Most overrated businesses
According to an article I saw at Yahoo a few days ago, start-ups which most likely will fail, at least in America are as follows:
1. Running a restaurant: never mind that you’re a good cook. 60% of restaurants close in its first 3 years of operation. Catering also fall in this category.
Why: low profit margin, need strong managers, which most people aren’t.
2. Direct selling: new team members usually join in after learning what the highest earners in the company earns. After some time, saturation creeps in.
3. Online retail: it is more difficult now to for small players to compete with established retailers as compared to the early days of the web. Peopleare more likely to buy stainless steel tiles off a well-known company than yours.
4. High-End Retail: less people nowadays are spending money on luxuries. The good days might come back, but not now.
5. Independent Consulting: not as easy to do as it seems: in reality, many struggle with time management, spending more time looking for work than actually doing it.
6. Being a franchise owner: there are risks uniquely associated with it, for example overly restrictive contracts and high royalties that makes it hard to profit. A 1995 study by Wayne State University found that more non-franchise businesses were still operating after 4 years than franchise ones.
7. Traffic-driven websites: as the internet ages, it’s only to get harder to earn income via online advertising. You could need millions of dollars to get any presence and you’d need a huge amount of traffic before you’re somewhere.
So what business should one start? Experts argue that you should “create firms in which they have professional experience so they have a competitive advantage in the market.”
