Successful Businesses with Low Failure Rates

Apr 3, 2025

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.