It is no secret that we all would like to set up a reliable business with a high success rate. No one would wish to incorporate a company that is doomed to fail. A logical question is, how can one be sure the chosen business or industry has a low failure rate? The article below comes with hopeful stats for business people about to set up a startup or a new business in 2023.
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Not a single business is invincible. Startups or well-established market players all risk failure in the near or not-so-near future. Risks and potential failures are an integral part of business life, and it is particularly true for serious large-scale businesses. The well-known risk-return tradeoff principle means that would-be returns go up alongside with the risk increase.
This explains why shares are more profitable long-term compared to regular savings bank accounts.
Although high-yielding assets like large businesses may generate income above 30%, they involve serious risks. According to the US Bureau of Labour Statistics, around 20% of startups fail within 2 years since the launch date, 45% – within 5 years, and 65% – within 10 years.
Yet, not all hope is lost, as certain businesses come with the least failure rates. It means, their chances for success are much higher.
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Industries with highest failure rate
You’d better think twice if you are about to incorporate a small enterprise in the mining industry, quarry development, or oil and gas production, as these face the highest failure rate.
The industry employing mining engineers, geologists, and first-line controllers comes with the highest failure rate of 25.6%, with most failures occurring during the organization’s 1st year in business.
Here are some other industries with high failure rates:
- administrative services and garbage removal services (e.g., offered by street cleaners, house cleaners, office clerks, and security guards) – a 20.9% failure rate
- information industry (e.g., support service employees and telecom equipment installers) – a 20.8% failure rate
- entertainment, art, and recreation (e.g., actors, musicians, and entertainers) – a 18.9% failure rate.
Mining, quarry development, and oil and gas production industries also boast extremely high failure rates, with failures occurring within 5 and 10 years since the company incorporation date.
Take a look at the following stats for 5-year and 10-year business failure rates broken down by industry:
Business failure rates broken down by industry
|Industry||1-year business failure rate||5-year business failure rate||10-year business failure rate|
|Mining industry, quarry development, and oil and gas production||25.6%||58.5%||74.8%|
|Administrative services and garbage removal services||20.9%||49.1%||66.9%|
|Art, recreation and entertainment||18.9%||42.6%||66.5%|
|Professional, scientific, and technical services||17.1%||47.7%||70.3%|
|Transport and warehouse services||16.2%||47.0%||67.3%|
|Business and company management||16.2%||48.6%||63.0%|
|Financial and insurance services||15.3%||43.3%||63.2%|
|Other services (except public management)||15.1%||40.7%||61.7%|
|Hospitality and catering services||14.7%||40.4%||64.3%|
|Healthcare and social services||14.1%||44.1%||60.8%|
|Agriculture, forest management, fishing, and hunting||12.3%||30.0%||48.1%|
|Real estate, leasing, and rentals||11.6%||35.1%||59.8%|
Businesses that you launch in the industries listed below boast the lowest failure rate:
- real estate, leasing, and rentals (property managers, real estate agents, and rental clerks): a 11.6% failure rate
- fishing, hunting, forestry, and agriculture (agricultural equipment operators, lorry drivers, agricultural workers, and common labor personnel): a 12.3% failure rate
- retail trade (cashiers, retail personnel, and shop assistants): a 12.4% failure rate
- healthcare and social services (home care assistants, licensed practitioners and professionals, healthcare service managers): a 14.1% failure rate.
Real estate, leasing, and rentals have top chances to survive the 1st year but are hardly likely to stay in business after 5 or 10 years. Within the said periods, they will be outperformed by agricultural, forestry, fishing and hunting enterprises.
Let’s talk about 7 business types least likely to fail mentioning the stats for these companies and businesses so that you could decide as to the best way to start a business in the aforecited sectors.
Why is it vital that you realize what share of businesses will fail and what percentage of companies will survive 10 years in business? Substantially all business people spend a tremendous amount of time, money, and energy to set up a new business. With this in mind, it is crucial to choose the one that is likely to avoid failure and will eventually succeed if you are about to incorporate your own company. You may be willing to run against the wind yet increasing your chances to do well and flourish is a stellar strategy.
1. Vending machine business
With a trade enterprise, your likelihood to fail is miniscule, while with vending machines, it is next to zero.
Purchasing a vending machine to start your impulse buying business does not require major investments. With a vending machine in store, you will only have to find some space in a high-traffic area to generate sales. It is as simple as that.
We recommend you start with 1 vending machine to see how the business operates and gradually expand it later on. In future, you will be able to build a vending machine empire to generate a passive income of USD 5,000 per month or more.
With vending machines, your success rate will reach 90%. The combination of a low failure rate, affordable startup costs, and simple business transactions is a 100% winning formula.
2. Laundromat business
Laundromats make another excellent business boasting a low failure rate. Relying on Laundrylux, laundromats boast a 95% chance to survive 5 years in business. In these business jungles, nothing is guaranteed, yet the aforecited low failure rate looks truly impressive.
Laundromats make for a superb recession-proof business that will generate income regardless of economic developments, no matter how favorable or unfavorable they may be. Empires come and go but people always need to have their clothes washed and dried.
The best thing about laundromats is that this is a passive business that necessitates little involvement on your part. Machines do all the hard work, customers load and unload laundromats on their own, while business owners only take care of cleaning and repairing laundromats as well as collecting cash. For these purposes, however, business owners may hire personnel and not be bothered. FYI: a laundromat business comes with minimum expenses and minimum failure rate.
3. Rentiers – residential and office real estate rentals
The choice in favor of purchasing real estate to lease it out later on is a first step to build a multimillion-dollar business in future. As Andrew Carnegie used to say: “In ninety percent of all cases, millionaires owe their success to the real estate they own. Funds invested in real properties leave industrial investments taken together far behind. Today, both rational fellows and wage earners invest in immovable properties”.
With this in mind, it is hardly surprising hard asset investments come with an enviable success rate of 85.3% and a minimum failure rate.
Why is a real estate business the one least likely to fail? Consider this: money flows are there for you to enjoy on a permanent basis, tenants pay your mortgage, and real estate assets go up in price long-term. Alongside with the fact you are free to purchase real estate on a mortgage to lease it out later on, this creates a leverage to increase profits and grow your wealth potential.
A rental property business may be structured to become a source of passive income. The only thing for you to do to turn it into reality is hire a real estate manager. Managing properties independently remains an option, in which case you will spend 5 to 10 hours per month to control up to 10 property units. As per the International Wealth professionals, the above passive business faces the lowest failure risk.
Real estate is a liquid asset that is more profitable compared to capital assets and comes with a lower failure rate. When push comes to shove, selling a couple of real estate units can be a solution to get you out of trouble.
4. Warehouse management business
If you feel like investing in real estate but don’t want to deal with tenants, garbage, or restrooms, warehouse properties may be your thing. With an impressive success rate of 92%, warehouse managers are least likely to fail.
To turn your warehouse business into a passive one, consider self-serve warehouses that require no service personnel. With technologies on the rise, it is not only possible but also easy to do. Using their smartphones, customers may book a warehouse facility, obtain a code to unblock it and bring the things to be stored therein. None of these actions requires a manager present. A business as simple as this is unlikely to fail.
5. Transport companies
With e-commerce, gig economy, and online platforms, setting up a transport company is easier than ever.
The concept of a transport enterprise is simple. It is a business that delivers goods or passengers to the desired destinations and charges fees for it.
In any shape or form, be it long-haul cargo transportation or Uber side gigs on weekends and everything in-between, a transport business is unlikely to fail.
The aforementioned businesses boast an admirable success rate of 76.4%.
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With transport companies, success rates vary since some of them are riskier compared to the others. By an average, the failure rate is minimal in their case.
6. Agricultural enterprises
Being pretty stable, agricultural enterprises boast a low failure rate. They come in all shapes, forms, and types, including farms, mills, and any related enterprises.
The success rate of 88% that agricultural enterprises boast is indeed something. This is superb news for those interested in agriculture or related businesses, as they are unlikely to fail.
7. Dump truck services
As claimed by smallbiztrends, a trucking company rendering dump truck services is most likely to survive compared to competitors from other industry branches and faces the lowest chances to fail.
No doubt, it takes a lot to launch a mining company, not to mention the fact that the process requires substantial investment. Yet, the mining industry is stable and you can benefit therefrom if you put your mind to it.
You can either launch a business to sell and service dump trucks or lease them and set up your own trucking company. Many miners use the services of third-party trucking companies by ordering their dump trucks with drivers.
Those living close by such miners, can benefit from demand for dump trucks that never runs low. With dump trucks, one can transport coal or other mineral deposits. The best thing about it is that you don’t have to spend millions of dollars to start mining. A second-hand dump truck will cost you USD 15,000 only.
Dump trucks are universal. They don’t have any limitations as to industries that they service, the mining industry being just an option. Dump trucks are used to transport bulk construction materials and service highway carriers. Services rendered by your enterprise will be in high demand with building contractors, landscape designers, real estate agents, and even property owners who need to take out lots of garbage and waste. No wonder, dump truck services come with a minimum failure rate.
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