My blogging colleague Lynn Terry had some interesting comments today on a recent Yahoo Small Business article predicting small business failures. I liked her comments and have a couple more to add, and I’d like to thank her for wading through the Yahoo articles, becuase frankly, for an on line based business I find Yahoo clueless and negative … much more so than many more conventional “dirt based” publishers. Strange.
7 Small Business Ideas Most Likely To Fail
… The article states that “many people do a lousy job of picking businesses they can realistically turn into a profitable operation.”
The co-authors go on to say that most aspiring entrepreneurs consider small business ideas that are cheap or easy to set up, or start a business based on a love for the product or service – instead of basing their decision on true profit potential…
Here is the quick list of the 7 small business ideas they consider “overrated”:
- Restaurants
- Direct Sales
- Online Retail
- High End Retail
- Independent Consulting
- Franchise Ownership
- Traffic-Driven Web Sites
I’ve highlighted the 3 business models that are “work at home” options, but we could easily add Independent Consulting as a 4th model that can be done from a home office and/or as an online operation. …
Direct Sales – I agree with the authors that it is the Top % that performs well in direct sales. To some extent the model itself supports this, because as the company grows the top tier stands to profit most. However, the closing statement on this model didn’t sit well with me:
The result, Yancey says: “Most of them wind up with a bunch of jewelry or kitchen equipment sitting in their basement that they can’t sell.”
That they can’t sell… or that they don’t sell? …
I have to say Lynn has hit the mark with laser-like accuracy there. There is plenty, and I mean plenty of scope to make money in direct sales, but tou can’t do it by trying to sell third-rate crapolla and better than first-rate prices. That’s a recipe for disaster in any economic climate.
photo credit: Avia Venefica
A good friend I used to work with decided he was going to retire early and fund the short fall in his necessary retirement income with a direct sales website. I thought iut a little strange, as he was thinking of marketing clothes, retail, and had no expereince at all in that field, but heck, anyone can make a go of nearly anything if they work at it.
Problem is, my friend didn’t work at it. He signed up to some sort of ‘online mall’ membership deal and set ip a “free” website selling ultra-cheap looking immigration leather jackets and other schlock from China in competition with several other online mall members. You don’t need Dominic Dunn to tel you the effort ended badly. But that is not a failure of the business model (strategic), it’s a failure of how my friend chose to implement the model (tactical).
Read the rest of Lynn’s article, I think she makes some very good points, I’ll try to squeeze in a few more first-hand expereince comments later.
