Ten businesses that are risky for beginners. If you're a new entrepreneur, think twice before opening any of these establishments!
Grocery stores, supermarkets, specialty food markets, bakeries, and other food sellers are risky businesses to start. Startups face competition from huge chain stores that have established distribution and marketing systems. Also, stores in this industry have tight profit margins.
Many new bars and restaurants fail each year. These businesses are often started by people with a passion for food but with limited business knowledge. These businesses have many startup costs, such as meeting local government codes, installing kitchen equipment, and hiring staff. New restaurant owners often do not have enough money to finance all of the startup costs of their new businesses.
People who open cell phone stores and electronics stores find it very difficult to succeed. Cell phones are sold at very low profit margins and the competition is fierce. The wireless companies run their own stores and they can undercut the prices of independent stores without batting an eye.
New clothing stores aren't very profitable for new business owners. Fashion tastes change quickly, and if you are not on top of the latest trends you can find yourself with a store full of unwanted clothes. Clothing sales can have slow periods, and if you open a new store during a slow time you may not survive long enough to see business pick up.
It's difficult to successfully run a new travel agency. Many people choose to book their own trips on the internet and do their own research on travel destinations. It's true that travel agencies can do better with specialized packages, but these packages are not easy to put together. Travel expenses are among the first things that people cut out of their budgets when their finances tighten.
Dry cleaners and laundromats are tough for new business owners to run because they require high up-front investments and they have low profit margins. Barber shops are also risky because people are more likely to visit inexpensive haircut chain stores as opposed to pricier independent barber shops.
Check cashing stores and payday loan stores are challenging businesses for new entrepreneurs. These stores have a difficult time getting funding, and their prices are undercut by larger financial companies that appear to be more legitimate. Check cashing stores also face risks of losses from bad checks.
Taxi companies and limousine services are difficult for new business owners. They require large up-front investments in vehicles and they have high insurance rates. Many transportation companies have a hard time finding reliable drivers. Often these businesses have to compete with companies that have existing contracts with hotels and other customers.
Auto repair businesses are always needed but they are not easily profitable, especially for new business owners. Income is limited by the amounts that auto insurance companies are willing to pay. Highly trained mechanics are not easy to find and they require high rates of pay.
New independent trucking lines are high-risk investments. They have to compete with big companies that have established routes and loyal customers. Trucking lines have low profit margins that get lower when fuel prices increase.
New business owners that are adequately prepared and sufficiently financed can still succeed in these risky businesses. A marketing plan can also come in handy, but make sure it includes the use of logo products. If a prospective business owner is willing to consider safer business ideas, then he may have a better chance of success. Just remember that a business owner that has the right connections has a good chance of being successful in any industry.
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