One of the most critical decisions you will ever make in starting your own business is, for all too many entrepreneurs, not really a decision at all.
Many entrepreneurs never really think critically about what business to go into — they just jump in head first. Maybe they have a little experience in one business. Maybe they read an article somewhere about someone who made a lot of money in a particular type of business, and maybe it sounded like a cool and interesting thing to do.
All too often, these entrepreneurs end up with a bad business idea that they are doomed to struggle with (if it survives at all).
There’s a better way. That’s because there are some businesses that are more likely to survive. There are some that can make you more money for a lot less work (essential if you’re running this as a side hustle). There are some that are outright risky.
We’ll admit it: we are generalizing a bit here. With the right conditions, business start-up know-how and strategy, and hustle, almost any business idea can turn into a profitable venture. But business ideas aren’t created equal. Statistically speaking, some business ideas are more likely to be a success. A well-thought-out business model can significantly influence the success or failure of a business. So in this article, we’ll explore some of the best and worst businesses to start going into 2025 and beyond.
Deciding on business ownership is a crucial step in starting a successful business. It requires careful consideration of your goals, skills, and resources. Before making a decision, ask yourself if you have the necessary skills and experience to run a business. Consider your financial situation, risk tolerance, and personal goals. It’s also essential to research the market and competition to determine if your business idea has potential.
Owning a business is not just about having a great business idea; it’s about having the right mindset and resources to turn that idea into a successful business. Do you have the skills and experience needed to manage and grow a business? Are you financially prepared to invest in your business and handle potential losses? What are your personal goals, and how does business ownership fit into them?
Researching the market and understanding your competition is also vital. Is there a demand for your product or service? Who are your competitors, and what can you offer that they don’t? By answering these questions, you can make a more informed decision about whether business ownership is the right path for you.
Researching and brainstorming business ideas is a critical step in starting a successful business. It involves identifying your passions, skills, and market needs. Consider what problems you can solve, what products or services you can offer, and what sets you apart from the competition. Use online resources, such as business idea generators and market research reports, to help you brainstorm and refine your ideas.
Start by looking inward: what are you passionate about? What skills do you have that could be turned into a business? Next, look outward: what does the market need? What problems can you solve for your potential customers? By aligning your passions and skills with market needs, you can come up with business ideas that are both fulfilling and viable.
Don’t be afraid to use online tools to help you brainstorm. Business idea generators can spark new ideas, while market research reports can provide valuable insights into industry trends and customer needs. The goal is to find a business idea that not only excites you but also has the potential to be a successful business.
Any business idea can turn into a profitable company, but some ideas are a better, safer bet than others. Here’s “the good, the bad, and the ugly” for some common business ideas.
If you’re not sure what type of business you like best, starting a service business might be a great fit. Service businesses often rank among the most profitable business ideas due to their low startup costs and high demand.
Service businesses tend to be local, and competition from national firms tends to be less severe than for product businesses or Internet firms. For example, national firms usually don’t have a significant cost advantage over small local services. And the personal touch of a local owner can be a significant advantage in a service business.
Service businesses typically require less capital to start and operate than product businesses because you don’t have to finance inventory. Often, you can ask customers for immediate payment by credit or debit card upon completion of the work, so you don’t have to get involved in extending credit or payment plans. As a result, you can start many service businesses with a very small investment (or perhaps no investment at all). You can also operate a lot of service businesses as a home based business, saving a lot of money on overhead.
Some service businesses you can start part time, possibly even keeping your day job. There’s also a higher chance of breaking even sooner with a service business thanks to the low overhead costs.
If you’re aspiring not just to be wealthy, but to really hit the big time, a product business may be your best bet. But there’s a distinction we need to make: we’re talking about a product business, not a manufacturing. Manufacturing itself can take huge amounts of capital and is best left for specialized firms.
Although product businesses can lead to super riches, the risk and failure rate is very high. You will almost always be competing against larger national or international firms with similar products. Then there are the challenges of distribution and financing a growing inventory. Ultimately, to make a product business work, you really need to weigh the potential profits against the hefty challenges you’d face.
That said, creating your own product can be an incredibly fulfilling experience. There’s something magical about developing a concept, designing a prototype for it, testing it, and then bringing it to market successfully.
Take, for example, a book publishing company. Publishers face tremendous challenges bringing their product (books) to customers. There’s the process of locating titles that will be profitable. Then there’s the challenge of getting them edited, typeset, designing a cover, and then printing it and successfully selling it to readers. This work can be pretty difficult, but seeing readers enjoy great stories? Talk about rewarding.
Rental businesses are not as easy of a way to make money as you might think, but there are many rental firm owners who have made a lot of money. It takes time to develop a steady patronage and iron out the operational issues of running the business.
As a rental business owner, you must manage various operational challenges to be successful. You have to rent a lot of items, because the rental fees on even expensive products like cars or boats can be relatively modest. On the expense side, you have marketing costs, repair, and maintenance, to name a few. Liability insurance can also be high. Even if you get people to sign a release, you can still get sued on the basis of having rented out faulty equipment.
There are also issues like theft; even with the best preventative measures, you can find yourself spending hard-won profits to replace lost inventory.
Rental businesses also tend to be more cyclical, meaning business ebbs and flows throughout the year (or with upturns and downturns of the economy). Take, for example, a rental bike business. Unless you’re operating in a vacation destination that’s popular and temperate year round (unlikely), you’ll find that you’re busy during the summer months but slow during school season and almost nonexistent when the weather’s ugly.
If you prepare for this cyclicality in your business plan, you’ll be fine. But it’s one of several challenges you’ll need to anticipate.
Consulting can be a great business, offering your expertise to others to help them improve their company (or even their personally lives, depending on your consulting focus). This business is especially promising for entrepreneurs who’ve already had a career in their field, allowing them to use their niche expertise, well-established reputations, and industry contacts to their advantage.
Consulting probably isn’t the best option for younger professionals who are still building experience in their field. But if that’s you, you could consider partnering with a proven professional and starting a consulting business as a team. Your clients would benefit from your shared expertise, and you’d benefit from a shared workload and the opportunity to learn from your partner’s experience. You could also consider investing in some specialized training; specialized education can enhance your ability to provide valuable insights and solutions to clients.
There’s a wealth of possibilities in business consulting: public relations, information technologies, search engine optimization (SEO), marketing, and more. You could even offer your services to private clients with services like lactation consulting, personal styling, sleep consulting, or even resume writing.
One drawback (or advantage, depending on your personality) of a consulting business is that it’s usually a solo endeavor; when you aren’t working directly with clients, you’ll be on your own, chasing your next project. Even if you have a partner, it would be just the two of you.
Our recommendation? Start a consulting LLC to enhance your professional image and get the personal asset protection that this business structure provides (all while keeping your business paperwork manageable).
Retail is a lot tougher than ever before, and it’s getting more difficult every day. Think about it: where do you shop normally? Odds are, you immediately think of go-to stores like Amazon, Walmart, or a regional chain. Superstores and big box stores take a lot of the retail market share, and it’s not surprising. Since their sales volume is so high, they can offer competitive prices that would destroy smaller retailers. And having insurmountable brand recognition doesn’t hurt their cause, either.
It’s not impossible to compete with the mammoth retailers out there — the success of the various “Dollar” store chains shows this — but it is very, very difficult. You especially need a very carefully developed strategy that clearly differentiates your business and gives shoppers a clear reason for choosing your store.
You also need a retail space that’s affordable but gets enough traffic. To get started with even a very small retail storefront you’ll need money for probably for at least 2 months of rent, inventory, any build out and some cash in reserve. So for most retail stores you are going to want $50,000 to $100,000 to get started. And even for the very tiniest of retail store fronts you’re going to need upwards of $10,000 to start your business.
One strategy to succeed in retail is to pick a niche that’s pretty specialized or has a product that customers prefer shopping in person for. A good example might be a local bike shop. Your customers would prefer coming to your store to chat about which bike is best for their riding goals and then take a bike for a quick test spin. You could also pair your retail offerings with repair services to keep customers coming back even after your first sale. Hobby shops like tabletop game stores tend to have similar appeal.
Opening up a retail business online — or an e-commerce site, if you prefer — what could be easier? Just throw together a website and wait for the orders to roll in, right? Unfortunately, it just isn’t that easy. First, it’s much harder than you might think to get visitors to come to your site.
For starters, getting a new website to rank in the first page of search engine results of the more popular keywords on the larger search engines is a formidable task indeed. Granted, you can buy advertising to drive traffic to your site, but it is very expensive. Then, even once you have driven traffic to your website, it can be very hard to convert visitors to sales.
Overall new e-commerce businesses have a shockingly high failure rate. According to a study conducted by Forbes, Huffington Post and Marketing Signals, roughly 90% of all new e-commerce companies in the U.S. fail within the first 120 days.
That’s a scary statistic, but it doesn’t guarantee that your e-commerce business would fail. What it does guarantee is that you have to develop a really sound strategy for how you’re going to attract customers to your site and convert their site visit into actual orders. By entering this industry with your eyes wide open to the challenges and a plan to overcome them, you’ll increase your chances of success.
If you really want to go into retail, particularly in a category dominated by superstores, you could be a lot better off opening a secondhand store. You may be able to operate with no investment in inventory by only handling goods on a consignment basis — that means that you never actually own the merchandise. Instead, you display the goods and pay for it only after you have sold it.
But even if you are selling on consignment you need to get a healthy markup. You want about 15 percent of the sales price if you are selling high-priced items like cars or boats, and more like 50 percent if you are selling less expensive items like children’s clothing.
You can also make a thrift store work by buying a stock of inventory or accepting donations for gently used items. This might require a bigger investment of money and time, but you can appeal to buyers who enjoy the thrill of the hunt for a thrifted treasure.
Your biggest expense as a secondhand store will always be your retail space, so be sure you’ve accounted for that expense. If you’re not quite ready for that, you can consider using sites like Poshmark or even a social media account for thrifting to build some capital through sales and expand into a physical space later on.
Restaurants have a sky-high failure rate. Steady, loyal patronage may take years to build, and it can be very difficult to rapidly accelerate the process, even with elaborate marketing campaigns. Owners of successful restaurants usually have extensive restaurant experience, work endless hours, and either rely on their large close-knit families for assistance or have a special knack for attracting, retaining, and motivating good kitchen help and waitstaff. On the other hand, to emphasize how hard the business is, many owners of failed restaurants also possess these so-called “success traits.”
A restaurant business is rife with challenges. Finding a location is hard. Unless you get lucky enough to rent a building that was previously used as a restaurant, you’ll need to spend a lot of money to build out the kitchen and dining room. Even then, you’ll still be paying rent to your landlord. You’ll also have to overcome city regulations.
Overhead costs are also challenging. Between employee wages and utilities, restaurants can spend a lot on costs. The water bill alone for a typical restaurant can run into the $50,000 range.
The lunch business can be a nice compromise between the challenges of running a restaurant business and the profit potential. Think: with a healthy, high-quality sandwich shop, you can appeal to busy professionals who need a quick, filling, and healthy lunch option. Having limited menu items can also help limit your overhead costs; after all, making sandwiches doesn’t require a bunch of specialized equipment. You’ll need refrigerator space, a prep counter, and maybe a panini press or toaster.
A sandwich shop can also be a great candidate for running a food truck, which might help you navigate the location challenge of the restaurant business. With a truck, you can go to where your customers are, and you likely won’t have as high of a lease payment to make (unless you buy your truck outright).
Digital marketing is a growing field that offers many opportunities for small business owners. It involves using digital channels, such as social media, email, and search engines, to reach and engage with customers. Consider offering digital marketing services, such as SEO, content creation, and social media management, to help businesses build their online presence.
In today’s digital age, businesses need to have a strong online presence to succeed. This is where digital marketing comes in. By offering services like search engine optimization (SEO), content creation, and social media management, you can help businesses attract and engage customers online.
Digital marketing is a dynamic and ever-evolving field, making it an exciting area for small business owners to explore. Whether you’re helping a local business improve its search engine rankings or managing a company’s social media accounts, there’s a growing demand for digital marketing expertise. Plus, with the right skills and strategies, you can build a successful business in this thriving industry.
Wholesale business ideas can be easy to start, but hard to succeed. They involve buying products in bulk and selling them to retailers or consumers. Consider offering wholesale products, such as clothing, electronics, or home goods, to retailers or online marketplaces. However, be aware of the challenges, such as high competition, low profit margins, and logistical complexities.
Starting a wholesale business might seem straightforward: buy products in bulk at a lower cost and sell them at a markup. However, the reality is more complex. The wholesale industry is highly competitive, with many players vying for the same market share. Profit margins can be razor-thin, and managing logistics — such as shipping, storage, and inventory — can be challenging.
If you’re considering a wholesale business, it’s crucial to do your homework. Identify products that have a steady demand and consider how you can differentiate yourself from competitors. Be prepared to navigate the logistical complexities and work on building strong relationships with both suppliers and customers. While the path to success in wholesale can be tough, with careful planning and execution, it can also be rewarding.
Let’s be clear: an exclusive distributorship is a little bit different from a wholesale or warehouse business, and that distinction can spell the difference between razor-thin profits and business success.
On one hand, a wholesaler typically sells the goods of many different manufacturers and competes head-to-head with other wholesalers often offering highly similar, if not exactly the same, products, driving gross profit margins to razor-thin levels.
An exclusive distributor, on the other hand, typically has much higher gross profit margins because they sell specific goods to wholesalers and directly to retailers or end industrial users. Sometimes the exclusive distributor imports a foreign product. They might even be the only distributor for that product in a wide radius, meaning anyone who needs it comes directly to them.
Essentially, an exclusive distributorship works through its name: exclusivity.
We all know that the traditional print media —newspapers and magazines— have been devastated by online advertising competition, so why not focus there? Isn’t everyone starting an online blog? How hard can it be? Well, it’s easy to start an online blog. But it is nearly impossible to make any significant money at it.
There are currently more than 200 million online blogs worldwide. And there’s not enough advertising money to go around. Most blogs don’t even carry ads. But plenty do. However, most blogs that do carry advertising only receive a dollar or two in revenue a day.
Typically, they are getting ad revenue through an ad-serving platform. The ad-serving platform may keep around 35 percent of the revenue. Furthermore, the ad rates that advertising space is sold for on blogs through ad servers tends to be very low. So a blog may be a good way to show off your creativity, but less a good way to try to earn even a part-time income.
A better bet? Start a different business and establish yourself as an authority in that sphere. Then use a blog as a content marketing venture for some supplemental income.
Especially if you don’t have business experience, buying a franchise can be a good bet; after all, you can rely on the brand recognition of the store you buy, so you won’t have to hustle as much on the marketing front. But a franchise isn’t a panacea; franchises can and do fail.
If you go this route, understand that you’ll have a pretty hefty upfront investment, so it’ll be a while before you generate an exact profit. That said, some chains to offer purchase programs that help you work around this challenge, so be sure to carefully read your contracts before diving in.
Buying an existing business will, on average, dramatically increase your chances of succeeding in business. But buying and valuing a business is not usually a simple process, and there are plenty of things to watch out for.
For example, settling on a price for the company can be tricky. You’ll be paying for the physical space, of course, but you’ll also be paying for all of the countless hours the original owner has invested into the company. You’ll need to balance that equity with a price point that you can actually get a profit from later on.
Then, after you’ve bought the business, you’ll have the challenges of making it your own. Too many businesses fail by coming in and making too many changes to quickly, alienating the company’s loyal customer base and even its employees.
No matter what business you decide to start, avoiding pitfalls is crucial to running a successful business. One of the most common mistakes is failing to conduct thorough market research. Without understanding your target market and competition, you risk launching a business that doesn’t meet customer needs or stands out in the market.
Inadequate funding is another common issue. Many new businesses underestimate the amount of capital needed to get started and sustain operations until they become profitable. Poor management and insufficient marketing can also derail your business. Effective management involves not only overseeing daily operations but also planning for growth and handling challenges. Marketing is essential for attracting and retaining customers, so don’t skimp on your marketing efforts.
To avoid these pitfalls, seek advice from experienced entrepreneurs, conduct thorough market research, and create a solid business plan. By being proactive and prepared, you can increase your chances of building a successful business.
Any business you go into will involve some risk, but some businesses are inherently much riskier than others. Make sure you carefully decide which type of business you want to go into and are aware of the most common risks in that type of business. Then, think about the risks and reward potential of the specific business you are considering. There is a common adage of “no risk, no reward,” but smart businesspeople try to reduce risk any chance they can.
If you need more business ideas, check out our favorite small business ideas for entrepreneurs. This detailed guide explores more than 350 ideas in a variety of industries, from health and wellness to technology and more. It’s a great place to find some inspiration.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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