4 Expensive Businesses to Think Twice About Starting

Follow your dreams — but run the numbers first.

Opening a business is one of the biggest decisions you’ll make. Once you’ve finally decided to take the jump and become your own boss, you’ll need to prepare thoroughly. It’s key you learn how to write a business plan to define and work towards accomplishing your goals. But none of that matters if you enter the wrong industry.

Choosing to open the right kind of business will have a substantial impact on your success — or lack thereof. Always keep in mind, the type of business you open will dictate how you live your life, so choose a field that satisfies your needs, both personal and professional. In some businesses, you are going to earn a lot less money than the effort you put in. These are the types of ventures you want to stray away from, so you can create a profitable business.

The business you decide to start will have a great impact on your chances of success, so you want to start off on the right foot. Here are some of the most difficult and expensive businesses, you should think twice about starting, so you can have the brightest financial future possible. Of course, if you’re a chef who wants to open a restaurant, following your dream is top priority and we probably can’t convince you otherwise. But for those entrepreneurs who just want to run a great business no matter what it is, reconsider these pricer ideas in exchange for a cheaper business to start.

Restaurant Business

There are millions of restaurants in the U.S., which means tons of competition. It’s also extremely easy to fail at opening a restaurant, if you come in unprepared. Without the proper education, planning and necessary funding, deciding to open a restaurant can lead you to financial distress. And, of course, it’s critical to acknowledge that the restaurant industry is among the hardest hit by COVID-19 closures, forcing many sit-down restaurants to pivot towards delivery and take-out food as their primary source of revenue.

In good times and bad, a restaurant takes tons of capital to open and maintain, and you can get easily distracted by the temptation to scale too quickly. Beyond needing the best location, great food and outstanding employees, there are tons of hidden costs associated with owning a restaurant.

You’ll need insurance for your business. You’ll need budget to market your business to the local community. Then, you’ll need to create an appealing environment to keep customers coming back. A water bill alone could end up costing you thousands, for example, so make sure you carefully consider these extra costs.

Owning a restaurant can be very rewarding, but you should think twice about opening one to provide your sole income. With expensive overhead and slim success rates, opening a restaurant is risk only someone with insatiable passion should take on.

Read: How to Write a Business Proposal

Rental Business

A rental business is another idea you should probably avoid starting unless you’re swimming in extra cash. Rental businesses come with high overhead, tons of hidden costs and extra liability as an owner. You’ll also have to worry about protecting what you’ve bought from being stolen or your entire company could end up afloat.

Whatever you’re deciding to rent out will probably take a lot of capital to acquire as well. Then you have to worry about the maintenance and repair costs that are inevitable over time. And, don’t forget about the insurance you’ll need to carry on every piece of equipment you decide to rent out. Even if you have customers sign a liability agreement, you can still be held responsible for renting out faulty equipment.

A rental business probably won’t lead to overnight success, as it takes tons of planning to develop an operation that’s profitable. If you’re not careful, this business could actually end up costing you tons of money in the end. No matter the business you decide to pursue, ensuring it is viable is step one.

Manufacturing Beverages

The craft beer industry is booming, but just because you like to drink beer doesn’t mean you’ll enjoy producing it. Manufacturing beverages, such as beer, can be very capital-intensive to acquire the equipment you’ll need to produce the drink. Not to mention the large warehouse space you’ll need to rent to get started. Then you’ll be selling your goods in a competitive market at such a low price point, it will be hard to turn a profit.

Brewing beer is also a science so it takes time and planning to come up with a winning recipe. Most people won’t be able to get it right the first try, so plan on using some of your funds for experimenting with different recipes. It’s easy to get carried away trying to compete with all of the businesses that already exist — there are thousands in the beer industry alone.

With all of these factors working against you, when will you ever expect to see a ROI? Opening a beverage manufacturing business is a huge risk, so think twice before you decide to get started.

Wholesale Business

If you are thinking about opening a wholesale business, then think twice. Although you might eventually turn a profit, with low margins and high costs, you might find it difficult to keep your business afloat. Wholesale business operations need to be concise and sophisticated to become profitable.

You’ll need to have tight credit and collection control, as well as a large volume of sales in a short period of time. This business is not one to enter, if you don’t have tons of space and capital available to you at all times.

Up Next: How to Pick a Startup Business Funding Option

The Bottom Line

Any business you enter will come with challenges along the way, but you should come in prepared to adapt to possible situations. Learn how to write a business plan before you decide to spend any money — it’ll help you spot potential roadblocks before they even occur. Consider talking to the team of professionals at Seek Capital to help you get the funding you’ll need to open a business that makes sense for your lifestyle and time horizon. Think twice about starting one of these expensive business ideas and weigh the risks and rewards of every new business endeavor.

More From Seek

Business Loan Resources

Photo credit: Jacob Lund/Shutterstock.com

Leave a Reply

Your email address will not be published. Required fields are marked *

Best Startup Loans of 2020 - Get Between $5,000 and $500,000

How much money does your business need?
Did you learn something from this article?

Get more great articles straight to your inbox!

Let us make it up to you with better articles straight to your inbox.

subscribe for more great funding ideas,
guides & how to's

We respect your privacy. privacy policy


Recommended For You

How to Come Up With a Business Name: Tips to Choose the Perfect Name

Coming up with a great business name is no easy task. Many common entrepreneurial instincts when it comes to naming a business, such as puns or mashing words together, are often some of the worst tips for naming your business.... Read More

How to Find Investors: 7 Steps to Raising Business Capital

Understanding the basics of raising capital is crucial to your business’s success. Before you get into which sources of capital to tap, you need to be clear on your business strategy. Draw up how you plan to get your business... Read More

10 Incorporation Documents You Need to Create a Corporation or LLC

Starting a business isn't as simple as coming up with an idea and starting to make money. To conduct legitimate business, you'll need to register the business, which includes deciding which type of business to form. And to do that,... Read More

6 Common Business Mistakes Brand New Entrepreneurs Make

When you decide to open a small business, you’ll face several obstacles throughout the process. Entrepreneurs need to be prepared for unexpected costs, problems with cash flow and personnel issues. Not to mention the challenge of creating a strong customer... Read More

subscribe for more great funding ideas,
guides & how to's

We respect your privacy. privacy policy