Sunday, August 30, 2009

Most overrated businesses... a new list

The Yahoo Small Business Answers Center sponsored by Bank of America has a recent article by Kelly K. Spors and Kevin Salwen titled: The 7 Most Overrated Businesses
It is a good update of what my business and university business school teaching has suggested to me, with some updates. What do you think?

In an earlier post, I mentioned that recessions can be a great time to start a business... but it must be a right business for you, and where you are. They mention this circumstance, as well. Here are their 7:

1. Restaurants - has always been my first, as well, along with bars. They quoted "60% of restaurants close in the first three years" (2003 study at Ohio State University) vs. roughly half of all start-ups in five years - the classic small business statistic.
2. Direct Sales - hasn't everybody tried this, at one time or another?
3. Online Retail - one of the "new" ones - by the way, there are millions of them...
4. High-End Retail - SBA notes they fail at much higher rate than non-specialty stores.
5. Independent Consulting - their quote: "A successful consulting firm needs people to find the work, grind out the work and mind the work. Unless you know you can do all three yourself, you potentially expose your business to great risk." I concur, from personal experience.
6. Franchise Ownership - a 1995 study by a researcher at Wayne State University found that 62% of franchises were open for business after four years, they note, and franchises were also found to be less profitable in those early years. I've been there, done that. True!
7. Traffic-Driven Web Sites - another new one. To have any chance of success, a $50 million investment is a minimum, one start-up consultant says. Does that, perhaps, eliminate most of us??

I enjoyed this update of one of my favorite subjects.

What are your thoughts? I'd love to hear from you!

Dr. Bill - I love to share, I hope you do to! ;-)


  1. What about the 7 best rated businesses?? what would they be?

  2. The subject is the best business for an individual to try to start. The worst were listed above. For the best, you have to know the business - generally have worked in the industry for a number of years. So, this will vary tremendously. Second, you must be good at "what it takes" to run that business. Finally, it has to be a business that will generate sufficient revenues, on a regular basis, to cover costs and create a reasonable return on investment of dollars and effort. Simple to explain, difficult to execute. Thanks for the question! ;-)