Now, I’m not usually a negative person and I don’t usually like to talk about the “worst” businesses. The reality is most business models can work depending on what your goals are, and everyone has different goals.
That said, I can’t help but notice that there are a lot of people out there peddling “the best” business models that they guarantee will work. I have some pretty strong opinions based on what I’ve been seeing, as well as what I think is going to happen in the future.
Ultimately I want to help fellow entrepreneurs gain the freedom to have the lifestyle they want. And a big part of that is picking the right opportunity and business model.
1. Amazon FBA
Do not start an Amazon ecommerce brand.
It’s called FBA, or Fulfilled by Amazon. You’ve likely seen videos pop on on your social media that say something like, “Start a product company on Amazon, it’s so easy!”
And while FBA enjoyed a golden age from 2015 to 2017, those days are over. The once lucrative margins have dwindled, fierce competition is the norm, and Amazon's introduction of its own product lines poses a significant threat to independent sellers.
Instead, set your marks on TikTok for ecommerce. With the recent launch of online stores on TikTok, there’s a unique opportunity for entrepreneurs to promote products directly to their followers.
Be wary of this one, though. Just like FBA, the TikTok for ecommerce boom may not last forever. With all things ecommerce, it’s important to use caution and be adaptable.
2. Faddy Franchises
Do not start a fad-based food franchise like Crumbl.
This cookie franchise was very popular when it first came out. In terms of growth, they skyrocketed, and hundreds of franchises sold at impressive numbers in terms of profit margins. But…these same owners are trying to sell back their operations now.
It’s the same story as frozen yogurt. Do you remember seeing fro-yo places popping up all over the country fifteen or so years ago? How many do you see now? My point exactly.
Food-based franchises often experience rapid growth only to face a decline as trends shift. Between market uncertainties, high capital requirements, and more, there are so many other stable and proven business models to try instead.
Rather than chasing fads, focus on models that have stood the test of time.
3. Fitness Franchises
Do not start a fitness franchise.
Jenny Craig, Orange Theory, F45, you know what I’m talking about. The fitness/gym franchise concept is similar to the fad-based food franchises from above. You’re essentially investing in businesses that are reliant on predicting the next fitness wave. It’s not a smart move.
I prefer to look at business models that have been around for hundreds, if not thousands of years because I know they aren’t going anywhere. It’s one of the reasons why I went all-in on MaidThis, my residential cleaning company.
When you opt for models with a proven, long-lasting track record you can avoid the risk associated with following the latest trend.
4. Pool Route
Do not start a pool route business.
Sometimes I like to go on BizBuySell out of curiosity. You know what I always see there lately? Pool routes. The ad often reads like this, “It’s a contract with this number of houses, all you need to do is service the route.”
For whatever reason, everyone I talked to who runs this business model says that it’s increasingly hard to find technicians to do this. Just like every home service business, it can be difficult to find people to run the labor.
Pool routes in particular are even more difficult because you need to train someone (who is willing to go door-to-door) to actually service the pool. And because the amount you could charge the customer isn’t that high, you aren’t able to pay super well for the work. It’s a very low ticket item — there isn’t much profit margin per job so you need a lot of routes to make each job work.
Now, a pool route business could work if you upsell another service with it. For example, if you notice that the yard is a mess, you could upsell them a landscaping service. However, it’s a tough business. You have to be there in person (or hire a trusted technician, which is again, hard to find) in order to sell the client.
Market saturation, reliance on unpredictable trends, and low profit margins seem to be the common threads that connect these businesses. Rather than following a fad blindly, do your research before deciding on a model.
Stay informed, be adaptable, and avoid the ventures I mentioned above and you’ll be well on your way to building a business that actually works.
Photo by Tim Mossholder on Unsplash
This article was written by Neel from MaidThis Franchise, a remote-local franchise opportunity for people looking to escape the rate race and reach financial freedom. Learn more here.
