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Entrepreneurs Are Better Off Not Starting These 15 Businesses

Simi January 23, 2018

Only the brave can be entrepreneurs. Starting your own business is an incredibly daunting venture. It is probably one of the biggest risks a person can take. There are zero assurances that it will succeed. If it does, then a person can live out the rest of their days being the masters of their own destiny.

They do not have to deal with bosses, they make their own hours and they get to profit directly from the success of their business. On the other hand, if it fails then they lose everything. The chances are they put every single penny to their name into the venture and if it doesn’t work out then they will most likely be left destitute. How then, does one prevent this? Do they simply not try at all and remain a cog in a bigger system?

There are a few things that need to be considered and done before starting a business. One of the most important of these being research. If there is a gap in the market which an entrepreneur can fill, then the chances of success increase. If the desires spot is already saturated, then the competition may hinder success entirely.

The job market does not stagnate for long. Businesses which were profitable 20 or even 10 years ago, may not necessarily be the safest bet today and should be avoided at all costs. These are some businesses which currently would most likely be unsuccessful.

1. Catering

Everyone needs to eat, and no one will stop getting married or throwing celebratory parties. This is generally the rationale that a prospective caterer would adopt. It is not necessarily untrue. People do love events with food and even more so, they love gourmet food. Caterers are needed for weddings, engagement parties, birthday parties, anniversaries, graduation parties and corporate events. The list is literally endless. The people who hire caterers spend hours and a countless amount of money planning and deciding on the menu. These things considered, it is not unreasonable to think that catering is a good business opportunity. Or is it?

Firstly, start-up costs are substantial. Certificates need to be purchased or obtained, premises need to be rented, staff hired, and equipment bought. Once all this is done then a client list needs to be built up. The demand may be there, but so is the competition. Even if all of this is completed correctly if the events the business is hired for are not regular then staff becomes an active concern.

It is not easy to keep full-time staff if a catering business has time-lapses between events. Part-time workers can be hired, but this comes with its own set of problems. These are just a few of the internal obstacles which a caterer may face.

External factors which are influencing the success of catering companies are the availability of other options. This is not because of the existence of competing catering companies, but rather other types of catering options. Mini-burgers and cocktails sausages have become quite outdated. These days people have the option of hiring food trucks for example. These allow guests to choose from a menu of items which are both tasty and unique.

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2. Web design

This is the computer age, there is no doubt about that. The amount of time that individuals spend on their computers and online is increasing with each year. New websites pop-up daily and disappear just as fast. Why not get in on the action? How hard could it possibly be? You only need to know HTML and have a bit of designing experience, right? This may have been true 20 years ago when the internet was still new, this is not the case today where we are well into the 21st century.

Web designing has gotten a tad more complicated than a few lines of HTML. CSS, WordPress and graphics software is essential for designing a high-quality website and high-quality is undoubtedly the order of the day. Clients are aware of the standard that exists in the market and they will demand it every time. With the current technological climate, only experts in their field can break away from the pack and have a business which is fully sustainable.

Time to develop the required skills is not the only cost paid to become a successful web designer. There is actual money involved and a lot of it paid out regularly. Software for web design is expensive to start off and the costs increase as new updates get released.

If the time to develop the skills and money to purchase the tools for skill and product development is not an insurmountable obstacle. Then the last thing to consider is knowledge of the industry and creative talent. A successful web designer needs to be intimately aware of what the clients want, what is popular and what is current. They also need to be able to deliver this in a unique and creative way.

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3. Travel Agency

Travelling the world is a very popular bucket list item. People work to go on holiday. They save bits and pieces everywhere they can so that at the end of the year they can jet off to an exotic location. Here they have visions of lounging on a beach, eating exotic food and meeting exotic people. Travelling is a character building and expanding experience. But, it is also daunting. Even if you are heading to a country where they speak the same language as you, getting ones, bearing is tough and avoiding scamsters is even harder. This is where travel agents come in.

They are supposed to remove all these obstacles by offering package deals which include flights, accommodation, airport transfers, and tours. These offerings can be tailor-made to suit each individual travel needs. A travel agent gets paid to spend their days compiling and selling these packages. On the surface, this job may sound enticing and starting a travel agency may seem like a venture which may stand the test of time.

Once you dig a little deeper, the flaws of this plan start revealing themselves. Firstly, people can be difficult. Each has their own specific insecurities and needs. To run a successful travel agency, one would need to be an exceptionally good people’s person. They must be able to soothe fears, deal with demands and smooth bumps in the road.

The other obstacle is the internet. People can research and plan their own holidays at the click of a button and it can be done 24 hours a day. Chances are, it will land up being cheaper if a person scouts deals and specials on their own. This ease of access has substantially decreased travel agent’s client base.

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4. Clothes stores

People love to shop. Not even a global recession can halt consumerism. Thousands of buyers across the globe will away their weekend hours testing and trying clothes. They do this in malls and, most importantly, they frequent the little clothing stores in town. The stores with the pretty displays and knick-knacks at the cash-out counter. These kinds of stores offer a service and a product, both coming in at a low operational cost. All that is needed to run a clothes shop is someone to work the counter and help the customer, a location, and products which can simply be displayed in boxes.

All of this is true, and it makes for a very reasonable business model. Or at least, it did. Big scale competition is making a sizeable dent in these enterprises bottom line. Big clothing brands can offer their clothes at a competitive price. This is because they have the luxury of bulk production, thus decreases the cost, and therefore the price, of each item.

This is also another industry which is being pummelled by the internet. These same big clothing brands have taken advantage of the purchasing benefits offered by the internet. They now have online stores which offer clothes at significantly reduced prices. This is possible because online sales require less manpower and facilities, which collectively decrease operational costs.

Buyers can shop for discounted items from the comfort of their home. Furthermore, these items are delivered directly to their doorsteps. There are not many who would turn down this option and head to the store down the road instead. Little clothing stores may maintain some internet wary customers, but this is not guaranteed to last long.

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5. Taxi Companies

Traffic is a hassle and cars are expensive to purchase and maintain. Scores of people avoid the headaches of driving altogether, and simply opt for public transport or taxis. These options eliminate the need to stress about parking, drinking and driving, and the morning rush. Sitting in a bus or taxi allows the passenger to relax and maybe even get some last-minute work done. Until the advent of affordable and reliable self-driving cars, people will always need other people to drive them around. This makes working in the transport industry a relatively safe career prospect, but it is not necessarily a lucrative one.

A person who is looking to start up a taxi service will most likely not drive the cars themselves. They will hire people. These people are not excessively qualified and therefore they will be paid wages which are shockingly close or even below minimum wage. This will already diminish the mood and satisfaction level of the workers. Added to that, will be customers.

These customers could be rude, disrespectful and downright abusive. Taxi drivers also need to actively seek out customers. They must sit in traffic and roadblocks all day, only to speed up to the curb in a feeble attempt to catch the one person who is looking for a taxi in a sea of taxis. The result being, that taxi drivers are mostly unsatisfied and unhappy.

This human element of running a taxi business would probably be enough to turn a person off the venture. If it is not, then the battling bottom line may be sufficient. Apps like Uber, are growing their market share daily. These lost customers are steadily diminishing the profits of traditional taxi businesses.

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6. Real Estate Agencies

Real estate agents are essentially their own bosses. They determine their own hours and generally, their profit is directly related to how much work they put in. A slacking real estate agent is an unsuccessful one. Every little thing an agent does for their business can be directly seen in their sales and profit margin. If a person has enough start-up capital, guts and a team of dedicated agents who are willing to fight tooth and nail for their fair share of the market, then one could theoretically run a successful real estate agency.

The problem with this business plan is that others have it and others have had it before. The real estate business is quite dominated by the big and reputable companies. This is not only because they have deep pockets which enable visibility and a mountain load of advertising. Buying and selling a house is an enormous investment. Property is the biggest purchase most people will make in their lifetime. These high stakes tend to make people anxious. They are more comfortable dealing with large, international companies who obviously have a large client base.

It is a risk entrusting a small company with your biggest asset. More clients mean, more competition for your property which inevitably results in a better selling price that is achieved. If, however, a small company does enlist some clients, then they must be prepared to deal with the consequences.

They must be equipped with a buyers and sellers list as well as the money and resources to ensure marketing, selling and transfer of each property. People can also be fickle creatures when it comes to their houses. They can be temperamental and simply hard to deal with.

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7. Software company

Well, if Bill Gates did it then why can’t I? Software development can be an incredibly lucrative business. There is always a very high demand for new technology and software. All of this is true. However, this does not mean that it is easy money. Software development is not only a long process, but it is an incredibly expensive one.

Initially, there needs to be a large opening bank balance which can sustain a development project for a couple of years. This will need to be enough to cover resources, facilities (which will most certainly include a testing lab), and software developers. Once a product is completed, more money will be needed to push it into the market. The industry is littered with new developments and it will take a fair amount of fight to push one’s way to the front.

Even free flowing finances is only enough to get a person halfway to the finish line in the software development race. The other half is plain old ingenuity and creativity. Bill Gates and Steve Jobs became titans because they offered something which no one else did. They were innovators, they had vision. They did not offer a subpar product which was just derivative of other readily available products.

It has been established that the development process is an expensive one. The product that is being developed better be a good one. In fact, it must be much better than good if it is going to be fiscally worth it. Spending years and truckloads of money on a product that is neither creative nor marketable would be a superb waste of money. One which a company and the owner along with it, is unlikely able to recover from.

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8. Photography

A picture captures a moment. It captures a time, a place and is supposed to be a palpable reminder of past times. This is what the photography business banks on. The idea is simple. A photographer can utilize light, composition, and intuition to capture a moment. They can capture the scene, the essence, the emotion and to reproduce something that is even better than the original. There is magic involved here. It is an art; a skill and it is not something that everyone can do. There is no falsehood here. It is not only a sales pitch, it is the reality.

And yet, starting a photography business is probably one of the worst business ventures a person could delve into. This is because our idea and perception of photos have changed. Yes, pictures do capture a moment but what happens when there are infinitely many moments. This is what smartphones have done. As the technology of the smartphones progress so does the quality of the cameras. Granted it is not as good as a professional camera, but not many people own those anyway.

The point is that people can take their own pictures. These snaps may not be artfully done, but that does not really matter. The sheer volume and accessibility of photos have decreased each individual one’s value. They are also readily distributed.

A person can take a quick picture and then send it at a moments notice to their entire family. This entire process takes a few seconds, if that, and is completely inexpensive. The need for a professional photographer and even physical prints is largely considered an unnecessary expense. Even the most robust and flashy advertising is not enough to launch or sustain a photography business.

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9. Discount stores

When economic times are harsh, and money is short, people look for any and every place where they can save a buck. This is where a discount store gathers its consumer base. They offer customers incredibly cheap products. These are not necessarily of a high-quality, they are actually at times quite poor products. This is mainly accepted because when people are desperate they can literally not afford to complain or be picky. Since the economic crisis in 2008, the group of people that do discount shopping is growing. It seems logical that along with this growth would be increased in the volume of discount stores.

This is unfortunately untrue. Small discount stores cannot survive. They have tried to confront and compete with the big stores and they have failed every time. Big discount stores like Wal-Mart are able to move massive amounts of products every day. This means that they can drastically drop their prices.

A discount on an already discounted product results in a price which is far superior, to the buyer anyway, compared to the prices offered by small discount stores. Because of the sheer volume of the stock orders, big stores are able to source better quality products which are still at a low rate.

The profit earned from each product may be low, but when millions of units are sold the result is a rather massive earning. Small stores are simply not able to offer the same quality products at such a low price. They are also not able to deliver the same variety of products. Customers are able to go to stores like Wal-Mart, where they can purchase everything they need all at a price which is lower than those offered by smaller stores.

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10. Independent auto-repair shops

If it is broke, fix it, don’t throw it away. This is the philosophy which most people live by. Your average person cannot afford to buy a new car every time something goes wrong with their current vehicle. They need to take their cars to a mechanic every year for a service and they need some sort of protocol in place for when something goes awry. In previous years, a car dealership and an auto-repair shop were two completely separate entities. One would sell you your car, while the other fixed it. Currently, these come as a package deal.

Whether a car is bought new or used, it is common practice for it to come with a service deal as well as extended warranties. The service deal is an agreement made with the dealership whereby for a small additional cost, a person can take their car back to them once a year, and they will have the car serviced by reputable companies. These companies are almost never small and independent shops.

They are often large businesses which have signed contracts with the dealerships. They have large premises and have state-of-the-art equipment. Small businesses cannot compete on this level. They cannot afford the large shop space which makes customers feel more comfortable and it is rare for a small business to have the diagnostic equipment which is necessary for the new cars which are on the market.

One place where independent companies can get business is in cases of emergencies. If something breaks in a car or the car breaks down altogether, then a person might take their car to these companies. This is only if they do not have extended warranty packages. If they do, then they simply take the car to the dealership who will have the car fixed at no charge.

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11. Fast food

In the big cities, there are fast food shops on every corner. There are not only multiple locations but also a vast variety of options. The fast-food industry is enormous, and the competition is tough. Their products come at affordable prices and they generally taste quite good due to the flavor enhancements added as well as the style of cooking. Another added draw is the convenience of the purchase. There is no extended waiting period and one does not even have to get out their car. For people on the move, fast food franchises can wind up being their main food source.

Money can be made in this industry, but there may be too much competition to be worth it. Even if a niche spot can be found the chances of it staying this way is slim. There will always be another store on another corner which will threaten to diminish your consumer base. Their food might not necessarily be better, but their prices could be lower. Huge companies like McDonald’s can offer food at very low prices simply because of the sheer volume of their output.

Competition is only an obstacle if there are buyers to compete over. Fast food is convenient, but it is also very unhealthy. This may not have been a problem 10 years ago, but today it is a very large concern.

As the low quality of fast food products becomes more publicised, the number of people who consume fast food diminishes. Even though it is less convenient and generally more expensive, people are starting to opt for healthier options. Even the medical industry has started actively steering people away from fast food.

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12. Restoration company

Unfortunately, we live in a throwaway society. For the most part, if something breaks then the first course of action is to simply toss it and buy a new one. This might seem frivolous, but it is generally the cheaper option. Appliances are all too easy to purchase. There are stores that offer a variety of products at a large range of prices. There is most definitely a product for every type of customer out there. While simply purchasing a new product is the way that most people choose to go, there is the option of repairing it.

This may seem like a gap in the market, but it is not. Products purchased at large and reputable stores mostly come with a warranty. If the product defaults within a certain amount of time, then it can be taken back to the store and they will have it repaired with no attached cost. They do not send these broken products to any company. They send them to large companies with whom they have an established relationship and contact.

If a restoration company does not fit into this group, then they may have some problem sourcing clients. There are some products which hold sentimental value and a person is reluctant to get rid of it. Here they will send it to a restoration company, but only if the cost is to their suiting.

Restoring a product can become quite costly if spare parts need to be sourced. If a company is to make any kind of profit, then they will need to up the price if they are to cover this cost. There are very few items out there whose sentimental value outweighs the cost of repairing it. This is what is directly affecting the profit margin of small restoration companies.

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13. Liquor stores

The dividing line between wants and needs can be different for each person. As a rule, people need water, food, clothes, a roof over their heads, education and medical attention. There is a variation on each of these which changes according to a person’s financial situation. However, overall, alcohol is not a need. It is a luxury. Money is generally not specifically put aside to accommodate for a monthly alcohol allowance. As the economy worsens and people start tightening their purse, it is luxury items which take a knock.

Previously, alcohol may have been the exact thing which people turned to when times got hard. This is not exactly the case now. Firstly, the negative health impacts of alcohol are constantly being announced by the health industry and even at government levels. If people are drinking, they are doing it knowing full well the consequences.

Another fact which may influence the sale of alcohol is the price. Sin taxes get raised annually which are making products like alcohol and tobacco increasingly more expensive to purchase. The result is that, even if a person is inclined to turn to alcohol to escape their reality, it might not actually be feasible considering the rising costs.

Drinking is a social activity. Society is largely aware of how dangerous and threatening it can be. But, the fact remains that people will always drink. This does not mean that the business will be a lucrative one. If people are going to purchase alcohol, they will buy it at reduced prices from big stores. Small liquor stores cannot compete on this level. They will see an overall drop in clientele due to both perception and prices.

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14. Pet supply stores

People have pets and people love their pets. This will always be true. People need supplies for their pets, this is another thing which will always be true. But, people will not always buy supplies for their pet from the little shop down the road. They are taking their business elsewhere which is resulting in a lot of small pet stores closing their doors for good.

Rent, just like everything else, has gone up in prices. Large stores with large client bases can accommodate the rise of prices. A small store cannot. To continue running, they are forced to up the price of their products. Unless they have extremely loyal customers, this will result in buyers frequenting stores which offer products at lower prices.

Another cut back which pet stores make when costs rise is to hire staff that is not qualified. A qualified worker costs more but at least they are schooled on the product and can advise customers. An unqualified customer may land up giving a customer incorrect advice which will further cost the business buyers. It creates a devastating negative feedback loop.

Internet-based companies have lower operational costs. They do not have to spend excessive amounts of money on rental space or numerous employees. This allows them to offer the same products, but at discounted prices. Online shopping is also far more convenient than heading to the store. Products are ordered quickly and arrive at the buyer’s doorstep in a short period of time. The majority of the time, people will tend to buy their pet supplies online and not at the shops. This kind of climate is enough to drive small pet stores straight into the ground.

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15. Computer shops

In the 1990’s most houses only had one computer. As the technology and the industry advanced, computers became highly desirable products. Selling computers and running a computer shop does not really require any advanced skills. With these factors at play, people starting opening computer shops on every corner. Business may have been good for a time but eventually, the market simply became flooded. To stay afloat there were only two real options available to computer shops. These were to drop the price of their products and to increase their marketing.

The profit made on a computer is not exceptionally high. The product itself is rather expensive to produce which makes it impossible to reduce the price too much. If a shop is already operating on low-sales, then reducing the price of the products is simply not an option. This leaves them with marketing. A computer shop does not produce the products, they simply sell them. The only thing that can separate them from their competition, other than prices, is the level of service offered. But, how much does this really matter?

Computer shops that opened in the 90’s are not surviving. They are closing every day. Added to the internal competition and operational costs is the fact that there is competition coming from big businesses. They sell a huge number of products, so they can drop the price of their computers and still make a sizeable profit.

It may be the computer age, but it is not the age of computer shops. Even if a shop can compete and sell a product and service which is desirable, the profit margin will still be low. It is not likely to remain afloat for long.

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