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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.
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