7 Losers and 4 Winners: Risky vs. Safer Business Models

When you acquire a company, its business model could be the difference between a winning lottery ticket vs. a debilitating loan…

And the data doesn't lie about which businesses consistently fail and which ones generate wealth.

Codie Sanchez recently published an insightful video about what the numbers really tell us about business survival rates:

The Losers: Businesses to Run From

1. Gyms: The 81% First-Year Failure Rate Champion

Gyms have one of the highest failure rates in all of small business - 81% fail within the first year. The problem isn't the concept; it's that most gym owners treat their business like a hobby rather than a financial enterprise.

The fatal flaws?

No standardized pricing, weak marketing strategies, and missing high-margin revenue streams like personal training packages and premium memberships.

Unless you're planning to franchise with Gold's or Planet Fitness, or create an Equinox-level premium experience, find another way to bulk up, financially.

2. ATMs: The Declining Cash Trap

The math on ATM businesses is brutal.

With average transactions of 3-5 per day at $80-100 each, earning 1-2% commission, you're looking at just $2.40 to $15 daily per machine. Factor in the 7-year payback period on equipment and the fact that nobody carries cash anymore, and you've got a business model in terminal decline.

Unless you're positioning machines outside cannabis dispensaries or cash-only bars, this business is heading the way of the payphone.

3. Dry Cleaners: The Hidden $100K Liability Bomb

Here's something that'll make you think twice: 75% of US dry cleaners have contaminated soil requiring environmental remediation. That cleanup can cost anywhere from $5,000 to hundreds of thousands of dollars.

When you're buying a business for $100-200K that might come with a 6-figure environmental liability, the risk-reward equation doesn't compute.

4. Hotels: Real Estate Masquerading as a Business

Hotels average $94,000 in revenue against $96,000 in expenses - so they often lose money operationally.

The only way these properties become profitable is through real estate depreciation and tax strategies. Add in 24/7 customer service demands and the fact that 67% are franchised (with franchisors taking massive cuts), and you've got a complex, capital-intensive nightmare.

5. Amazon FBA: The 1% Success Rate Gamble

Only 1% of Amazon FBA sellers achieve 6-figure incomes.

You're completely divorced from your customers, can't access their information, and one algorithm change can destroy your entire business.

With Chinese knockoffs, Amazon competing against you using your own sales data, and fake review attacks from competitors, this is platform risk on steroids.

6. Retail Stores: The 90% First-Year Casualty

Retail stores have a staggering 90% failure rate in the first year, with less than 47% surviving 4 years.

Between declining foot traffic, high rent, negative float (paying for inventory months before selling it), and the e-commerce steamroller, traditional retail is a cash suck, not a cash flow business.

7. Restaurants: Where Dreams Go to Die at 80% Failure Rate

With 60% failing in year one and 80% dead by year 4, restaurants are notorious wealth destroyers.

The average restaurant sells for only $198,000, which is dwarfed by the average small business’ $800,000 price tag.

Between food spoilage, labor costs, and fierce competition, this is a business where passion consistently trumps profits - to the owner's detriment.

The Winners: 4 Business Models that Could Be Better

1. Last-Mile Delivery/Trucking: 76.4% Success Rate

Last-mile delivery is exploding. It represents 53% of total shipping costs, and with e-commerce growth showing no signs of slowing, demand curves point straight up.

You can start with delivery routes for major carriers or serve local businesses - the opportunities are everywhere.

2. Senior Care Centers: Banking on Demographics

With baby boomers aging and Alzheimer's care commanding 3-5x premiums, senior care facilities have surprisingly low failure rates.

Government subsidies help, and you can start small with residential care homes for just a few residents rather than building million-dollar facilities.

3. Real Estate Rentals: The 85.3% Success Rate Wealth Builder

Andrew Carnegie said 90% of millionaires made it through real estate, and with an 85.3% success rate for rental properties, the data backs him up.

With 44 million American renters spending $485 billion annually on rent, this remains one of the most proven wealth-building models available.

4. Laundromats: The Boring 92% Winner

With a 92% success rate, laundromats are the unsexy business that consistently prints money.

They cost $100-300K to start, have repeat weekly customers, and face declining competition. Add wash-and-fold services or delivery, and you can scale a simple laundromat into a multi 6-figure operation.

The Bottom Line

Business isn't always about following your passion; sometimes it's about following the data.

Pick a model with proven economics and a high success rate, and let these “boring” businesses fund your dreams, passions, and hobbies.

The difference between dreamers and builders isn't courage - it's often choosing the right vehicle for the journey.

Thanks for reading Acquiring & Exiting.

Acquiring & Exiting is brought to you by the same team behind the Business Acquisition Summit.