Worst Businesses to Start

Business Nightmares

Author

Millionaire Syrup
March 17, 2024

Worst Businesses to Start

Business Nightmares

1. ATM Routes

Starting an ATM business might seem nice, but the numbers just don't work out.

First, you've got low transactions. On average, an ATM only sees about 3 to 5 transactions a day. That's not a lot of action. Second, the cut you're making is small. You're only getting 1 to 3 percent of an average withdrawal, which ends up being about $80 to $100.

Third, there are high costs involved. You've got to pay someone to service these ATMs, and that costs you every time they collect cash from the machines. It can really add up. Fourth, unless you've got a ton of ATMs, your profit margins are going to be really thin. It's hard to make good money with just a few machines.

Lastly, the payback period is long. It takes about seven years for one ATM to hit break-even, and some investment funds in ATMs don't start paying out until after four years. In a nutshell, the math just doesn't add up for making good money with ATMs.

2. Amazon FBA

Amazon FBA stands for Fulfillment by Amazon. It's a service where Amazon picks, packs, and ships your orders for you. You sell the product online, but all the shipping and logistics are handled by Amazon. Your products are stored in Amazon's fulfillment centers, and they take care of getting them to the customer, including customer service.

Now, here's why not to start this business:

Amazon controls everything. If they decide your product is a "scam" (even if it's not), they can suspend your account and you'll lose access to your inventory and sales. This has happened to many sellers, and it's a major risk when you're relying on Amazon for your business.

Second, Amazon is a highly competitive marketplace. There are millions of sellers on the platform, all vying for the attention of customers. Next, Amazon charges a variety of fees for its FBA service, including storage fees, pick and pack fees, and shipping fees.

Overall, while Amazon FBA may seem like an easy way to start an online business, there are a number of risks and challenges involved.

3. Restaurants
The restaurant business is tough. The average small business in the US sells for around $800,000, while the average restaurant sells for only $198,000. Also, 60% of restaurants fail in the first year, and 80% after four years. So, why do restaurants fail? Well, there are a few reasons. First, the profit margin is really small. Successful restaurants only net about 3-5% profit. That means if anything goes wrong, they can easily start losing money. Second, there's a ton of competition. The restaurant industry is a red ocean market, which means there are so many competitors that it's hard to stand out.

4. Hotels

Hotels are more like complex real estate investments than typical businesses because they have a lot of components and are costly to maintain. They're asset-heavy, meaning they require a lot of physical stuff to operate.

Now, looking at the numbers, the IRS data shows that for about 28,000 one-owner hotels in the US, the average yearly income is around $94,464. But the expenses? They're about $96,064 on average. So, they're actually losing money, with an average net profit of -2%.

If that’s not convincing enough, hotels are also 24/7 on-demand. This means handling things like midnight phone calls and always managing the hotel.

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