No matter how you look at it, starting a new business means taking a risk. Actually, it means taking a lot of risks over a long period of time. This only works if you have two main qualities as an entrepreneur: an ability to find comfort in the midst of uncertainty, and the knowledge and instincts to calculate which risks are worth taking and which are recklessly ill-advised.
One of the first decisions wherein keen risk-assessment is needed is the decision about which industry to enter into. This isn’t always a conscious, purposeful choice for every small business owner; there tend to be two ways that startup owners go about choosing what kind of business to start: either it’s a natural evolution of their interests and experience, or they are career entrepreneurs who seek out opportunities rather than sticking to just one industry. There are positives and negatives to both routes to small business ownership, and when well executed, neither is inherently more prone to success than the other.
The truth is, starting any small business for any reason comes down to a matter of good timing. We’re big fans of the expression, “There are no good ideas, just good execution” – and a pivotal part of good execution is picking the right time to launch a project or new business venture.
With this in mind, we’ve looked ahead to 2014 to try and predict which industries are poised to be the biggest risks for new businesses. We’re not saying to never start these kinds of businesses – but right now, a lot of factors are creating an especially sizable risk level.
1. Physical media
DVDs, video games, and CDs are increasingly difficult products to build a business around. Tangible media is rapidly being replaced by online equivalents. This is an industry that has been on the way out for years, and 2014 is almost certainly going to see the death rattle. Clearly, it’s not a safe bet to jump in now.
2. Photo retouching
The other night, I was hosting a dinner party and after someone snapped a few photos, she sat down and proceeded to retouch the photos to make herself look slimmer. Right there on my couch. And then she posted them to social media. It was mind-boggling, but it brought reality into focus: It’s not especially new information that people have access to retouching software on their own computers, diminishing the need for professional assistance, but now they can whip up some airbrushing on their mobile device? Crazy. If average (and clearly insecure) people can do what this girl did, it’s not surprising that the professional photographers who once relied on retouching shops to work on their photos don’t have as big of a need anymore.
3. Carpentry or anything housing-related
Housing development, construction, carpentry, design and decorating, landscaping – any industry that is largely reliant on a thriving housing market is still struggling. Things in the real estate world aren’t currently quite as bleak as they have been, but we’re still a long way off from the industry being sufficiently rehabilitated. As a result, it’s hard enough for established companies in these fields to sustain themselves; new small businesses might not fare so well.
This is a strange situation: we predict that in 2015, healthcare related businesses will be positioned to do incredibly well. The reason for that is the same reason why they might not do as well in 2014: the Affordable Care Act is in the process of creating huge shifts in how our country’s healthcare system works. And things are very much still in motion, as they will likely continue to be for at least the next year. By 2015, hopefully things will be a little more settled, allowing entrepreneurs a chance to more clearly see where new gaps in the industry exist. Bottom line: healthcare is changing, which means lots of opportunity – but we need to let the situation simmer for awhile still.