If you’re looking to launch a new business you may find it useful to know which businesses are the least profitable. After all, launching a new business is hard so the last thing you want is to find out after all your hard graft that your profits are miniscule.
Beverage Manufacturing
The potential is so appealing, that launching your own drinks brand could mean selling millions of bottles worldwide. But, wait. The competition is pretty fierce and there are many large brands to compete with. Furthermore, your product may have a limited shelf life. If it’s alcohol-based you will need to take into consideration licensing laws, including registration. People will usually only drink brands that they trust, so will have to spend a huge amount on marketing to launch your product. Taking all that into consideration beverage manufacturing can have profit margins as little as 1%.
Grocery Stores
Thinking of starting a grocery store? Think carefully. Grocery stores can have a pre-tax profit of as little as 2%. The grocery market is often competitive with large operators fulfilling most of your potential client’s needs. Also, food items have a sell-by date. If you don’t sell you will literally be throwing money away. Unless you have a truly ground-breaking proposition, stay clear of this one.
Real Estate Services Business
At first glance, a property services business may appear attractive. The start-up costs can be reasonable and the training to become an agent shifting client’s properties for rent or sale can be reasonable too. However, many large players in the market have been established for many years. It will be very difficult to differentiate yourself from the crowd and you may find it difficult to attract both landlords and tenants.
Bakeries
Have a passion for baking? Think carefully before you launch. The issue with bakeries is the large overhead costs. You will be spending a large amount on electricity or gas to bake your goodies. You may need specialised equipment and premises. The items are perishable and you will need to comply with food safety laws. You will also need to take into consideration packaging costs. All in all, probably not worth it unless you provide a high-end bespoke service to high-paying clients.
Retail
If you are planning to launch anything in the retail sector you need to think carefully. Footfall is down in most towns across the globe. Depending on where you live shop rents can be high and you will have business rates and other overheads to consider. Your main competitor will be the large online retailers such as Amazon, eBay etc. Unless your idea is amazingly unique and is likely to draw in customers for the experience rather than the goods, it’s probably not worth it.
Final thoughts
Sometimes having a passion is simply not enough. If you are considering any of the businesses above you need to check your business plan to ensure you have something unique that will attract customers. Do plenty of research to ensure that there is a demand for your offering.
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