Following on from our blog about potentially successful businesses to start in 2025, here’s the flip side – 3 businesses our Business Services Director, Dan Heelan, reckons you would NOT want to start in 2025.
The Criteria for the List
When talking about the ‘worst’ businesses to start, here are the guidelines I used to determine which three types of small businesses made the list.
My criteria was
- How difficult are they to start?
- How much start-up funding may be required?
- How long it takes to gain customers?
- The ability to start as a ‘side hustle’ and grow into a full-time business
- The ability to be easily profitable
- The success rate we’ve seen of these businesses
- Can the business be easily scaled up?
This list of criteria is based on the thousands of businesses we’ve worked with, to give a personal list based on the above.
Whilst the businesses listed here don’t see the best success rates (in our experience), we also have worked with ones in these sectors that have been really successful! So, the results will definitely vary, based on the entrepreneur involved! So you can make these work.
1. Amazon FBA / Drop Shipping Businesses
Accountants Verdict
We have come across sooooo many of these businesses. The vast majority of them simply fold because they don’t make any money.
There are clearly ones that do make it, and do well (we work with some), but for most, the outcome is not a positive one.
Some of the reasons for this:
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- Competitive space, with big players
- Low margins (profit per item sold)
- ‘Hidden’ costs many new owners don’t consider
- Cost of initial inventory
- Time it takes to see any cash (when you are not buying more stock)
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I could also list ‘print on demand’ businesses in the same category. We’ve seen many start up, and then realise there is a lot of work for not a lot of money.
2. Property Businesses
Accountants Verdict
Now this one will likely shock you, so hear me out. I think it’s relatively well established that many wealthy people are ‘into property’. There is clearly money to be made.
However, the reason this makes the list is because we come across so many budding business owners going on “property business” courses.
They are paying multiple thousands of pounds for a course to teach them how to become a property business, but then have no cash to buy anything. These courses often teach that you need an expensive support network, and corporate structure, with ongoing charges.
These courses usually include ‘rent to rent’ and ‘property sourcing’ strategies that tell you it’s possible to start a property business with no funds. Whilst yes, this is technically possible, in our experience the success rate is very low.
Where we do see success long term, is in owners looking to get into property investment with money already behind them to invest (sometimes with the knowledge gained from coaching or courses).
I am not saying don’t start a property business (I have one myself). However, do consider whether you have enough money to make this worthwhile, and a model that will work for you. If you are relying on rent to rent, or property sourcing, it’s likely to be very challenging.
3. Any business you don’t understand
Accountants Verdict
One area where we see constant failure rates is when a new owner has desperately taken the leap into running a business because they…… ‘want to run a business’.
They often pick up a franchise or buy something that is supposed to be established. Often they subsequently find thay aren’t passionate about it. Worse still, they don’t really understand the market, the product, or the business model required to make the business work. So, when the time comes, as it usually does in any small business, to put in the extra effort in hours, they just don’t have the ‘juice’ to make it happen.
It’s also difficult to sell your product or service to new prospects if you clearly are not knowledgeable in the area, or the passion doesn’t radiate from you! As a result, these owners would also be super exposed to a key member of the team leaving, if they do not have technical knowledge of the market, production or services.
Before they know it, they are multiple thousands in debt, and would have been better off (financially and mentally!) to have stayed employed.
A key element to business success
Whatever you decide, the best success rate we see for owners surviving the initial start-up years is when they have their finances under control. They often have a strong support network too, including their accountants, to help them ensure their business is on a firm financial basis and keep on top of important aspects such as tax, pay and allowances.
If you need help with your business accounting, from basic bookkeeping to payroll, just give us a call. Our team have helped thousands of small businesses survive and thrive, and we can help you too!