The 13 Worst Businesses to Start in 2013

Thinking of starting a business in 2013? Make sure your business idea isn't on this list.
Getting Small Businesses Unstuck, Shafran Moltz Group
December 17, 2012

Over 500,000 businesses get started in the U.S. every year, and unfortunately not everyone is a success. (Many of them are bad ideas, and poorly executed.) If you're thinking of starting up a business in 2013, heed our warning and watch out for these 13 bad business ideas. While you're at it, check out the best business ideas that we think are winners for the coming year.

Worst Businesses for 2013

1. A distribution business. Since most products are a commodity and almost anything can be purchased directly from the manufacturer, distributors are a dying breed. The middleman is on  his way out. Try instead: Start a business that adds value and is hard to duplicate. Change the form of the product or add services that make the product more usable for the intended customer.

2. A “deal a day” website. The industry is in a downturn, and merchants no longer want to give up their margin in an effort to find a new customer. Try instead: Running a contest or flash sale on Twitter or Facebook. Offering discounts and coupons is still an effective way to attract new customers.

3. A frozen yogurt shop. The market is saturated, and there already seems to be one on every urban corner. Try instead: Open up a small shop, or even try a food truck, and sell creative food items like meatloaf cupcakes or gourmet donuts.

4. A restaurant. There are so many codes and permits to be obtained, it can be overwhelming, time-consuming and expensive. And of course, there's the high employee turnover and abundance of competition. Try instead: The advice from above rings true here too, as far as opening a small shop or food truck and specializing in more creative foods.

5. A retail bookstore. More eBooks were sold than paper copies in 2012 and, of course, there is the online retail giant, Amazon. (Borders learned this lesson the hard way.) Try instead: Capitalize on the eBook market, and sell specialty eBooks online to a specific niche—one where you have a high degree of knowledge.

 6. An Internet café. Many retail establishments give WiFi for free, and most people have an Internet-enabled device. Try instead: Open up a fix-it shop for smartphones and home computers—a service that is currently in high demand. 

7. A video rental store. In September 2012, 39 billion videos were watched online. In addition, Redbox, with its $1 video rentals, has taken over the DVD rental market, and big-box retailers all sell movies and games. Try instead: Set up a YouTube channel to be part of the promotion for your small business—just don't let that small business be a video rental store.

8. A pay phone booth company. There are more cell phones in this world than toilets. Enough said. Try instead: You can open up an online shop selling cell phone cases and accessories. Although there's already a lot of competition, the sheer number of devices out there is encouraging.

9. A Hallmark card store (or gift shop). More and more people are shopping online for gifts, thanks to limitless inventory and promotional, inexpensive shipping offers. People are mailing less physical cards every year. Try instead: Open a gift shop near a hospital that will see a lot of  foot traffic.

10. A retail clothing or shoe store. Again, more of this is being done online or sold at big box retailers at discounted prices. Try instead: A store that includes regularly priced items along with some high-end brand name products. Capitalize on the fact that high-end retail is booming, and use the brand names in your advertising to bring in customers.

11. A travel agency. Most of this business is being done on sites such as Orbitz, Expedia or directly with the airlines and hotels. Try instead: Specialize in packaged, high-end trips to other countries.

12. A limo company. With taxis now facing competition from Uber, this area is suddenly very competitive. Try instead: Car sharing services are increasingly popular, but this business is difficult to start up with limited capital.

13. An alcohol distributor. This is typically highly controlled by state government. It usually takes a bit of political capital to get licensed for this type of business. Try instead: Craft breweries are booming, and licenses are easy to get.

Best Bets for 2013

Child care. Most families need to have both parents working and they need help.

Home healthcare. The population is aging and living longer. Many people want to live in their homes with assistance.

Home tutoring. Colleges are becoming more competitive and parents are paying a lot of money to help their kids compete.

What do you think are the best and worst business ideas for 2013? Let us know in the comments below!

Photo: Thinkstock