Businesses that Never Fail? 6 Businesses with Amazingly Low Failure Rates [Backed by Data]

most businesses fail the question is how can you have a business that doesn't fail we found six businesses with the lowest failure rate associated with them this is all backed by data because I think it's valid to be worried about having a business that fails I mean according to the US Bureau of Labor sta statistics uh which sounds really fancy and official uh 20% of us small businesses fail within the first year then that jumps up to like 50% by the year five and after 10 years 2third of all businesses have gone under that's not

good odds not great odds at all so if we actually look at the data to figure out which ones have the highest likelihood to succeed then you can determine if you want to jump into those pools I always talk about the most important decision you make as the first deal you do or the first business you start because if the first one fails your likelihood of taking the risk again is incredibly diminished this is called your recency bias so if your recency bias is winning that's why we want small wins then you are more likely

to go win again or take more risks if your recency bias is losing or things that feel bad you're less likely to continue to take risk so let's get to the data and see which businesses have the lowest this is going to bankrupt me potential I got six right [Music] here all right number one probably won't surprise my contrarian friends laundromats oh laundromats an amazingly low failure rate according to laundry Lux laundromats have about a 94.8% success rate over a 5-year period I also confirmed these numbers because lrx is a member of the lrat community

so maybe they're a little biased uh and the Chamber of Commerce did a study in partnership with Speed Queen where they show that they have about a 93% success rate so somewhere in the '90s let's call it again nothing's guaranteed in business but that's one of the reasons I talk about these laundr mats like my gateway drug to business buying they have a low failure rate they're simple to understand quarter machines a little bit of a dryer a little bit of a washer they typically don't take Millions to start or buy and it also turns

out people need to wash their clothes even during recessions so you have downside protection lastly there's a passive component if you do uh laundr mats as an absentee business you can run it remote or with very few employees or contractors your employees end up being your machines so we've got a whole video on the nitty-gritty of laundromats for you how we rent them how I started my first laundromat uh that I bought for $100,000 and made $67,000 on and even how to make a laundromat be worth $3 million that's number one laundr mats number two

rental property businesses you know I think it was Andrew Carnegie that said 90% of all millionaires become so through owning real estate more money has been made in real estate than almost all industrial Investments combined so maybe it makes sense that they have an 85.3% success rate why is why is real estate interesting and why does it have a low failure rate well one is because again it's a simple business with hard assets so you know you have your house the market is really efficient so typically your house is worth what the market says that

it is there's not a lot of room for variance there or change you typically have monthly cash flow in the form of rental income it's pretty easy to model because you know upfront I have to pay X and mortgage and I have to pay y uh from my renter and here's the delta or the difference between the two um also interesting Parts about real estate are obviously things like appreciation baked in 4% a year on average or my favorite word leverage this is the form of mortgages right so you have the ability to use somebody

else's money in order to buy uh real estate and then that also allows you to have tax benefits like 1031 exchanges where you sell to defer capital gains uh depreciation and amortization which basically are a different way for you to take writeoffs on your taxes overall there's also great tax benefits to being a real estate investor only and then there's the passive component in that you could just hire a property manager there's no such thing as free money uh with no work but real estate prices are interesting if you're in the right cycle of the

market now right now I think real estate's pric pretty high but Falling fast I mean California today real estate prices are down like 20 to 30% here and you need to think about can I qualify for a loan can I cover the mortgage um but this success rate is probably there for all the reasons that we talked about you know even if you're making a small percentage monthly like the average rental property Nets about $462 a month so it's not going to make you a billionaire but you probably can understand how to grow the business

how not to grow the business and what a good deal looks like with a little bit of [Music] work better better all right number three self storage facility if you don't like the idea of real estate investing for a multif family let's say and you don't want to deal with 10 or trash and toilets Self Storage have less of those things they have been one of the leading asset classes in real estate since 2008 and according to a few studies one by Rhino building um these resilient businesses have like a 92% success rate one caveat

here I would say though is there are a lot of these self storage facilities so will that 92% rate continue I'd want to watch what's going to happen the next couple months and years but I have plenty of friends like this guy Nick Huber who makes millions on absentee storage sit he lives hours away from here's a whole article we did on how to start and run an unmanned Self Storage business and you know what's fascinating about this aset class is advances in technology make this not only possible but pretty standard to run these things

remote so basically you have keyless entry uh you have tracking systems you have security systems you have automated bill pay you have all automated contracts all of this allows people to get in and out of their units without you then there's the value ad component AKA adding things things to the business to make it more valuable and efficient they're high with this type of asset class it doesn't take a ton to make Self Storage pretty interesting in fact look at what you can do if you just paint the front of your self storage unit and

what the normal increase in the property value is for that so the phone has allowed us to have no manager on site needed in most [Music] ways you better number four Transportation businesses last mile delivery I think last mile delivery is the biggest change in our economy in the last 10 years when it comes to transportation and Logistics with e-commerce coming along the gig economy online platforms it's more needed than ever to have a way to get the goods into our greedy little mitts and porches basically Trucking that delivers Goods or people from one place

to another for a fee is transportation and Logistics we have a whole article on here on how one gent turned this idea of a short distance Trucking Company into 22 100 bucks a day it's really good um but this can come in many forms from like a full-fledged Long Haul Trucking business to a simple little side hustle driving for Uber on the weekends or everything in between these businesses have a success rate about 76.4% uh according to advisor Smith that's kind of fascinating because I thought these businesses would be more complex now there is a

massive difference between short and long hole Trucking or shipping food from Uber and Long Haul Trucking so your results are going to vary but on average these businesses have a high success rate I think because again we don't have that many inputs I'd worry about scale giving the the demand for drivers if you wanted to really create a huge Empire but as a job turned into a business this one could be interesting and relatively low risk you know you could buy a truck that's going to have an inherent value in it a little bit of

depreciation after you buy it maybe if you buy it new and it's your time to start with actually running the roots or having somebody else but you don't have a lot of what's called capex or upfront expenses in order to run the business and so not only does it have a relatively low failure rate but I always am looking for how can I make sure a deal can never bankrupt me I don't ever want to do a deal where if this one deal goes sideways especially in the beginning I could Wipe Out the past 20

years of me investing and working and neither do you and that's why I like these little Gateway starter businesses story time all right guys this is kind of special because I just sold a website for 8K that I bought for about a 100 bucks it was called grow Getters a newsletter that talked about marketing growth I did it just for fun with two friends and it made me realize that I wanted to tell more people that you could start with small deals you could start with large deals but you can definitely start with online deals

so I partnered with this company Flippa thanks guys about where to buy online businesses it's my favorite site to buy any sort of online business period full stop that's why I'm trying to invest in them so maybe you guys can check this out so that I could get part of this uh series that'd be awesome thanks Blake CEO because after all we know that 94% of startups fail that's why I like to buy them instead of build them and this is true on flipa to for online businesses you can get loans or use seller financing

although you got to put down some cash you can have profits on day one of owning the business you can use the cash flow of the business to fund your next brilliant idea but instead of paying for an idea you buy it first so here's the link go check them out there's 500,000 businesses that have been listed on flipper they've done billions of dollars in transactions Cody you're forgetting that flipper is also the best place to sell an online business they even have a matching algorithm to get your business in front of the people most

likely to buy so anyone out there looking to sell or even just find out what their business is worth check out flippers free valuation tool here anyway back to you on stage Cody speaking of maybe my favorite intro starter business vending machine Roots so you don't need a lot of Cash 3 to 5K you buy a vending machine and get started or you're super smart and industrious and you buy a used one for 800 bucks like this you know I've talked ad nauseum AKA a lot about this and I have friends who have vending machines

that vend healthy food have you know normal vending machines ooh is this name dropping uh I guess it might be but all this to say that uh Candace Nelson has been having an internet butt of mine lately and she is the founder of Sprinkles Cupcakes she created Sprinkles Cupcakes vending machines brilliant idea she definitely made more than a few grand on that thing I don't want to make a big deal about this but if you do not think that red velvet cupcakes from sprinkles are the best cupcakes out there like I don't know if we

can be friends I think it's unavoidable once you have your vending machine couple different things you need to do for IT find a well-trafficked location negotiate to put it in for you know as a service or for a rental fee then fill in ventory great little starter business I wouldn't do it if I was a pro or wanted to make a lot of money meaning if I wanted to make hundreds and hundreds of thousands of dollars a year this business is probably really good for your first 20 30 50 maybe you could get to $100,000

but it's a great business to learn things like pnls Logistics pricing margins managing a few contractors or running it by yourself you start small it's not going to bankrupt you you figure out how the business works and then you slowly expand and this business has more than a 90% almost success rate then you could eventually have a bunch of them roll them up and sell them as a group uh like these companies do so the actual success rate for a vending machine business varies from 90% according to drop vending who's in the space or 82%

success rate according to the US Bureau of Labor there're a slew of billion dollar vending companies which is interesting uh also because it does show that you can scale this space although I think it'd be a hard slog so when you combine the low failure rate affordable startup cost and simple operations of this business I really like this starter business for people who want to [Music] hustle okay number six senior care centers so this one surprised me I didn't realize that Senior Care Centers had such a low failure rate but actually it kind of makes

sense for a lot of reasons one government subsidies State subsidies City subsidies that basically allow people to run Senior Care Center like this with some help from the government two is obviously the demographics in the US are changing there's a lot of older people less young people and they need more care now originally when I thought of these ideas I was like what are some beginner ways to do this you can't buy I mean this property right here costs tens of millions of dollars you probably can't buy that uh when you're just starting out but

I didn't realize that there's a ton of little houses where they actually rent a house and get it zoned properly for senior care or alternatively buy a house and get it zoned or the right certificates to be able to have assisted living there so that's why this idea is actually kind of interesting there's definitely oversight here and certifications and Zoning that you have to be aware of but you don't have to have the millions I thought you did so there you have it six businesses with the least likelihood to blow up in your face uh

at least according to the data so which businesses do you guys want us to cover next