Businesses That Never Fail

 

Businesses That Never Fail? 6 Businesses With Amazingly Low Failure Rate:

How do you have a business that doesn't fail? We discovered six businesses that have the lowest failure rate and they are all supported by statistics. because I believe it is reasonable to worry about running a failing firm. The US Bureau of Labor Statistics, which sounds incredibly nice and authoritative, says that 20% of our small enterprises fail within the first year, and that number then rises to 50%. Two-thirds of all enterprises fail by the fifth year and by the tenth year. These are not excellent odds at all.

The most crucial decision you make is the first deal you make or the first business you start because if the first one fails, your likelihood of taking the risk again is drastically reduced. Therefore, if we actually look at the data to figure out which ones have the highest likelihood to succeed, then you can determine if we want to jump into those pools we were talking about. Your recency bias is what we refer to as.

You are more likely to go win again or take more risks if your recency bias is positive, which is why we prefer tiny wins. You're less inclined to continue taking the risk if your recency bias favours losing or negative experiences.

Number one, laundromats

Laundromats and an amazingly low failure rate. According to statistics laundromats have about a 94.8% success rate over a five-year period. the Chamber of Commerce did a study in partnership with Speedway, where they show that they have about a 93% success rate. So somewhere in the 90s, let's call it again, nothing's guaranteed in business, but that's one of the reasons we talk about these laundromats. they have a low failure rate. They're simple-to-understand quarters machines, a little bit of a dryer, a little bit of a washer. They typically don't take millions to start or buy. And it also turns out people need to wash their clothes, even during recessions so you have downside protection.

Number two rental property businesses

You know, I think it was Andrew Carnegie that said 90% of all millionaires become so through owning real estate more money has been made in real estate than almost all industrial investments combined. So maybe it makes sense that they have an 85.3% success rate. Why is real estate interesting and why does it have a low failure rate? Well, one is because again, it's a simple business with hard assets. So you know you have your house in the market is really efficient. So typically your house is worth what the market says that it is there are not a lot of variances there are changes you typically have monthly cash flow in the form of rental income. It's pretty easy to model because you know, upfront, I have to pay taxes mortgage, and I have to pay y from my renter. 

Also, interesting parts about real estate are obviously things like appreciation being down 4% a year on average and my favorite word, leverage. This is the form of mortgage, right? So you have the ability to use somebody else's money in order to buy real estate. And then that also allows you to have tax benefits where you sell to defer capital gains, Depreciation, or Amortization, which basically are different ways for you to take right off on your taxes overall. And then there's the passive component and you could just hire a property manager. There's no such thing as free money with no work but real estate prices are interesting.

Number three is the self-storage facility.

You don't like the idea of real estate investing for multifamily, let's say and you don't want to deal with tenants or trash and toilets, self-storage has fewer of those things. They have been one of the leading asset classes in real estate since 2008. And according to a few studies, these resilient businesses have a 92% success rate. One caveat here I would say though, is there are a lot of these self-storage facilities. So will that 92% rate continue? I want to watch what's going to happen in the next couple of months and years. technology makes this not only possible but pretty standard to run these things easily.

 So basically you have keyless entry. You have tracking systems, you have security systems, you have automated bill pay, and you have all automated contracts. All of this allows people to get in and out of their units without you. Then there's the Value Add Component adding things to the business to make it more valuable and efficient. They're high with this type of asset class. It doesn't take a ton to make Self Storage pretty interesting. In fact, look at what you can do if you don't have your self-storage unit and what the normal increase in the property value is for that. So the phone has allowed us to have no manager onsite needed.

Number Four, transportation businesses

Transportation businesses last mile delivery. I think last-mile delivery is the biggest change in our economy in the last 10 years when it comes to transportation and logistics with E-commerce coming along with the gig economy online platforms. It's more needed than ever to have a way to get the goods into our grubby little mitts and porches. Basically, trucking that delivers goods or people from one place to another is transportation and logistics.

These businesses have a success rate about 76.4% According to adviser Smith, that's kind of fascinating. On average, these businesses have a high success rate I think because again, we don't have that many inputs. I'd worry about scale, given the demand for drivers if you wanted to really create a huge empire, but as a job turn into a business. 

This one can be interesting and relatively low risk. You know, you could buy a truck that's going to have an inherent value in it a little bit of depreciation after you buy it. Maybe if you buy it new, and it's your time to start with actually running the routes or having somebody else but you don't have a lot of what's called cap x or upfront expenses in order to run this business. And so not only does it have a relatively low failure rate, but I always am looking for how can I make sure a deal can never bankrupt me. I don't ever want to do a deal where if this one deal goes sideways, especially in the beginning, I could wipe out the past 20 years of my investing and working and neither do you and that's why I like these little gateway starter businesses.

Number five, vending machine:

You don't need a lot of cash, three to 5k You buy a vending machine and get started or you're super smart and industrious and you buy a used one for 800 bucks.

it's a great business to learn things like logistics, pricing margins, managing a few contractors, or running it by yourself. You start small it's not going to bankrupt you. You figure out how the business works. And then you slowly expand and this business has more than a 90% success rate. Then you can eventually have a bunch of them, roll them up, and sell them as a group. So the actual success rate for a vending machine business varies from 90%, According to the US Bureau of Labor when you combine the low failure rate, affordable startup costs, and simple operations in this business, I really like this starter business.

Number six senior care centers.

So this one surprised me. I didn't realize the senior care centers had such a low failure rate. But actually, it kind of makes sense for a lot of reasons. One, government subsidies, state subsidies, and city subsidies that basically allow people to run senior care centers like this with some help from the government too is obviously the demographics in the US are changing. 

There are a lot of older people, and fewer young people and they need more care. Now, originally, when I thought of these ideas, I was like, what are some beginner ways to do this? You can't buy I mean, this property right here costs 10's of millions of dollars. 

You probably can't buy that when you're just starting out. But I didn't realize that there are a ton of little houses where they actually rent a house and get it zoned properly for senior care. Or alternatively, buy a house and get it zoned, or the right certificates to be able to have assisted living there. So that's why this idea it's actually kind of interesting.

If you want to learn more and increase your knowledge then read.... 9 things that highly successful people do to achieve goals