Low-Risk and Safest New Business Ideas to Launch
So you want to start a business and learn about the safest businesses to start. That’s smart because starting a new business can be risky. There are all kinds of risks of losing your capital investment, time spent, business confidence, personal reputation, family relationships, and your health too!
So, in this blog post, I will give you lots of low-risk business ideas and tell you which are the highest risk businesses to avoid.
Plus, I’m going to share with your my hard-won tips on how to make your business startup safer to reduce risk and increase your chances of business survival and success.
What is the safest business to start?
You are sitting at your desk, and you are thinking about what business to begin. You have considered a few ideas, but you don’t know which one is the safest. Don’t worry! We’ve created this list of safe and profitable businesses for entrepreneurs who want to start their own firm but need some help deciding which business idea to launch.
One safe type of company to start is in the field of business consulting: it has low overhead and is a highly profitable endeavor. It is low-risk because you often get paid upfront and will not have high overhead expenses. If you want to start a business, think about what you know.
Take the skills you already possess and use them to advise clients as a paid consultant. And, you have connections in the field from your career who might just become your very first customers. The highest demand consultants now are IT, Marketing, financial, human resources, social media, and security.
Tutoring is a safe business idea for someone with teaching skills looking to avoid administration. With tutoring, you guide a student in an academic subject that you know, such as school subjects (Math, Science, English), foreign languages, professional accreditation, and life skills (public speaking, meditation, and cooking).
Become a Virtual Assistant
If working from home is your thing, then a virtual assistant might be the perfect side hustle. For example, you could work for someone else and set your hours to make it easier on yourself with balancing family life or taking care of children.
Sell Your Services
A service-based business is the safest bet for entrepreneurs. Many entrepreneurs start small by providing services in their local community. These are “safe” business ideas because there is less competition and a lower chance of failure. Launch a service business with your current skills and talents.
Also, consider the equipment needs and lower your startup costs by starting a business with the things you already own or have access to it. You do not need to outlay cash to purchase new tools. Some low-risk service businesses include lawn care and house cleaning.
Start an Online Course
If you have expertise in something that people are willing to pay for (such as blogging), you might want to create a course on the subject. You can use sites like Udemy or Skillshare
Start a Podcast
This is another excellent way to earn income while working from home and one that could be very lucrative for those who have an audience already in place. Just think of all the different types of podcasts out there, from comedy to political commentary. These are the best ways to monetize your podcast to make income.
Peddle Your Unused Clothing
This safe business idea might sound like a no-brainer, but it’s not just about going out and selling your clothes on eBay or Craigslist. Instead, you could host an event at your home for friends where you sell their unused clothing then use the profits as seed money to start up another business venture.
Sell Your Unused Books
Everyone has a few books they no longer need, and if you want to turn them into cash, then hosting an event in your home is yet again the perfect solution. Just think about all those book clubs out there that would be more than happy to come over for dinner while getting some new reading material in the process.
If you have a spare room or the space for catering, then hosting events is a great way to create a profitable business is to find new trade opportunities in your community. You can do anything from birthday parties to wedding receptions depending on where you live and what’s popular locally.
Launch a Rental Business
Starting an organization that leases equipment is an excellent business opportunity because you can generate recurring income. Typically, there is are lower capital startup costs and higher profit margins. Also, this is a great side business idea to work part-time, out of your home, while working full-time at your day job.
Rental Business Resources
Deal in Antiques and Collectibles
If you know about antiques and collectibles – put your know-how to work to make you money in your own business. It is a safe startup choice because many antique owners will allow you to sell their items on consignment, so you do not have to invest much startup capital. A friend of mine makes good money buying things at thrift shops and garage sales, then reselling them at a nice profit on eBay and antique fairs.
Become a Reseller
Becoming a reseller is an excellent safe startup choice for beginning entrepreneurs. You can start your resale businesses with low startup costs, less danger, and potentially higher profit margins since you are not buying lots of costly new inventory. Get my best reseller new business ideas here
Open a Dropshipping Site
If you are skilled in marketing and sales, starting a dropshipping business may be an excellent way to become an entrepreneur. One of the safest businesses to start is a dropshipping website. You can create an income without having to worry about storing or shipping products yourself, as third-party vendors handle them.
First, start by promoting your products on a blog or any other marketing channels available to you, such as social media and online forums. Then, when customers make a purchase, you send the order to the supplier, who will then complete it. You can use reputable services like Doba or Orbelo to help get your business off the ground.
Work Freelance Gigs
Gig consulting and freelancing are two safe ways to earn money on the side. You’ll need some experience in consulting, but with freelance work, all you need is reliable internet access and the required skillset.
Being a freelancer is having total freedom. You can work when you want, be your own boss, and do your own work. Working for yourself is great! You get to take time off whenever you want and work on the things you like without anyone telling you what to do.
If you are skilled in design, writing, programming, or organization, this is a great profession to enter – primarily because it’s accessible and easy. Simply open a profile on one of the major freelance marketplaces such as Fiverr and start getting jobs. As with the other companies on our list, freelancing has low expenses and high profits.
In addition, you can generate cash from other high-demand services as a presentation creator, editor, and social media manager. If you are an aspiring entrepreneur with creative and technical knowledge, this could be a very lucrative venture. Starting a business can be daunting, but you’ll only need three things to create freelance gigs – your skill or expertise, a laptop, and the software (if required).
Sure, you are scared to venture out on your own. No wonder when all you hear from well-meaning family and friends are terrifying statistics like 90% of startups fail within the first five years! Happily, statistics are not accurate – in fact, according to the SBA report, over half of all new companies survive five years. Check out my post about this encouraging news for new entrepreneurs here.
Now let’s review the highest-risk business ideas so you can avoid these failure-prone industries.
If you’re not experienced in the food industry or don’t have access to an established customer base, then opening your own restaurant might be too risky. Instead, you could consider catering services so that those customers come to you instead of investing all of your time and money into something uncertain.
Clothing Retail Stores
Clothing retailers are precarious businesses because they require a large amount of capital to purchase inventory, secure retail space, and have shrinking profit margins.
Additionally, they are subject to shifts in consumer tastes, theft, and merchandise damage. If you want to sell retail apparel, choose one of the safer options, such as reselling, drop shipping, and selling clothing.
Real Estate Flipping
There has been too much volatility with housing prices lately in many markets; plus, renovations take up a lot of time which can be used for other projects with a higher chance of success.
Oil and Gas Industry
Oil enterprises are complex businesses to enter with high costs and complicated regulations, so unless you’re an expert in the field, this is not likely to turn out well.
This is one business idea that will demand patience from entrepreneurs while requiring high upfront investment for little payoff, as well as specialized devices designed specifically for mushroom farmers. With such steep barriers to entry, it may not be worth the exposure when there are other safer ventures available.
If you are interested in trying this business idea out, first read my guide on how to make money growing mushrooms here.
Farming can be uncertain. You could spend a lot of money and time planting, and it doesn’t work out. A farmer can’t predict what will happen with their crops. Mother Nature could steal all or a significant portion of his crop with cold weather and floods. Farmers face many challenges.
The reward for success is high, but one small mistake can mean a fortune’s worth of lost investment. If you want to try your hand at farming, check out our list of the best agricultural business ideas.
Painting Contractor Services
This isn’t among our safest small business ideas because painting contractors depend on the weather. If it rains or snows, then the business will slow down, so most painters have a side job for when times are tough.
Dry Cleaning Service
Though the cost of starting this type of business is typically no less than $25,000 if not more, with some services costing up to $500,000+, you can find cheaper franchises that offer smaller costs upfront.
High Fraud Industries
Precarious businesses are more susceptible to fraud and scams, which could be a setback for any aspiring entrepreneur. While they are still legal, they often suffer more credit card chargebacks and fraud than other business types. The most high-risk industries are online gaming, adult content websites, travel booking, horoscope, selling event tickets Forex trading.
Are amongst the most hazardous startups because they depend on getting FDA approval which can be costly, take a long time, and is often not granted.
11 Ways to Make Any Business Start-Up Safer
Yes, all worthwhile endeavors- like starting a business – have some measure of risk. It can be scary to become an entrepreneur because it is fraught with possible pitfalls. Yikes!
I have started many businesses and fallen into every pitfall there was! So, I have learned how to avoid the worst mistakes in entrepreneurship and want to share them with you now to help you avoid trouble. So, here are my 10 ways to make your business startup safer by lower the dangers.
1. Do What You Know
The safest business to start is doing something you already know how to do. For example, if you’re a consultant, now create a consulting firm; if you are a plumber now, then start a plumbing business on the side.
You already know how to repair plumbing, price jobs, and find customers. These proven strategies will make your startup a safer bet.
This tip may seem obvious, but many first-time business owners try to enter a new field which is often a critical factor in their failures. They are bored with their job and want to start something entirely new. If that is the case with you, look within your trade and find an aspect that will give you a sense of newness but still within your current knowledge and skillset.
2. Use What You Have
Instead of going out and buying all new equipment, please use what you have, borrow, or get access to. The new purchases will quickly consume your lean startup and jeopardize your cash flow position, putting undue stress on your fledgling company.
So, if you have lawn care tools such as a lawnmower, weed trimmer, and rakes – use these to begin your business in landscaping (check out these catchy landscaping business name ideas here).
3. Buy Used Equipment
I know that starting a business is exciting and you want to go out and buy beautiful new office furniture and shiny new computers. But, no, please, this is precisely the wrong thing to do since it puts you in a dangerous position from day one.
You see, most entrepreneurs have a limited startup budget. Thus, every dollar you put into assets that do not produce income (such as office furniture and computers) is a dollar that is underperforming for your bottom line.
Healthy startups focus on investing money into assets that build the bottom line, such as effective marketing, inventory, and labor.
When I started my first small business, I shared a desk with my assistant. She sat at one end; I sat on the other end. After much hard work, smart business decisions, and more than a bit of luck, I sold that firm for over a million dollars.
And Yes, I kept that desk we shared as a reminder of my humble beginnings and good conservative spending habits. For example, it is far better to buy serviceable used equipment than to overspend on new gear straining your tight budget.
You can find almost anything used these days. Look around for used equipment dealers, eBay, Craigslist, Facebook marketplace, friends, and family as possible sources for low-cost items to use for your new company.
Think creatively. I purchased a restaurant steam jacket mixer for one of my early manufacturing startups and used it to mix body lotions.
As your small business grows and you have a steady profit, you can purchase upgraded items at that time.
Business Equipment Resources
4. Test Your Idea Thoroughly
Eureka! When you’ve got an exciting new small business idea, it can be tempting not to test it thoroughly before launching. Unfortunately, this is a fatal mistake many beginner entrepreneurs make that I don’t you to make.
So, I highly encourage you carefully test your business idea to see if the marketplace thinks it is a brilliant as you do. Start by reading my list of the ten best ways to test your business idea here.
If you only want to do one test, create a product prototype or a digital image to show potential customers and ask them if they would buy it for your suggested retail price.
Be sure to test it with people that are in your target customer group. So, targeting teenage girls with your new nail enamel line means don’t show your products to your Dad for his opinion as to the final validation.
At the same time, this may be apparent to you. But, many of the struggling business owners who hire me to help them save their companies tell me just such stories. They made the big mistake of relying on well-meaning family members – outside of their target customer group – to validate their business ideas.
5. Price Higher Not Lower
Another drastic, dangerous mistake beginner entrepreneurs make is to undercharging for their products and services. They think that they will get more orders by offering a lower price. That is just about the worst strategy known to entrepreneurship.
You MUST charge enough to cover all material, labor, and overhead costs, including your salary. If you charge less to get new customers, thinking that you will make up the difference on volume – you are mistaken.
You will simply go out of business faster.
If you’re concerned that your retail price is too high, see if you can reduce it by streamlining your material and labor costs.
6. Study Your Accounting Reports Regularly
As a beginning small business, I strongly urge you to create a business plan with detailed financial projections. This document is your roadmap for business success, whether or not you’re getting a bank loan or an SBA loan.
The detailed financial projections of sales and expenses contained in your business plan are the benchmarks to measure your progress and make adjustments along the way.
I want you to compare those projections on it a weekly – or even daily – to make sure that you are matching your sales figures and that your expenses are in line with what you’ve budgeted. If they are not, you need to make adjustments immediately, not a month away. That is why it is critical to study your accounting reports more often than once a month.
7. Collect Outstanding Invoices ASAP
Become your own best bill collector.
Every week, review your account receivables due and have a standard collection process in place that you administer.
Every Friday, I would read the accounts receivable report in my startups, and any customers who were late I paying got a friendly reminder email. If the bill was later than ten days, they got a more robust email requesting payment. Then if the bills were 30 days past due, I called them and asked them if they had new questions about the orders and when we could expect their check.
This regular process accelerated my invoice collection rate, creating healthy cash flow.
Do not be scared to collect monies due. The longer invoices are unpaid, the less likely they will ever get paid. You worked hard to create the products and services clients purchased, and you deserve to be paid on time.
8. Collect Deposits for Custom Work
All custom work such as construction, business consulting, and catering collect deposits upon accepting 30 – 50% orders before the job begins.
Remember, if you’re doing custom work, you cannot capture or recapture those goods to sell to somebody else if that bill is unpaid.
It’s also an excellent test of your client’s commitment to your project and to paying you in full when the job is complete. If they are hesitant to make a deposit, you may have saved yourself many headaches later by realizing that this client would be a lousy paying client.
In my business consulting firm, we require a 50% deposit and then progress payments of 25% as the job continues. If progress payments are not made on time, all work stops until charges are current.
This may sound harsh to you, but getting paid is the only way to stay in business.
If your client is an upstanding small business person and is pleased with your work, they will have no problem with making these payments.
9. Say Goodbye to Bad Clients
As a new entrepreneur, it’s tempting to want to accept every new client order. So you’re anxious to begin and be successful that you may overlook certain customer red flags that must be acknowledged.
Suppose you’re speaking to a prospective client, and they are quick to order but slow to agree to some of your essential terms of service, make a deposit payment, or complete their credit application correctly. In that case, they may become a problem client later on.
It is far better not to enter into a business contract with these types of problematic people. If they asked for too many extras, have too many special needs, complain about your pricing and delivery schedule, it is best to stop negotiations immediately.
Simply say thank you for your time. I think that we are not a good fit. I wish you well in your endeavors. Then move on to more profitable and enjoyable customers.
The universe is filled with nice people who want to buy (and pay for) your products. So do not let your business be held hostage (or ruined) by troublesome clients.
10. Spend Less On Advertising & Marketing
Novice entrepreneurs often overspend on advertising because they’re excited and are not familiar with the many other ways to promote their less expensive products that are usually more successful.
Sure it’s easier to pay for advertising and then sit back and wait for clients to come – but often, they don’t come. Advertising is NOT a guaranteed way to get customers and make sales – it IS guaranteed to drain your startup account –quickly!
Instead, use smarter and cheaper methods, including contacting potential clients directly through social media, getting referrals from mutual contacts, making calls and sending emails, and running direct mail campaigns with letters, brochures, and postcards.
Whenever possible, reduce your advertising and marketing costs to the lowest possible. Stop standing back and waiting for customers to come to you. Instead, go out and get your customers at industry events, at trade shows, and in public places. I built my first few startups with clients I got from knocking on doors and saying hello. Yes, my heart pounded, and my legs shook – but it worked and cost almost nothing – just a few pennies for brochures and cards.
The key to effective cold calling is to choose your targets carefully. Start by carefully writing out an ideal client, then research to find the most likely candidates. Then craft an effective opening line – like an elevator pitch – to say hello and make contact. Here’s how to draft an effective cold calling script by a professional sales script agency.
11. Ask for Help
Please take advantage of all the business and government programs available to help aspiring entrepreneurs, click the button below for more information.
No matter where you live, there is most likely a program near you from the SBA,
SBDC, or SCORE that can help you (typically free or low cost) in business training, industry networking, financial resources, and contact referrals. That is sure to make your success more likely possible.
I recommend that all my new entrepreneurs seriously consider getting a mentor to work with one on one. You could work with one from the SCORE program or through other trade networks.
A good choice would be someone familiar with your business – but not in direct competition with you, such as someone in a different geographic market or retired from being a successful business owner.
It’s essential to identify and reduce risk in your business. You don’t want to find out a year later that you could have done something differently, right? I’ve put together this list of 10 ways for you to start reducing the uncertainties in your startup so that you can be successful and safe from failure!
So please take my advice and go through these tips one by one. These strategies will help make sure your new company is protected as much as possible.
Your idea for a new business might be the next big thing, but if you’re not careful and don’t take precautions to reduce risk, your startup may never get off the ground.
So consider my tips on reducing risks so that your business can succeed from day one!
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