Profitable Startup Business Ideas and Failure Factors
It is not unwise to label the United States as the land of startups and small businesses. Although the country hosts world’s biggest corporations, yet 89% of firms have less than 20 workers. Around 69% of startups begin at home while 56% of the total launched startups manage to exist beyond five years. An idea and its implementation are the principal causes behind any profitable startup business.
This article shares the most profitable business ideas for the current and upcoming times. The selection of these ideas is based on multiple parameters including industrial demand, cost-effectiveness, and massive return on investment. Successful case studies also accompany each selection. Latter half of the text shares some of the top startup failure factors.
Most profitable startup business ideas
It is an undeniable fact that implementation and management of business idea is far more significant than the idea itself. Nevertheless, ideas also play a crucial role in ensuring growth and consumer admiration. Following are some of the most profitable low-cost ideas picked by our editor.
On-demand Home Cleaning Services
One of the top selection parameters is the ability of a service in addressing problems faced by majority of the users in a region. Every household needs to fulfill home cleaning chores regardless of how they do it. Surveys from credible organizations indicate that a significant number of households in the US are ready to pay for on-demand services once they are available in their area.
The startups like Handy and Thumbtack do not have to employ permanent workers. Instead, they provide marketplaces where consumers and workers can connect. This ability reduces the operational and management costs considerably. The only one-time cost for such a business would be the app development.
On-demand food business is the most profitable business with low startup costs. There are some businesses with greater revenues but the profit-to-cost ratio of food delivery startups is lowest. For the same reason, a number of startups in this area are leading toward becoming unicorns.
Food delivery is also one of the few business models which are applicable in every developed and developing country. One notable example is the emergence of two unicorns in India. In the US, Grubhub, Uber Eats, Doordash are some of the on-demand food startups likely to join billion dollar club soon.
Tutor on-demand services are gaining momentum faster than one would imagine. Statista research from 2018 unveils that 13% of the US residents utilized tutor besides formal education. This number does not include the individuals obtaining informal education through remote tutorship. Moreover, the percentage growth indicates an incredible number of new consumers are adopting on-demand tutorship annually.
Such a business does not necessarily have to provide teaching of formal sujects. Instead, you may choose to provide mentorship to athletes or physical fitness training as well.
Analysts forecast that on-site tutors will cease to exist in less than five years due to rise of on-demand alternatives. Apart from being a profitable low-cost startup business, on-demand services also provide low-cost substitute to consumers. It also ensures eliminating geographical limitations. Therefore, students may choose a teacher of their choice out of all available for on-demand teaching.
The Failure Factors
Unlike widespread belief, luck plays little or no role in shaping the destiny of startups. Research indicates that there are undeniable factors leading to startup failures. Following are three of the most frequently occurring reasons.
Absence of Appropriate Business Model
Many young entrepreneurs embark on ambitious journeys to reach the level of industrial leaders with a perception that their unique idea will thrive. Ideas are not as significant for establishment of profitable startup business as the approach to implement them. Unfortunately, most of startups fail to develop a blueprint and implementation path for their business.
Business model should define the revenue streams. For instance, food delivery startup Grubhub generates revenue mainly from three sources. These include sponsored prioritized search results for food outlets, delivery outsourcing service for restaurants, and delivery charges from customers. Some other may also use advertisement as a revenue generating source. However, grubhub prefers not to use it.
Moreover, inflexibility is also a major cause of failure. Owners must ensure that the business offers flexibility to scale-up over the time. Besides, the business should also carry the ability to evolve with technological innovations.
Loopholes in Software Systems
Most of the startups emerging in the current decade require supporting software systems. These systems reside at the core of business architectures. Unfortunately, startup owners with lack of technical knowledge end up employing inefficient developers.
Mobile apps accompanied with monitoring software make the foundation of startup. Imagine the magnitude of dent on companies like Uber, Grubhub, Postmates, and Handy if their mobile apps suddenly stopped working.
Software must ensure that it provides a simple but pleasing interface. Many companies overcrowd their app in a bid to appear fancier. Consequently, the usability becomes intensely low as non-technical users are unable to effectively use such apps. The performance of app also plays crucial role. Users will prefer switching to another similar service if app speed is relatively lower.
Although startups have more cost-effective and productive marketing opportunities than before, yet appropriate utilization is essential for success. Before launching marketing campaigns, the managers should have an understanding of demographics and interest groups which may convert into customers.
Besides, you also need to have a comprehensive marketing funnel. Such a hypothetical funnel classifies the visitors of your website, ad, or app. This classification enables you to determine the probability to determine if a visitor can convert into a customer or not. There are scores of free and paid tools available to evaluate the behavior of visitors.
The choice of startup ideas indicates that profitable small businesses with low startup costs require flawless implementation. Efficient software systems often turn relatively lesser known ideas into remarkable revenue generating engines.
Mob Inspire carries a decade long experience of helping startups in growing up to their potential. Contact us today so that we can start exploring new opportunities to streamline your business.