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Is your business idea the right idea?

It is often said that the best time to start a new business is in a recession, and some data has shown that through a variety of factors, new businesses are more likely to start during tough economic times.  So naturally one might think that during the worst financial crisis in decades would be a prime time to start a business you always wanted, right? The answer may depend on what you have in mind for a business.

The truth is that some businesses are difficult to start and maintain over a long period of time.  A recent column from Kelly Spors and Kevin Salwen on Yahoo’s Small Business Answers Center offered some advice for would-be entrepreneurs along with some sobering statistics around what businesses are a bit “overrated” in terms of success rates.

Some of the businesses you might think about starting are the ones that you shouldn’t, including franchise ownership, restaurants, independent consulting, and high end retail, according to the piece.

Why? Well each avenue has its own set of pitfalls.  For example, restaurants close at a rate of 60% in the first three years, while with consulting it’s sometimes difficult to earn steady income.  High end shops are suffering as people’s discretionary income continues to dwindle down in a tough economy.

So while you shouldn’t be discouraged by the prospects of starting a new business, you should make sure that you have a competitive advantage and know the industry you’re getting into very well, otherwise you could struggle.  Sometimes the decisions you make before you even launch are the best ones.

Have you started a successful business in the past year? What have been the keys to success, and what led you to choose that particular business?  Do you have first hand knowledge of businesses failing in the categories included in the piece?