5 Small Businesses That Have High Failure Rates

In this article, we will take a look at the 10 small businesses that have high failure rates. If you want to skip our detailed analysis, you can go directly to 10 Small Businesses That Have High Failure Rates.

5. Electronics

Industry Value (2022): $202.99 Billion

Net Margin (2022): 3.82%

According to our methodology, the electronics industry has a high failure rate. Rapid technological developments coupled with high competition suggest that the electronics business must keep up with the dynamic environment. Failure to do so often results in business failure. Moreover, starting an electronics repair and maintenance business may take years to build trust among consumers. The rise of online electronics stores provides an opportunity for business owners, however, market saturation must be kept in mind.

4. Reinsurance

Industry Value (2022): $148.27 Billion

Net Margin (2022): 1.22%

A reinsurance business provides insurance services to insurance companies. Poor underwriting along with poor investment choices results in business owners not having enough money when claims arise. Such often results in business owners running out of cash to meet daily expenses. However, timely decision-making and mentorship may avoid such issues.

3. Publishing and Newspapers

Industry Value (2022): $121.36 Billion

Net Margin (2022): 2.65%

According to our methodology, the publishing and newspaper industry has a high failure rate. Starting a newspaper and publishing business may cost a business owner with high paper costs, high printing costs, and high distribution costs. However, digital blogging and content creation is a rising business domain that could be explored instead.

2. Food Wholesalers

Industry Value (2022): $121.12 Billion

Net Margin (2022): 1.27%

Companies aimed at selling niche and perishable food items are most likely to fail. The market for food wholesalers is highly saturated making it hard for small business owners to penetrate the market. Moreover, a well-diversified business may require high startup costs. However, businesses can prevent high failure by specializing in the sale of long-lasting products.

1. Office Equipment

Industry Value (2022): $38.87 Billion

Net Margin (2022): 2.93%

According to our methodology, small businesses in the office equipment industry have high failure rates. Selling outdated niche office equipment, sticking to a brick-and-mortar office equipment store, and providing no value-added services such as assembly and repair, often contribute to the failure of an office equipment business. The rising competition in the industry and increasing trend toward online outlets limits the chances of success. Instead business owners may focus on selling niche and high quality items through e-commerce platforms.

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