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5 Business ideas with the highest risk of failure

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The purpose of this article is not to scare away people from investing-rather it is meant to encourage people to do thorough researches before investing. Jump in and invest in a business venture you are not too sure of and you will end up with heavy losses.

Below we look at the top small business ventures where first timers usually lose money.

  1. Mabhero-Second Hand Bales. At face value this looks like a lucrative business, you buy mabhero ako at $250 or $350 and make returns of above $700 right? Well making money with mabhero is easier said than done. Most people find out the hard way when the bales they are sold are either of low quality or do not have the correct material as advertised. Our verdict is exercise caution when dealing with mabhero.
  2. Restaurant Business-Profit margins in this business are very low and most first timers do not know. You see others with huge number of customers and want to join in? Take your time to analyse this business as the failure rate is extremely high. Most leave the business with heavy losses and debts. If you want evidence then do look around and find someone who has been in this business for more than 5 years. The numbers you will find will be limited. There are many tricks in this business that you need to master such as growing own veges or raising own chickens so as to eliminate buying from shops.
  3. Poultry Industry– No doubt the easiest field to enter, just buy a few chickens and raise them. After raising them then sell…easy as ABC right? Well not so easy-you need experience in this sector and if you do not have experience your chances of encountering heavy losses are high-extremely high! You may have to learn the hard way with poultry diseases, being conned by employees, customers who do not pay or buying sub standard chickens which result in poor yields.
  4. Kombi Business-First timers have horrible tales about this industry. You just watch others making money uchinzwa makombi ane mari and you want to jump in right? Yes you can jump in but if you have little experience then you are a sure bet for heavy losses! Your problems will start with the people you choose to run your business-the Driver and Hwindi, 2 people who can connive to make your business a loss making one. They may even set targets to buy their own kombi using your own kombi. No matter the tight internal controls that you can put-the 2 employees will always find a way to take funds from the business. Finding honest employees is impossible. So take your time before taking the plunge in this shark infested business.
  5. Tobacco Farming –A few years ago, tobacco was KING! The crop helped to empower a lot of people especially the resettled farmers. Those in rural areas joined the bandwagon especially in 2009. With prices as high as $5 or $6 in the year 2009, most people abandoned all projects and concentrated on this cash cow. Some stopped farming other crops opting to plant tobacco. Some in urban areas descended to rural areas in order to take up tobacco farming. Most were disappointed, they learnt the hard way when prices started slowing down in the following years. I know of several people who took bank loans in order to farm tobacco-few managed to repay the loans after selling their crops. A visit to most rural areas shows that those who had opted for tobacco have since abandoned it and with many resettled farmers complaining of the low prices this year-the expectation is that the number of growers will continue to dwindle. Interested in farming tobacco? Congratulations but be very careful-do make sure you have insurance, irrigation equipment and all the necessary inputs. You lose little by engaging experts who will give you guidance, trends and carry out feasibility studies for you.

We can add more areas where many lose money especially when they are first timers. The trick to reduce losses is to carefully study any proposed business venture. Talk to others, develop a business plan and engage experts.

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