Starting your own small business is one of the most exciting, rewarding, and challenging endeavors you'll undertake. And, it's going to take some real foresight, research and dedication to keep the doors of your first business open. In fact, more than 50 percent of small businesses fail with in the first year of business, and 95 percent fail within the first five years, reports the Small Business Administration (SBA).
Several reasons contribute to the failure of a small business: lack of experience, mismanaging funds, poor location, or growing competition. But one of the biggest killers is starting a small business in a large industry without identifying if you have a necessary or essential product. We're not saying that you shouldn't open a small business, but you should be well aware of the risks if you do.
Related: 3 Secrets for Military Spouse Entrepreneurs
Conversely, there are some small businesses that are on the verge of booming due to an increase in demand: child care services; computer-related/Internet services; and home health care services.
Before you run off to start your own Internet-child-care hospice, take a look at four of the hardest small businesses to run (according to Forbes) as well as four of the most successful to date (according to Inc.com):
Four the Hard Way:
- Transportation -- This big category includes taxis, limos, ambulances, hearses and other vehicles for hire. All operators pay high insurance premiums, suffer during oil spikes and have tons of competition, but each mode has its own risks, too. Take taxis: In New York City, where the number of taxis has been fixed since 1937, the price of a taxi license is upwards of $400,000 -- a stiff entry price to do battle, even in a $1.8 billion market. Then you have to find trustworthy drivers to pull in revenue -- unless you enjoy grueling 10-plus-hour shifts.
- Retail stores -- It only takes one slow season to leave you swimming in inventory. And differentiating your shop among giants, such as Nordstrom, Gap or Urban Outfitters is not easy.
- Restaurants -- Purchasing the furniture and equipment, a liquor license, and passing the health code can run in the hundreds of thousands of dollars. Once you open your doors, get ready for your staff to walk out through them at a moment's notice. Oh, yeah: Most food-service vendors like cash on delivery, so a slow week can make it hard to buy next week's ingredients or alcohol.
- Travel Agencies and Tour Operators -- Travel is a do-it-yourself activity these days, with online travel search firms like Expedia and Priceline.com. To attract paying customers, agents and tour organizers now have to offer packages in more exotic locales, where Internet research is less effective. While it could be fun, that research takes a lot of time and money -- as will all the marketing to convince customers that you're a step up from their guidebooks, or that you can offer them better deals than they can find on their own.
Fantastic Four:
- Internet Services -- Starting your own web-related service may yield many results. Technology has become so essential in our daily lives that every home has at least one household computer and businesses are reliant on the Internet. Additionally, in the next three years the number of people who use the Internet is projected to grow to more than 2 billion, that is about one third of the world's population, reports Inc.com.
- Computer related services -- As more people, world wide, begin to buy computers at a low cost, the need for computer-related services will grow too. If you have a background in information technology and can help people eliminate viruses, or fix a reoccurring computer problem, you could be the next "Geek on Call."
- Child Care Services -- The child care/daycare industry has become one of the fastest growing businesses in the United States. What's more, this industry makes $11 billion annually -- and it's projected to keep growing. This may be the ideal small business for stay-at-home moms who want to be entrepreneurs as well.
- Home Health Care Services -- A small home health care business can reach many people. Each year more than 7.6 million people need home health care service reports the National Association for Home Care. The aging American population and advancements in medical technologies have spurred the necessity for qualified home health care professionals. This is a great opportunity to build a business that can help people for years to come.
The small businesses world is a tough arena. But your dedication and hard work -- coupled with the foresight to know what products people need -- can keep you in business for a long time to come.
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