According to Yahoo there are 7 overrated business that most aspiring entrepreneur should think twice before engaging with one of them. It says that many would be entrepreneurs are drawn to business they like to patronize or the ones that are the cheapest and easiest to start.
People are most likely to start businesses in industries where start-ups are most likely to fail. Scott Shane, entrepreneurship professor (Case Western Reserve University).
Here’s the list of most overrated business:
1. Restaurants – 60% of restaurant close in the first three years, according to a 2003 study at Ohio State University. It requires more than having a unique and good recipe.
2. Direct Sales – Work from home and earn commission. The problem with this type of business is that those that are sitting on the top of the network are the usually high earners (who by the way gets their bonuses and a percentage of commission from new recruits).
3. Online Retail – Marketplace is already saturated by Ebay and Amazon.
4. High-End Retail – With the global recession, people are no longer spending money on little luxuries.
5. Independent Consulting – Many consultants spends so much time scouting work that it’s very difficult to earn steady income.
When the engagement ends, they are frantically looking for work.
Dennis Ceru, entrepreneurship professor (Babson college).
6. Franchise Ownership – Many people don’t understand the risks associated with franchising and sign restrictive franchise agreements.
7. Traffic-Driven Web Sites – You need to have a million page views a day to attract advertisers.
It is an interesting article, but I think it’s not really about the type of business but rather it’s about the lack of preparation on the part of entrepreneur. Many tends to think that having a business will give them more personal time and money, but unfortunately it’s not like that. You need a plan, commitment and knowledge to run a business everyday.
