If you want to start a business, you’re right on track to becoming wealthier. It takes time and hard work, but both will pay off if you play your cards right. For this reason, you want to make sure that your business idea is something profitable.
Not all business ideas can take off, so it pays to know what to avoid. This way, you can maximise your capital, especially if you have borrowed from a registered money lender. If you’re still thinking of what business to start, here are three ideas to always steer clear of.
Multi-Level Marketing (MLM) Schemes
Different people have different opinions about MLM businesses. Of course, those who have made it big will rave about their MLM company all day long. But not everyone makes it big in this industry.
According to statistics, over 90% of people who sign up for an MLM end up losing money. Some make little money, while only a select few make lots of money. Often, those who do make it big earn most of their commissions by recruiting more people to join their company. It’s not so much about selling products anymore.
Since the population of the world is limited, they will eventually run out of people to recruit. And if everyone in the MLM company is doing the same thing, everyone will run out of people in a hurry.
In short, the entire business model of MLMs is mathematically impossible to maintain. You can no longer earn if you have no one else to sell to.
Not to mention the often exorbitant joining fees for many MLM companies. You’re better off investing that money creating your own business that actually sells a useful product.
Subscription boxes containing perishable goods
Subscription services have become really popular as a business model, especially with the rise of the SaaS (Software as a Service) industry. Now, you can get almost anything through a subscription, including food.
But food-based subscription services come with a huge challenge. Food items are perishable, so they need special storage and handling to keep them edible for longer. Also, they need to be delivered to customers as quickly as possible. The logistics requirements of such a business will end up costing you a fortune.
For this reason, it’s best to avoid putting subscription service and food in the same box. Choose a different product to offer under a subscription instead. The best products for this kind of business are those that can last long while stored away in your basement or a warehouse.
Anything with “AI” in it
Many businesses in 2023 have adopted the term AI (artificial intelligence). With the rise of tools like ChatGPT, Midjourney, and Bard, AI seems to be the next big thing in the entire tech industry. But that does not mean everyone who claims the AI label really knows how to use it.
If you plan to use AI with your business, make sure the AI will offer unique, useful benefits to your clients. This could come in different forms, such as:
- Making better sense of data
- Automating repetitive tasks
- Speeding up routine tasks
- Helping them come up with ideas
Don’t just slap “AI” onto your tagline, brand name, or value proposition for the sake of it. Make sure the AI actually does something beneficial.
Starting a business remains one of the best ways to build wealth. But not all businesses are created equal. If there are good business ideas, there are also bad ones. Avoid these three business models if you plan to start your own.