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Do You Know What Kind Of Business Not To Open?

Do you plan to open a small business?  Do you have a specific type of business in mind?  Well, here's another thing to think about - what kind of business not to open.

The state of the economy can have a lot to do with whether a particular business succeeds or fails.  For instance, it wouldn't have been a good idea to open a carpentry subcontracting business during the recent housing slump.  A new building supply warehouse or a lumberyard also would have been unlikely to prosper.  Depending on current economic circumstances, some kinds of businesses may be destined for failure.  Also, some businesses are just more difficult to operate successfully than others.

Almost half of all new small businesses fail within the first five years.  So don't add to the failure rate by opening the wrong business.  Here are several examples of companies that might fit that description:

Apiculture

Bees are under massive pressure from a swarm of man-made and natural threats, including pesticides, air pollution, and a tiny mite that infests and kills entire bee colonies.  Colonies in the United States have declined by almost 40% in recent years.  As a result, bees are one of our most precious natural resources.  Without bees, there is no pollination; without pollination, there are no fruits and vegetables. So as an apiculturist, you'd truly be performing a service to humanity. Just keep in mind that you may get stung.

Photo finishing

Can you say digital?  Not a lot of people print photos these days.  It is estimated that Americans printed about 18 billion in 2009, down from 30 billion in 2001.  The main reason, obviously, is the digital camera. A few one-hour photo labs and shopping mall photo kiosks are still in business but their future does not look good.  They could be gone in a flash!

Here are two other types of businesses that may have a high failure rate:

Consulting or business services

Consultants and coaches often fail because there are no standards in the field.  Many companies are reluctant to hire coaches and consultants when they can't prove their ability through licenses or other documentation.  Consultants must demonstrate through portfolios that they can perform the work they're being hired to do.  Inexperienced consultants rarely succeed.  When consultants are not adequately prepared, they may become frustrated trying to land contracts or competing with others in the field.

Independent restaurants

Independent restaurants suffer from a failure rate that's higher than average for restaurants, with some estimates pegging the failure rate for independents at as high as 60% during the first five years.  Whether a particular venture fails may depend on the skill and experience of the owner, the level of capital available, and other key business factors.  But restaurants also suffer from several inherent difficulties.  Inventory and portion control can be especially difficult for restaurants, they usually need comparatively large numbers of employees, and establishing a place for in a local market with a new, unknown name and cuisine can be a substantial barrier to success.

Video rental stores

Although video rental was once an okay business, that's hardly the case now.  On-demand options and streaming services such as Netflix have rendered a visit to the video store unnecessary.  In 2003, there were 25,042 stores focused primarily on DVD, video game, and VHS rentals, according to IBIS World.  By 2010, there were only 17,369 stores.  Some specialty stores are hanging on, offering rare or foreign videos, hosting live screenings, and inviting directors to come and talk about filmmaking.  But those are the exceptions.

Coin-operated laundry and dry cleaning

This is a business with low margins and even lower growth rates.  No matter where you open your business, you'll be competing against plenty of existing players who know the game better than you do. Also, start-up costs are on the high side, often as much as $1 million or more.  Plus, dry cleaners are increasingly in the crosshairs of environmental concerns because of all of the harsh chemicals they've traditionally used.  That means investing even more money to make your operations eco-friendly.

Just to be on the safe side, Google "what types of small businesses are most likely to fail?"  We also can help guide you.



INDEX
  • Now Is A Perfect Time To Open A New Business
  • Do You Know If Your Business Really Is Small?
  • 4 Estate Issues For Business Owners
  • Self-Employed? Map Out Tax Details
  • 10 Easy Steps To Take If Opening A New Business
  • To Buy Or Not To Buy: That Is The Business Franchise Question
  • Ever Considered Helping Your Adult Child Open A Business?
  • Do You Know What Kind Of Business Not To Open?
  • Do You Plan To Move Your Business To A New State?
  • Dispel These 7 Popular Myths About Retirement
  • 4 Retirement Plan Options For Your Small Business
  • Are Stocks Overpriced And Forming A Bubble?
  • 4 Steps To Creating A Dynamic Business Budget
  • Can An Underfunded Small Business Startup Be Successful?
  • What Happens If You Have Excess Capital Losses?
  • This Is Not Granddad's 'Defined Benefit Plan'
  • Despite Much Pessimism, Slow Growth Persists
  • How To Take Your Section 179 Deduction To The Max
  • Squeeze More Out Of Bonus Depreciation Deductions
  • A Common Error In Powers Of Attorney
  • For The Self-Employed: 4 Retirement Plan Choices
  • Which States Are The Most Friendly To Businesses?
  • How Economic Myths Distort Investment Outlook
  • Don't Forget About Roth 401(k)
  • REITs: A Great Diversification Investment
  • Shopping For A Bank Account That Pays The Highest Possible Rate Of Interest
  • The Twenty Top Tax Breaks In The New 2010 Tax Act
  • Investing Defensivley Does Not Mean Deserting Stocks
  • 401(k) Alternatives For Business Owners
  • Tax Court Okays Deducting Cost Of MBA
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  • Slash Taxes By Swapping Like-Kind Assets
  • Transferring The Family Business To Your Heirs
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  • Move Fast To Corral Emergency SBA Loans
  • Risk Management
  • Estate Taxes And The Obama Administration
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  • A Little Bond Logic Yields Insights
  • Avoiding The IRA Rollover Crackdown
  • Ruling Cites Business Owner Responsibility to 401 (k) Plans
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  • Managing Cash Flow In Tight Times
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  • Avoid Being Accused Of Insider Trading
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  • Understanding the Importance of a Fiduciary Standard
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  • Timber As A Liquid Investment
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  • Ethanol: Salvation or Panacea?
  • Emerging Market Food Consumption Growth Equals Rising Prices
  • A Primer On Managed Futures
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  • Know The Score
  • REITS: A Very Good Portfolio Diversifier, But Should You Invest In Them?
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  • Identity Theft : Correct Those Credit Reporting Errors
  • Risk-Controlled Investing
  • Q & A With Robert Arnott
  • Identity Theft : Applying For Credit? Better Check Your Credit Report First
  • Identity Theft: Everyday Prevention
  • Identity Theft : Help Is On Its Way
  • Identity Theft: Tips To Protect Yourself
  • Identity Theft : Don't Fall For That E-Mail!
  • Identity Theft : One More Reason To Protect Your Credit
  • Identity Theft: A Note About Social Security Numbers
  • What Do Rising Interest Rates Mean For Money Market Yields?
  • Exit Gracefully: How Business Owners Should Plan For A Comfortable Retirement
  • Section 529 Plans Are Popular But Not The Only Way To Go
  • The Importance Of Commodities In A Portfolio
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  • IRS Refuses Change Of Section 179 Election To Expense Depreciable Property
  • Small Businesses Need To Be Aggressive On Costs
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  • Do It Yourself Tax Preparers Watch Out: Tax Answers From IRS Centers Oftentimes Are Incorrect And/Or Insufficient
  • Home Office Deductions: Hoops To Jump Through
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  • What Is Risk?
  • 4 Steps To A More Secure Investment Portfolio For Your Retirement
  • Traditional Investing May Decrease Your Retirement Lifestyle
  • Year-End Tax Planning Can Help Generate High Return On Investment
  • Businesses Receive Temporary Depreciation Bonus
  • Understanding Deflation
  • Is Your 401(k) Plan A Failure?
  • Succession Planning: Developing A Plan For Your Business
  • The ERISA Retirement Plan Law Spells Out Fiduciary Issues
  • Evaluating The Quality Of A Company's Earnings
  • Investing In Times Of Uncertainty And Risk: The Importance Of Diversification
  • Tax Issues To Consider When Buying A Long-Term Care Policy
  • Yesterday's Great Companies
  • Businesses Should Be Aware Of States' Use Taxes
  • Expanded Retirement Plan Contribution Limits Create New Opportunities For Business Owners
  • Succession Planning: Developing A Plan For Your Business



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