Businesses with Low Failure Rates

Introduction to Business Failure Rates

• Concern about Business Failure: Many businesses fail, leading to apprehension in starting.
• US Bureau of Labor Statistics Data:
  • 20% of US small businesses fail in the first year.
  • 50% fail by the fifth year.
  • Two-thirds fail after 10 years.
• Success in Business: Understanding businesses with higher success rates can guide better decision-making.

Importance of Recency Bias

• Recency Bias: Affects future decision-making based on recent successes or failures.
  • Successful beginnings increase the likelihood of taking further risks.
  • Initial failures diminish the willingness to take risks again.

Businesses with Low Failure Rates

1. Laundromats

• Success Rate: Around 93-94.8% over five years.
• Attributes:
  • Simple business model with coin-operated machines.
  • Low failure rate and recession resilience (ongoing demand for laundry services).
  • Potential for passive income as an absentee business.

2. Rental Property Businesses

• Success Rate: 85.3%.
• Attributes:
  • Involves owning tangible assets (real estate).
  • Offers steady cash flow through rent.
  • Benefits from appreciation, leverage, and tax advantages.
  • Can be managed passively with a property manager.

3. Self-Storage Facilities

• Success Rate: 92%.
• Attributes:
  • Low management needs due to technology (keyless entry, automated systems).
  • Opportunity for value addition and property appreciation.

4. Transportation Businesses

• Success Rate: 76.4%.
• Attributes:
  • Includes last-mile delivery and various transportation services.
  • High demand with the rise of e-commerce.
  • Low initial capital expenditure and inherent asset value (e.g., trucks).

5. Vending Machine Routes

• Success Rate: Around 82-90%.
• Attributes:
  • Low startup cost ($3-5K for a machine).
  • Good for learning business basics (PnLs, logistics).
  • Potential for growth by expanding and rolling up the business.

6. Senior Care Centers

• Attributes:
  • Supported by government subsidies.
  • Growing demand due to demographic changes (aging population).
  • Potential to start small with zoned residential properties for assisted living.

Conclusion

• Low-Risk Businesses: These businesses provide opportunities with lower likelihood of failure.
• Considerations: Factors such as market demand, asset management, and scalability contribute to low failure rates.
• Future Topics: Audience suggestions for other business explorations.