The commercial realm is like a vast ocean teeming with lucrative prospects for those daring enough to take the plunge. However, plunging without a profitable and tried-and-tested concept is like diving into shark-infested waters without a safety cage.
Remember Uber Eats taking inspiration from DoorDash and making it big? Or GymShark outperforming giants like Nike and Adidas by fine-tuning their strategies? And how about every Tom, Dick, and Harry launching a streaming service following Netflix’s success?
However, not all business models retain their glimmer over time. Several ideas that were previously golden geese have now turned into albatrosses. In the journey towards a prosperous 2023, you need to steer clear of these. Here are five top examples.
1. Dropshipping: More Drop Than Ship
Dropshipping was all the rage when it burst onto the scene, promising a six-figure income and a way to earn while you sleep.
YouTube was flooded with influencers promoting dropshipping as the holy grail of businesses, leading to an absurdly saturated market with more than 140,000 new stores in 2021 alone. The subsequent downfall was inevitable, with a 90% failure rate the following year.
Nowadays, with success rates hovering between a meager 1-5%, you’ll need to undercut your prices significantly to attract customers, causing your profit margin to plummet. Couple this with the need to fork out at least $300 for advertising if you lack a ready audience, and the promise of easy money seems a distant dream.
And then there are the various other hurdles, including legal liabilities, poor control over the supply chain, and low-quality products.
2. Airbnb Rental: From Dream House to House of Horrors
Airbnb’s initial concept was a win-win: homeowners could earn a little extra by renting out their unused space, while travelers could find affordable, short-term accommodation.
However, the platform’s misuse as a low-quality, pseudo-hotel service has severely dented its profitability.
In a previous article, I unpacked Airbnb’s downfall, highlighting issues like damage to properties without any repercussions for the guests, false complaints that could tarnish your listing, and the struggle to make ends meet even with full bookings.
Furthermore, the property market’s current overvaluation, driven by Airbnb’s popularity, carries the risk of a price crash that could leave you with a depreciating asset.
3. Cryptocurrency-based Ventures: The Unstable Gold Mine
Cryptocurrencies have been on a roller-coaster ride since their inception in 2008. The bull run between 2020 and early 2022 sparked a plethora of new projects and businesses aiming to capitalize on this digital gold rush.
But fast-forward to the present day, and we’re witnessing the demise of many such projects due to a lack of hype and dwindling capital. Tokens that once fetched hundreds of dollars are now worth less than a tenner, and exchanges are shutting down due to cash flow issues.
While cryptocurrencies may make a comeback, and some tokens may offer investment potential at their current low prices, launching a new crypto-based business for 2023 is akin to navigating a minefield.
4. Home-centric Businesses: Time to Step Out
In 2020 and 2021, businesses helping people to stay at home seemed to be sitting on a gold mine. With the pandemic enforcing social isolation, companies like Peloton, which specialized in home exercise equipment, hit record sales.
However, 2022 witnessed a mass bankruptcy of such businesses as consumers sought a return to traditional services and physical spaces. Currently, any business that encourages people to stay indoors is unlikely to thrive.
5. Graphic and Brand Design: When AI Steals the Show
Graphic and brand design businesses reaped considerable benefits with the digital age’s onset. However, AI-powered tools and platforms like Canva and Snappa now let people design for free or at minimal costs, bypassing the need for professional designers.
While many graphic designers are pivoting to UI/UX design in response to the growing demand, relying solely on design skills is no longer as lucrative as before. It’s all about diversification, and designers are now augmenting their abilities with in-demand skills like video editing and social media management.
Wrapping It Up
While the past glory of some businesses is fading in 2023, it’s essential to scrutinize their rise and fall to understand the factors at play. Be wary of influencers still pushing these defunct models to sell courses or books; always do your due diligence.
After all, there’s no shortcut to wealth. Success is a cocktail of time, effort, and unwavering dedication. So gear up, put in the hard yards, and make your business dreams a reality!