engineering services consistently rank among the most profitable for small operators.
Sector OPBT grew 9.9% to $72.6 billion in 2023-24. Business counts increased 2.5%, indicating healthy but not excessive competition.
Solo practitioners and small partnerships typically retain 30% or more of revenue as profit, assuming efficient operations and strong utilisation rates. The scalability of knowledge-based services creates margin expansion as firms grow.
Highest peak margins, with significant volatility. Mining services deliver exceptional returns during boom periods, then face sharp contractions when commodity prices fall.
Total mining OPBT reached $176.8 billion in 2023-24, down 27.4% from the prior year but still the largest of any sector. Small operators servicing major projects capture a portion of this value.
Important note: While SME service providers can achieve these high margins, the sector is tied to the volatile commodity cycle. The 27.4% drop in total industry OPBT in 2023-24 illustrates the risk. The sector suits owners comfortable with cyclical revenue and project-based work.
Recurring revenue with limited labour intensity. Property management, equipment hire, and real estate agencies benefit from established assets and client relationships.
Sector EBITDA grew 9.4% in 2023-24 (up $6.5 billion), though OPBT was affected by property revaluations under higher interest rates. Underlying cash generation for established operators remained solid.
The sector rewards capital or relationship investment upfront, with ongoing returns flowing from the established base.
Trail commissions and recurring relationships. Financial planning, mortgage broking, and insurance agencies deliver strong margins through ongoing client relationships.
Sector OPBT for auxiliary services (the segment most relevant to SMEs) grew 5.4% to $19.6 billion. Regulatory compliance costs are significant but manageable at scale.
Established practices with loyal client bases generate predictable income streams with limited ongoing service requirements.
The sector with the strongest momentum. Transport and logistics posted exceptional OPBT growth, reflecting demand for freight and delivery services.
Sector OPBT surged 103.3% to $38.2 billion. While some of this reflects asset revaluations, underlying demand for freight and delivery services remains robust. Business counts grew 5.1% in 2024-25, second only to health care.
Owner-operators with efficient fleet management and strong customer relationships can achieve margins above 20%. The sector is capital-intensive but cash generative.
Digital scalability driving margins. Digital services, software development, and telecommunications support strong margins through low marginal costs.
Sector OPBT grew 10.8% to $23.6 billion, with earnings rising faster than revenue as digital business models mature.
Small operators in specialised niches can achieve exceptional margins, though competition is intense in commoditised services.
Essential demand plus energy transition. Utilities and waste services benefit from essential demand and increasingly from renewable energy investment.
Sector OPBT grew 7.3% to $14.4 billion, with strong performance in electricity supply as retailers recovered wholesale cost pressures. Solar installation, battery storage, and waste management businesses are expanding rapidly.
Labour arbitrage and operational efficiency. Outsourced services including cleaning, security, and business support deliver consistent margins through efficient workforce management.
Sector OPBT grew 2.9% to $12.3 billion. Margins depend heavily on labour costs and contract terms. Well-managed operations achieve 15-20%, while poorly structured contracts can eliminate profitability entirely.
Skills demand supporting private providers. Private tutoring, vocational training, and corporate education deliver solid margins with limited capital requirements.
Sector OPBT grew 2.5% to $7.3 billion, with private preschool and school education showing the strongest performance at 14.6% growth.
Volume and operational efficiency. Wholesale distribution delivers moderate margins through scale and specialisation.
Sector OPBT grew 5.1% to $44.4 billion, with machinery and equipment wholesaling showing the strongest performance. Specialised distributors serving niche markets can achieve higher returns.
High revenue, variable margins. Specialised trades including electrical, plumbing, and carpentry deliver moderate margins with significant variation by trade and market conditions.
Total construction OPBT grew 11.4% to $58 billion, driven by infrastructure and non-residential demand. However, residential builders face margin pressure from fixed-price contracts and rising costs.
Important note: Construction often appears profitable at the revenue line but delivers thinner owner returns than expected. A $2 million construction business may generate $100,000 to $200,000 in net profit (5-10%), while a $1 million health practice generates $250,000 to $300,000 (25-30%).
Niche positioning driving returns. Food processing, metal fabrication, and specialised manufacturing deliver moderate margins for efficient operators.
Total sector OPBT fell 14.3% to $33.6 billion, but performance varied significantly by subsector. Food product manufacturing grew OPBT by 25.1% as cattle prices fell and demand rose. Chemical manufacturing fell 39.6% on lower fertiliser prices.
Event-based variability. Fitness, entertainment, and creative services deliver variable margins depending on business model and market positioning.
Sector OPBT fell 9.2% to $6.7 billion as expenses grew faster than revenue. However, business counts grew 2.3%, indicating ongoing entrepreneurial interest.
Long-term moderate returns with significant volatility. Primary production delivers moderate long-term margins with significant year-to-year variation.
OPBT fell 35.4% (down $9.6 billion) to $11.7 billion in 2023-24 as weather conditions and commodity prices turned unfavourable. The sector suits operators with land assets and tolerance for income variability.
Contract stability. Security services and regulatory compliance contractors deliver steady margins through government and corporate contracts.
Sector OPBT grew 2.2% to $1.25 billion.
Trade-dependent variability. Repair services, personal care, and other services deliver variable margins depending on specialisation.
Sector OPBT fell 1.1% to $11.5 billion, though underlying performance varied significantly by subsector.
High effort, thin margins. Retail delivers among the lowest margins of any sector despite high revenue potential.
Business counts fell 0.4% in 2024-25 as marginal operators exited. Sector OPBT grew just 0.4% to $38.2 billion despite 4.8% revenue growth, illustrating the margin compression affecting the industry.
Key insight: A $1 million retail business typically generates $50,000 to $100,000 in net profit. The owner works full-time managing inventory, staff, and customers for returns that may be lower than employment alternatives.
Labour intensity squeezing returns. Hospitality delivers among the lowest margins despite high revenue potential.
Sector OPBT fell 6.2% to $11.8 billion as expenses grew 11.1% against 9.5% revenue growth. Labour intensity, perishable inventory, and competitive pressure combine to squeeze profits.
The sector suits operators passionate about hospitality who can manage costs tightly. Many owners earn less than they would as employees in other industries.
Emerging high-margin opportunity. Renewable energy installation, battery storage, and critical minerals services represent an emerging opportunity that lacks established ATO benchmark categories but shows strong growth indicators.
These businesses span existing categories including electrical services, mining support, and construction services. Early entrants with technical capability are capturing premium margins as energy transition investment accelerates.
Note: This entry is based on market trends rather than established ATO benchmarks, which lag emerging sectors.
Construction looks profitable but often is not. High revenue and busy operations mask thin margins. A $2 million construction firm may net less than a $1 million health practice after accounting for materials, subcontractors, and project overruns. Many builders and contractors work harder than professional services operators while earning less.
Retail keeps owners busy for minimal return. Despite high turnover, retail margins of 5-10% mean a $1 million business might generate $50,000 to $100,000 in profit before owner drawings. The business demands full-time attention for returns that may trail employment alternatives.
Mining is volatile but peaks high. Operators willing to accept income variability can earn exceptional returns during favourable market conditions, though the 27.4% OPBT decline in 2023-24 illustrates the downside risk.
Health care delivers consistently. Medical and allied health practices combine high margins with steady demand, creating reliable owner returns year after year. The constraint is practitioner capacity, not market opportunity.
Owners in high-revenue, low-margin industries often share a common experience: working long hours, managing significant staff and operational complexity, yet taking home less than expected.
This pattern typically indicates a finance operations problem rather than a revenue problem. Common issues include:
Addressing these operational issues can shift a business from the bottom of its industry range to the top without changing revenue. A construction business moving from 5% to 15% margins on $2 million revenue adds $200,000 to owner returns.
Scale Suite delivers embedded finance and human resource services for ambitious Australian businesses. Our Sydney-based team integrates with your daily operations through a shared platform, working like part of your internal staff but with senior-level expertise. From complete bookkeeping to strategic CFO insights, we deliver better outcomes than a single hire without the recruitment risk, training time, or full-time salary commitment.
High revenue but tight cash? That's usually a finance ops issue. Get a free assessment.
ATO Small Business Benchmarks (2022-23, updated March 2025) - https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/small-business-benchmarks
ATO Benchmarks A-Z (Industry-specific ratios) - https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/small-business-benchmarks/benchmarks-a-z
ATO Industry Benchmarks for Taxation Statistics 2022-23 - https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/taxation-statistics/taxation-statistics-2022-23/statistics/industry-benchmarks
ABS Australian Industry (2023-24), released May 2025 - https://www.abs.gov.au/statistics/industry/industry-overview/australian-industry/latest-release
ABS Counts of Australian Businesses, including Entries and Exits (July 2021 - June 2025), released 16 December 2025 - https://www.abs.gov.au/statistics/economy/business-indicators/counts-australian-businesses-including-entries-and-exits/latest-release
Scale Suite delivers embedded finance and human resource services for ambitious Australian businesses.Our Sydney-based team integrates with your daily operations through a shared platform, working like part of your internal staff but with senior-level expertise. From complete bookkeeping to strategic CFO insights, we deliver better outcomes than a single hire - without the recruitment risk, training time, or full-time salary commitment.
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