The Worst Businesses to Start This Year

Starting a new business? These are the worst faring industries to do it in, according to new research.
Business Writers
April 20, 2012

Roughly half of startups fail within five years, but you may be able to improve your odds by side-stepping some almost-certain money pits.

IBISWorld, a Los Angeles-based publisher of industry research, crunched its numbers and found for the Orange County Register the worst businesses to start.

By far the worst is anything involving the U.S. manufacture of men's suits, coats and trousers. Revenues in that industry have plummeted 85.3 percent over the past decade, and 53.7 percent of men's clothing manufacturers have closed. IBISWorld predicts that just 75 percent of the surviving firms will make it through this year, and that revenues in the industry will fall another 21 percent.

It seems a grim time to be in much of the U.S. clothing industry in general, as well as luggage and leather goods manufacturing (which has lost more than half of its business in the past decade). IBISWorld also fingered knitting mills, hosiery mills and costume and team uniform manufacturing as poor bets for the entrepreneur. US revenues in these industries have taken a nosedive mostly because these things can be made more cheaply abroad.

Also on the endangered list: photofinishing. (When was the last time you developed anything besides a serious penchant for Instagram's sepia filter?) Once upon a time having a "one-hour photo shop" was something to brag about. Now it's practically a history museum. Revenues in the industry have plunged 70.1 percent in the past decade, and the number of shops has fallen by 55 percent.

Technology is also making video, DVD and game rentals and recordable media manufacturing obsolete. Revenues in the former fell 49.6 percent in the past decade and more than half the shops closed. And more will be going the way of Blockbuster: Revenues are expected to drop another 52.5 percent, and less than half of shops will survive. Ditto in the recordable media industry, which is fast going the way of the phonograph. Revenues in that industry have fallen by 53.6 percent and will fall by another 20.1 percent.

Two other poor bets: Appliance repair and manufacturing of plumbing fixtures and bathroom accessories. It's now cheaper to replace small appliances than to fix them, which is part of the reason why revenues are down for repairmen (make that repair companies) by 44.5 percent, and some 20 percent of shops have closed. IBISWorld analyst Nikolita Ponteva told the OC Register that original equipment manufacturers also are doing their own warranty repairs.

Meanwhile, the plumbing fixture/bathroom accessory manufacturers are under siege because of foreign competition. Revenues in the industry have dropped 57.7 percent, and more than one in three factories has disappeared.

Have you worked or started businesses in any of these industries? What other industries do you think are poor bets for entrepreneurs?

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