Industry Economics

Operating Margins

A buyer staring at a CIM has a prior question before any specific number: is 18% even normal in this trade, or is the add-back schedule doing the work? These are the IRS's own estimates across every nonfarm Schedule C in the country, and Schedule C net income is earnings before any owner salary, which makes net income over receipts the closest public analog to an SDE margin that exists.

How to Read the Margins

Two margins ship for every line on purpose. The all-filers figure includes every side gig and every money-loser in the country, which drags it below what a real business earns. The profitable-only figure excludes the failures, which lifts it above the typical. A buyable business usually lives between the two, and the width of the gap is itself information. Home health care services shows the widest on the page, at 27.9 points, because losses in that trade are real and common.

These are sole-proprietorship aggregates, not comparables for your target's LLC. Use them for the sanity check they are good at: a listing claiming twice the profitable-only margin of its industry is making a claim diligence has to prove, usually about add-backs. Industries whose tax treatment makes even this bracket misleading, like real-estate lessors whose depreciation turns the aggregate negative, are omitted rather than published soft.

IRS SOI, Nonfarm Sole Proprietorship Returns, Table 1 (TY2023), tax year 2023, from the SOI sole-proprietorship tables.

Two Questions Pay Answers

Is the seller's payroll line plausible? A P&L claiming twelve employees and $300,000 of payroll is claiming $25,000 a head. That is not what a plumbing and HVAC company pays: the industry average is $73,693. The gap is either part-time staff, cash, a mistake, or a story, and all four are worth knowing before the LOI.

What is the job you are about to take actually worth? The market-rate salary for the owner's role is the add-back a lender scrutinizes hardest, because an owner who pays themselves nothing makes the earnings look bigger than the business is. The number that holds up is what the role would cost to hire, and the way to argue it is against a benchmark rather than a feeling.

Pay by Industry

The industries we have guides for first, then every industry with enough businesses to measure. Sort by pay to see where the skilled labor is, and by staff per business to see what you would be managing.

What the Pay Number Is Not

It is a wage bill divided by headcount, so it is not a salary. It mixes full-time and part-time staff, it mixes the owner on payroll with the newest hire, and it is an average across an industry that contains both a two-person shop and a company with ninety people. An industry paying $28,000 a head is not paying everyone $28,000; it is an industry with a lot of part-time work in it.

Census leaves sole proprietors and partners of unincorporated businesses out of the headcount and the payroll alike, while a corporation's salaried officers are in both. So an owner who draws profit adds nothing to either number, and an owner paid a salary is averaged in with the staff. For the other angle on the same cost, the employment and weekly pay section below carries what the work pays a person, from the BLS series, rather than what an owner spends per head.

Census County Business Patterns (2023). What the earnings mean once the payroll is right is in the add-back review on the valuation calculator, and how many of these businesses exist is in Market Depth.

Employment and Weekly Pay

Sorted by employment. Sort by the year-over-year column to see where hiring is tightening, and by weekly pay to compare labor cost across trades. Each figure is a detailed industry rather than a broad sector, so the rows do not overlap.

Read employment as scale and its trend as pressure. A trade adding jobs is one where demand is holding and staffing is competitive, so wage costs and turnover deserve a hard look in diligence. One shedding them may be consolidating, automating, or shrinking, and which of the three it is decides whether a cheap multiple is a bargain.

• Buying an HVAC Business
• Buying a Plumbing Business
• Buying an Electrical Contracting Business
• Buying a Roofing Company
• Buying a Restaurant
• Buying an Assisted Living Facility
• Buying a Landscaping Business
• Buying a Commercial Cleaning Business
• Buying a Moving Company
• Buying a Childcare Center
• Buying a Dental Practice
• Buying an Auto Repair Shop
• Buying an Auto Body Shop
• Buying a Gym or Fitness Studio
• Buying a Tire Shop
• Buying a Veterinary Practice
• Buying a Laundromat
• Buying a Funeral Home

Employment, year-over-year change, and average weekly earnings come from the Bureau of Labor Statistics Current Employment Statistics national series, seasonally adjusted, for September 2026. Employment counts all employees on nonfarm payrolls in the industry; weekly earnings are for all employees. Industries are the detailed series a searcher most often hunts in, so broad sector totals are left off and the rows do not double-count.

The Metrics Each Trade Runs On

Margins and pay say what a business keeps and what its people cost. These are the numbers that say whether it is healthy week to week: the recurring-revenue share in a service trade, the rebooking rate in a salon, inventory turns in a shop. They are distilled from each trade's own buy guide, which explains why each one matters and what a healthy reading looks like. Treat them as the checklist to request rather than a scoreboard: the readings come from the seller, not from this page, and a trade that runs on another number gains one here when its guide does.

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