For many individuals, starting a business is an exciting idea. Others, who may have lost a job during the coronavirus pandemic, may consider it a necessity. Before you take the plunge, however, you should be sure to thoroughly research your options.
Support Small Biz: Nominate Your Favorite Small Business To Be Featured in GOBankingRates’ 2022 Small Business Spotlight
Read: 22 Side Gigs That Can Make You Richer Than a Full-Time Job
Many business ideas sound great on paper, but the reality can be entirely different. Some or all of the 10 business ideas listed below may catch your fancy, but they would all be extremely difficult to successfully execute in the current business environment. Before you dive into any of these industries, consult with a small-business expert to see if you should consider looking elsewhere.
Pet Supply Store
It’s well-known that pet owners are willing to spend nearly anything on their furry friends. In fact, many owners consider their pets to be legitimate members of the family. Opening a pet supply store, therefore, sounds like a great idea, with a guaranteed flow of customers. The problem is competition and pricing. Pet supplies are now readily available at a number of places beyond dedicated pet supply stores, including drug stores, grocery stores and numerous online outlets. As with any business, if you can find a spot where you’re the only pet store for 100 miles, you might be onto something. However, for all others, it might not be the best option.
Few things sound more glamorous than being a travel agent. Between helping clients travel to exciting places around the world and actually visiting those areas yourself, the idea of being a travel agent is a dream come true for many. However, times have changed. About one-third of all travel in the U.S. is now booked online, and the number of retail travel agencies is dwindling. Although there will always be in-person sales at travel agencies, the industry is clearly shrinking. One possible way to counter this would be to operate a niche or specialty agency, but you’ll have to do your homework to succeed.
Opening a restaurant has always been a tricky business. According to Fundera, historically, about half of all restaurants fail within the first five years. With the lingering effects of the coronavirus pandemic, however, that overall failure rate will no doubt go up. Jumping into an industry with a historically high failure rate at a time when restaurants are facing enormous headwinds seems to be a particularly risky move.
More: 18 Restaurant Chains That Have Filed For Bankruptcy
Blogging is an attractive industry to many because it’s an opportunity for self-expression. There are also very few barriers to entry. All in all, blogging seems like an easy way to make some money. Yet, the reality falls short. To make money, blogs traditionally rely on advertising revenue. But there are only so many ads that users can click on. This is where the low barrier to entry actually hurts bloggers. With so many blogs and ads out there, it’s hard for any one individual blogger to actually capture revenue. Unless you already have a large social media following, are a noted celebrity or have a particularly interesting niche, earning real money as a blogger can be difficult.
Much like blogging, there are very few barriers to entry if you want to open an e-commerce store. However, an e-commerce store shares many of the same barriers to profitability that a blog does, specifically visibility and competition. If you’re going to make any sales at your e-commerce store, you’ve got to get the word out that you’re online and available. If your site doesn’t appear in search engine rankings, you’ll be lucky to get even a few sales, no matter how good your products are. Even if customers know that you exist, you’ll be competing in terms of price and product quality with countless other sites, including well-known retailers like Costco, Target and Walmart. You may get some sales of a one-of-a-kind product, but if you’re trying to generate the big bucks, e-commerce is a very difficult road to follow.
Electronics or Appliance Repair
If you’re good at fixing things, you might be considering getting into electronics or appliance repair. After all, things break all the time, right? Sadly, there are a number of headwinds when it comes to being an independent repair person. For starters, electronics and appliances keep getting cheaper and cheaper. By the time a product is out of warranty, many consumers are more willing to simply buy new rather than paying for a repair, especially if the price difference isn’t too great. In the American consumer culture, many customers upgrade their appliances or electronics every few years anyway, even if they aren’t broken. The bottom line is that it’s getting harder and harder to succeed as a repair person, especially if you are just starting a new shop.
Transportation services might seem like they are always in demand, and therefore solid business opportunities. Unfortunately, the landscape for these types of companies has changed dramatically over the past decade or so. Ride-share businesses like Uber and Lyft have cut into the taxi and limo business dramatically, and even the coronavirus pandemic has made traveling via public vehicles less appealing. Specialty transportation, such as rides for seniors, may be a viable niche play, but even that would require jumping through regulatory hoops. Overall, the business is tough for any new entrants, with existing players with established infrastructure dominating the industry.
Good photographers have always been in demand, especially for weddings, family portraits and other special events or occasions. But there’s no arguing that the proliferation of high-quality cameras on smartphones has diminished the need for professional photography services. The Samsung Galaxy S20 Ultra, for example, has a 108MP camera, 8K video and 100x digital zoom, specs that were professional-grade in the not-too-distant past. Although photographers will still be desired for certain special occasions, the general need for photographers is shrinking rapidly.
The corner liquor store used to be the easiest and best way to find your drink of choice. But nowadays, as with many retail operations, you can get nearly anything you want from a wide variety of sources. Big-box retailer Costco is actually the largest wine merchant in the nation, and online sources and even grocery stores now stock their shelves with a wide variety of alcohol. Many of these sources are actually cheaper than free-standing liquor stores, and buying alcohol during regular grocery trips is convenient enough for most customers. There will always be spontaneous purchases at liquor stores, but the competition in the industry is brutal.
When it comes to dream businesses, opening a nightclub is near the top of the list for many. Who wouldn’t want to offer a hip experience with live entertainment, specialty cocktails and good vibes? Once again, however, the reality of this type of business is generally far from fantasy. Even in the best of times, a nightclub needs a good location, advertising and some type of draw to bring in crowds from other entertainment venues. In 2020, the coronavirus shut down all nightclubs, and many will never reopen. And as things return closer to normal, there may be lingering reluctance on the part of customers to cram into small areas for some time to come. In short, starting a nightclub now could be a short-lived experience.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Business Ideas That Sound Good on Paper but Are Duds