Be careful. If you are serious about making money, building value in a saleable business, and supporting a family with small business avoid these pitfalls.
1. Avoid businesses with low barriers to entry. Any business that can be gotten into and operated for cheap is going to be full of dummies, fly-by-nights, illegals, etc. Stay away from those. The prices are too low and your competition to unscrupulous for good long term prospects. These would include drywall, knife sharpening, painting, pressure washing, etc. If someone can get into the business and operate it with $10,000 in capital or less, stay away.
2. Avoid businesses that are close to people’s hobbies. Barbell coaching, acting, gun retailers, etc. are all businesses people would love to be in and as a result will do the work for low prices, maybe even free. There are too many people who want to be in hobby businesses. Stay away.
3. Multi-level-marketing. Also full of dummies. Too crowded. Even if you are successful when you are ready to retire you won’t have a saleable business. Stay away.
4. Majority female-owned segments. You may not like me saying this. Tough. Often ladies are looking for a side hustle to “stay busy” or “help out with the bills.” They are working on the kids, householding, AND piddling with their boutique, crafts, etc. on the side. I often see physicians wives in this group. Dr. Wingnut is subsidizing her business. “He needs the write-off.” Others are just status conscious middle-class strivers. They love fuxxing around on social media and being the “go-to” person for their group. hese businesses have low margins, are often faddish, and overlap categories 1,2, and 3. These include craft/antique shops, boutiques, MLM, specialty stores, “two chicks and XXXXX” business models, etc. Stay away.
5. Immigrant dominated segments. Too competitive. Margins are too low. Stay away.
6. Long time to payoff biz. If it’s going to take 24 months to develop a minimum viable product and get revenue, let someone else do that. We want sales TODAY.
These are just a few pitfalls I thought of while pruning trees. More to come.