As an aspiring small business owner, you’re probably a very driven individual—and here at The Commercial Finance Group, we respect your ambition! It’s passionate individuals like you that keep the backbone of the United States economy running strong, providing valuable products and services that otherwise simply wouldn’t exist. With the power of our small business lending services here in Los Angeles, combined with you innovative drive and passion for your industry of choice, your ideas are bound for success.
Small Business Lenders Paving Your Way To Success
However, at the same time, the last thing you’d want to do as an entrepreneur is to invest your time, money, talents and efforts into an industry that’s…well, less than lucrative. It’s important to know what the hottest industries are to start a business in, because even if you do have a truly great idea, your company won’t be successful if you don’t get any business. In our experience as expert small business loan providers, we’ve seen our fair share of successful and less-than-successful companies being launched. While we hope for nothing but the absolute best for the entrepreneurs that The Commercial Finance Group works with, the point that we’re getting at is it pays to be smart and do your research about the industry you’re planning on starting a business in.
That’s why, in today’s small business financing blog post, we’re going to take an in-depth look at some industries that you may want to think twice about before getting involved in. Now, our special lies in small business lending in Los Angeles, Burbank and Atlanta, so we’re not here to tell you how to start your business—ultimately, we’re just helping your finance it. Who knows; perhaps you’ll gain some valuable insight about starting your next company by reading below!
As always, feel free to contact our small business loan providers to learn more about how we can help grow your ideas into a tangible, profitable reality. Let’s take a look.
It All Starts With Due Diligence
In the business world—especially when it comes to financing and investments—due diligence is absolutely key. In fact, due diligence is so important that it’s standard practice. According to Merriam-Webster (could a source be more credible when it comes to definitions?), due diligence is defined as the following (in the context of business, not to be mistaken with law:
“Research and analysis of a company or organization done in preparation for a business transaction (such as a corporate merger or purchase of securities)”
Even as defined in the context of law, due diligence refers to taking care to avoiding harm to persons or property, and can be related back to starting a business. While taking due diligence to thoroughly research what kind of industry you want to start your business in doesn’t necessarily concern physical harm, it will save you from a world of financial harm and an investment headache that you wish you never had.
Lengthy introduction aside, and now that we’ve clearly established the importance of exercising due diligence, let’s dive into some industries that are better left…untouched.
Oil and Gas Extraction
Not too many people are born with a natural propensity toward crude oil manufacturing. Aside from the environmentalist flack that you’ll receive from peers after getting involved with such an industry, this is a tough one to really “strike it rich.” With the advent of renewable energies like electric cars, hydropower technology and wind energy—not to mention hydrogen cell vehicles that are starting to grow more in popularity—investing in oil and gas is becoming less and less profitable as time goes on.
Additionally, the petrol powers that be are often tied to generations of powerful families or individuals who physically own land and the resources dedicated to extracting oil and natural gas. With this in mind, it should come as little to no surprise that oil and gas extraction is regularly cited as one of, if not the least, profitable industry for small business owners to get started in. The volatility of this industry doesn’t help either as the oil and gas market is known to go from plentiful to desolate in a day’s worth of time. For most entrepreneurs out there, starting an oil and gas business simply isn’t worth it.
Medical Equipment and Supplies Manufacturing
Medical costs are…well, costly. Though it’s a highly controversial system here in the United States, the privatized healthcare system is a for-profit system. So, after receiving a hospital bill after a major surgery or procedure, or even finishing a routine doctor’s appointment, you might think, “Hey, I could actually make a lot of money by dabbling in this industry.” Don’t. While manufacturing and distributing medical equipment and supplies seems like it could present a gold mine of profit potential for even a modest small business, be careful and think it through.
The reality is that profit generally does straight to hospitals and insurance companies, not necessarily to the wholesalers who provide these supplies and equipment. Left with an average pretax profit of less than five percent, it quickly becomes clear that this isn’t a very lucrative industry to get involved in.
Home Healthcare Services
There will always be a huge need for elderly care here in the United States and in most, if not all countries around the world. While volunteering and helping out older folks in need is a respectable and much-needed thing in today’s world, this isn’t something to profit on.
Home healthcare-based businesses face hard-line price limitations that are negotiated through Medicare and other major insurance companies. Additionally, based on the sheer nature of this industry, there’s a characteristic emotional toll—coupled with low pay relative to the work—that results in high turnover rates with employees. With these things in mind, managing your home healthcare business can be quite stressful and devoid of any legitimate profit margins.
Los Angeles Small Business Lending Solutions That Work
At The Commercial Finance Group, we respect your dreams, and encourage you to follow them. Ultimately, we’re here to finance your small business in Los Angeles and other areas around the country with the help of asset-based lending, finance factoring, and more. In our next post, we’ll follow up with more industries that you might want to consider avoiding.
Until then, learn more about our unique approach to lending or get in touch with us with any questions!
