If you’re worried about your business not succeeding, then check out these low-risk start-up ideas.
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, we’ll give you lots of low-risk business ideas and tell you which are the highest-risk businesses to avoid.
Plus, we’re going to share with you our hard-won tips on how to make your business startup safer to reduce risk and increase your chances of business survival and success.
You’re sitting at your desk, thinking about what business to start. You’ve 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 idea to launch.
Low-risk businesses typically have certain characteristics that set them apart from higher-risk ventures. These traits help minimize the financial and operational risks involved, making them ideal for new entrepreneurs. Here are some key characteristics of low-risk businesses:
By focusing on these characteristics, you can choose a business idea that offers a safer path to success.
Now, let’s look into those safe business ideas.
One safe type of company to start is business consulting. It has low overhead and is a highly profitable endeavor. It’s low-risk because you often get paid upfront and usually 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 may have connections in the field from your career who might just become your very first customers. The highest-demand consultants now are in IT, marketing, finance, 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). There are lots of possibilities.
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 for yourself to balance family life or take care of children.
A service-based business is a safer bet for entrepreneurs. Many entrepreneurs start small by providing services in their local community. One good example is starting a professional organizer business. These are “safe” business ideas because there’s 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. You don’t need to outlay cash to purchase new tools. Some low-risk service businesses include lawn care and house cleaning.
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.
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.
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 (although that can work for some). As an alternative, you could host an event at your home for friends where you sell their unused clothing and use the profits as seed money to start up another business venture.
Everyone has a few books they no longer need. 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 and 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.
Starting an organization that leases equipment is an excellent business opportunity because you can generate a steady monthly cash flow. Typically, there are lower capital startup costs and higher profit margins. Also, this is a great side business idea for working part-time out of your home while working full-time at your day job.
If you know about antiques and collectibles, put your know-how to work to make money with your own business. It can be a safe startup choice because many antique owners will allow you to sell their items on consignment, so you don’t have to invest much startup capital. For example, you could buy things at thrift shops and garage sales, reselling them later at a nice profit on eBay or at antique fairs.
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’re not buying lots of costly new inventory.
If you’re skilled in marketing and sales, starting a drop-shipping business may be an excellent way to become an entrepreneur. One of the safest businesses to start is a drop-shipping 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.
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’re 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’re 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).
Now, let’s review the highest-risk business ideas. While these ideas have been lucrative for some, you need to be aware of the risks involved.
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 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’re 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.
There has been too much volatility in 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.
To learn more, visit our guide on using an LLC for flipping houses.
Oil enterprises are complex businesses with high costs and complicated regulations, so entering one is not likely to go well unless you’re an expert in the field.
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’re interested in trying this business idea out, first read our 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 might not 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.
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.
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 upfront costs.
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, and Forex trading.
Medical devices are amongst the most hazardous startups because they depend on getting FDA approval, which can be costly, take a long time, and are often not granted.
Assessing your skills and interests is crucial when starting a low-risk business. Choosing a business idea that aligns with your abilities and passions will increase your chances of success and reduce the risk involved. Here are some questions to help you assess your skills and interests:
By reflecting on these questions, you can choose a low-risk business idea that aligns with your skills and interests, setting yourself up for success.
Yes, all worthwhile endeavors — like starting a business — have some measure of risk. It can be scary to become an entrepreneur because it’s fraught with possible pitfalls. Thankfully, you can learn from those who’ve gone before; here are 11 ways to make your business startup safer.
The safest business to start is one you already know how to do. For example, if you’re a consultant now, create a consulting firm; if you’re a plumber now, 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’re bored with their job and want to start something entirely new. If that’s the case with you, look within your trade and find an aspect that will give you a sense of newness but is still within your current knowledge and skillset.
Instead of going out and buying all new equipment, use what you have, can borrow, or have 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).
Starting a business is exciting, and you want to go out and buy beautiful new office furniture and shiny new computers. But that’s a pitfall to avoid; financially speaking, it can put 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. For example, it’s 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. Then, once your small business grows and you have a steady profit, you can purchase upgraded items at that time.
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. Instead, it’s highly encouraged to carefully test your business idea to see if the marketplace thinks it’s a brilliant as you do. Start by reading this list of the best ways to test your business idea.
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 or what price they’d be willing to pay.
Be sure to test it with people in your target customer group. For example, showing your dad your new nail enamel line probably won’t give you good feedback; you’d want to test it with young nail enthusiasts.
Another drastic, dangerous mistake beginner entrepreneurs make is undercharging for their products and services. They think that offering a lower price will increase their orders. 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 in volume — you are likely 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.
As a beginning small business, it’s crucial 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.
Your business plan’s detailed financial projections of sales and expenses are the benchmarks by which you can measure your progress and make adjustments along the way.
Compare your projections on a weekly — or even daily — basis to make sure that you’re matching your sales figures and that your expenses are in line with what you’ve budgeted. If they’re not, you need to make adjustments immediately, not a month away. That’s why it’s critical to study your accounting reports more often than once a month.
Become your own best bill collector. Every week, review your account receivables due and have a standard collection process in place that you administer. While it might seem tacky to ask people for money, it’s essential. You need healthy cash flow.
Don’t 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.
For custom work, including construction, business consulting, and catering, it’s common practice to collect deposits of 30 to 50% on orders before the commencement of the job. Remember, if you’re doing custom work, you can’t 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’re hesitant to make a deposit, you may have saved yourself many headaches later by realizing that this client would be a lousy paying client.
As a new entrepreneur, it’s tempting to want to accept every new client order. You’re so 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’s important to remember that, until there’s a contract in place, you’re not obligated to anyone. You can politely say that you’re not a good fit and move on. If there is a contract in place, you only need to fulfill its terms. You don’t have to enter into new contracts with them if they prove problematic.
The universe is filled with nice people who want to buy (and pay for) your products. So don’t let your business be held hostage (or ruined) by troublesome clients.
Novice entrepreneurs frequently incur excessive advertising costs due to their enthusiasm and lack of awareness about various, more effective yet less expensive promotional strategies for their products.
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.
Reduce your advertising and marketing costs as much as possible. Stop standing back and waiting for customers to come to you. Instead, go out and get your customers at industry events, trade shows, and public places. Smart social media posting can also be a powerful, low-cost tool.
Please take advantage of all the business and government programs available to help aspiring entrepreneurs. Hit the button below for more information about these programs.
No matter where you live, there is most likely a program near you from the SBA (Small Business Administration), SBDC (Small Business Development Centers), or SCORE (Service Corps of Retired Executives) that can help you (typically free or low cost) in business training, industry networking, financial resources, and contact referrals.
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? 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.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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