Are these the best businesses for you to start?

In this video, Matt reacts to the five businesses that have the “best” success rates. Are these the best businesses to start? Watch and find out!

There are tons of people out on social media giving business advice. Some of it is good advice, but most of it isn’t good. In this new series watch CapForge’s owner react to different advice videos. He’s an expert in all things business and has 20+ years of experience under his belt. Some of the things he reacts to might even surprise you!

Video Transcript: 

Business Advice Video: 

The majority of businesses in the US fail within the first five years. So here are five with the highest success rates. Number five transport companies. With the rise of Ecom, online platforms, and the gig economy, this business has a 76.4% success rate. Number four renting residential real estate. I’ve been in this business a long time. Tenants pay your rent. Property appreciates long term has an 85% success rate. I’m in storage as well. The success rate is actually a little higher. Number three vending machines. I think this is the first business idea that most of us have as kids. Looks like there’s still demand. Success rate 90%. Number two, warehouse management. This has a 92% success rate. Basically, people are turning their warehouses into a self-served warehouse using tech you don’t need any bodies on the property to manage it. Number one, laundromats. Most of us have been hearing about this one forever. Low overhead, recession resilient. They’re cash machines with a 95% success rate.

Matt reactions: 

So the first thing is it’s kind of ridiculous to say that these businesses never fail. The ones that fail, you don’t tend to hear about too much. And it doesn’t matter if every other business was successful. If yours failed, that sucks for you. So really what you want to do is make sure the business you start doesn’t fail. And I would not go specifically into any of these businesses just because I thought these had a potentially higher success rate. Right? You’re going to have the highest success rate starting a business that you are comfortable starting. So if you’re a graphic designer, you’re going to have much higher success rate starting a graphic design business. You could start freelancing on Fiverr or Upwork or one of those sites and eventually get some clients, build up your portfolio, and build a business that way. Graphic design is not on this list, but if graphic design is what you know and you can do, you’re going to have a much higher success rate launching than trying to launch a laundromat just because it’s the number one thing on this list. 

So let’s just talk about this for a second. Transport companies. There was just a huge huge transport company that declared bankruptcy. Yellow. They’re you know a billion-dollar multi-billion dollar company and they recently just declared bankruptcy. They’re in the transport business. So if those guys had trouble, I don’t think it’s as simple as being a sure thing at all. And certainly, when you’re starting smaller, you have even less resources to make that work. Renting residential real estate. Yes, if. Yes, if you can get it, you can get rent higher than the mortgage costs, which if you just bought the property, is probably unlikely. But it only takes one tenant to stop paying rent and decide also not to move out and also decide to trash the place and also decide to have some of their crackhead friends move in with them for a while to completely destroy the profits from that business for years to come. So for as many residential real estate rental success stories as there are, there are certainly also some horror stories out there. And that’s not a business it’s easy to start with little or no money. You’ve got to have enough capital to get a property to rent in the first place. So while there are a lot of people who need to rent places, renting residential real estate, not a slam dunk. Vending machines. Yes, it’s very easy to buy a vending machine. I could go out right now and buy ten vending machines, but that’s not how that business works. The only way a vending machine makes money is if you’re selling something that people want and it’s in an area where there’s a lot of people who want that product. So there’s a lot of vending machines sitting out there in locations that sell two sodas a day and cost more in electricity and the money to stock them than anybody’s getting rich or will pay back the cost of buying that vending machine in the first place. So vending machines can be successful, but like anything else, it requires hard work and knowing what the important part of a vending machine business is, which is getting the location. Warehouse management. I don’t even know where to start on that one. Yes, it can probably do well, but you need a warehouse, which is not a trivial thing to get a hold of. And then you need enough demand in the area, you need the software and tech to run the thing, and you need to do it at margins that can be successful. And that is not anybody’s idea of an easy process to do. And then laundromats. Yes, people have been talking about laundromats for years as a great passive cash flow source. But again, you’ve got to make sure the demographics are right, where your laundromat is located, the rent works, the machines are in good shape. And one of the things that happens in laundromats all the time is the machines break. So if they break more than the money you’re collecting, you may be running a laundromat, but successfully and profitably may be something else. 

So that’s not to say any of these businesses can’t be successful, but to say that this is the top five to pick from and these are slam dunk ideas and you can never fail with these businesses, I think, is really overstating the case. You’re much better off figuring what business is going to be good for you to do and looking into how to start. That not going off of a list from a video like this.