Business is tough—but being successful at it is even tougher. It’s no surprise that nearly half of all businesses fail within the first five years. In fact, the odds are so daunting that some companies will sell you a "proven" business model promising to help you beat the nearly 50% failure rate.
Now, I’m not here to say "avoid these five business models at all costs"—after all, some people do find success with them. But let’s be real: those cases are the exception, not the rule. The reality is that certain business models are inherently riskier and far less sustainable. With that in mind, here are five business models you should think twice about before diving in.
Before we get started, let’s clarify the difference between a business and a business model. A business is a specific company, like McDonald's. A business model, on the other hand, is the framework through which companies generate revenue—such as franchising, which is the dominant model in the fast-food industry.
Have you ever had a friend—or a friend of a friend—reach out and say they want to introduce you to someone? They’ll mention a “life-changing opportunity” or something they think you’d be “perfect for.” Maybe they even promise it’s “not a sales pitch”—but then you find yourself sitting through a carefully rehearsed presentation with slick slides, big income promises, and just one catch: you need to join their team.
If this sounds familiar, you were probably about to be pitched on something known as multi-level marketing (MLM).
In a nutshell, MLM is a business model where the real money comes from recruiting other people, not necessarily from selling a product. While there are actual products or services involved (think vitamins, cosmetics, essential oils, or financial services), the real focus is on building a downline—getting others to join so you can earn commissions from their sales and recruitment efforts.
❌Cons: Most people lose money. According to the Federal Trade Commission (FTC), 99% of MLM participants either break even or lose money. The business model often prioritizes recruiting over retail sales, making it dangerously close to a pyramid scheme.
✅Pros: The training in MLMs is actually pretty solid. You'll learn a bit about sales techniques, public speaking, and overcoming the fear of pitching people—which can be valuable skills in the long run. Whether or not you stick with the MLM, these skills can help you in other business ventures or professional settings.
Now, I know a lot of people will be surprised to see this here—especially considering there are literal billion-dollar drop shipping companies out there. Brands like Shein and Fashion Nova come to mind. With their massive scale and revenue, why would I advise someone to be leery of this business model?
First, let’s break down what drop shipping is and why it seems so appealing. For those unfamiliar, drop shipping is essentially a white-label business model that allows you to create your own brand without handling physical products. For example, let’s say you want to start a T-shirt company. With drop shipping, you can find suppliers with blank T-shirts, add your logo to them whenever you get a sale, and the supplier takes care of the manufacturing, inventory, and delivery. You never have to touch the product.
Sounds great, right? Well, not so fast.
Here’s the thing about drop shipping—if you’re considering opening a store through a platform like Shopify, please understand this: you are not a clothing company, nor a brand. You’re a marketing agency. With drop shipping, your business will live and die by your ability to market online. If you want to scale, you’ll quickly realize that ads are expensive and highly competitive.
A lot of entrepreneurs dive into drop shipping with creative designs and clever branding, but they fail to gain traction. Why? Because they were sold the idea that they’re in the fashion industry—when in reality, they’re in the advertising industry. Your success depends on how well you can run ads, optimize conversion rates, and drive traffic. Without that, even the most brilliant product will remain invisible.
💡 Pros:
✅ You can start an online business with no inventory or major overhead costs.
✅ It’s relatively easy to set up using platforms like Shopify.
⚠️ Cons:
❌ Your store’s success will heavily depend on going viral or on the amount of money you spend on ads.
❌ Low margins, high competition, and constant ad spending make it difficult to turn a real profit.
❌ No control over quality or shipping times, which can hurt customer satisfaction.
I once had a friend who did pretty well selling cakes online. Her cakes were creative, affordable, and high quality, and she managed to build a decent following—enough for it to become a profitable side hustle. With her growing popularity, she decided to take the leap and lease a storefront property in the middle of downtown.
On paper, it seemed like a natural next step. More visibility = more customers, right? Unfortunately, the reality was far different.
While the storefront did bring some extra eyes to her business, it didn’t translate into consistent foot traffic or sales. Let’s be honest—how many people are casually walking around downtown thinking, “Hey, let me buy a cake”? Not many. The storefront simply added a massive amount of overhead in the form of rent, utilities, insurance, and staffing costs. In the end, what was once a lean, profitable online business became a financial drain. Worse, it arguably diminished the customer experience—she could no longer focus on her creative designs and personalized service because she was constantly stressed about keeping the store afloat.
But this isn’t just her story—it’s part of a larger trend. Storefront businesses are struggling nationwide, largely due to the rise of e-commerce. Fewer people are shopping in person, and even when they do, they prefer the convenience and variety of online options. Today, people are more likely to browse a website from their couch than stroll downtown to discover new stores.
That’s not to say storefronts are dead—they still work for certain industries. Coffee shops like Starbucks and Dunkin’ Donuts thrive with physical locations because their products cater to impulse buys and offer social benefits like free Wi-Fi, a casual meeting space, and a touch of class status. You don’t need to plan ahead to grab a coffee—it’s a spur-of-the-moment purchase.
💡 Pros:
✅ Storefronts offer visibility and legitimacy for certain businesses.
✅ They can be effective for products with quick turnover or frequent, low-cost purchases (e.g., coffee, snacks, or convenience items).
✅ Great for local community engagement and establishing brand presence.
⚠️ Cons:
❌ High overhead costs (rent, utilities, staffing) can quickly eat into profits.
❌ Decreased foot traffic and consumer preference for online shopping make it harder to thrive.
❌ Requires constant in-person management, making it less flexible than an e-commerce business.
Have you noticed how everyone seems to be a coach these days? Whether it’s for fitness, business, mindset, or relationships, it feels like there’s a new coaching program popping up every time you scroll through social media. While the online coaching industry has exploded in popularity, it has also become oversaturated and increasingly competitive.
The problem? People are tuning out. With so many self-proclaimed “experts” offering courses, masterclasses, and mentorship programs, the average person has become skeptical and desensitized. Coaching, once seen as a premium service, is now viewed by many as just another online hustle—often overpriced and overhyped.
One of the biggest challenges in this space is credibility. These days, anyone with a social media account can call themselves a coach, making it difficult for potential clients to know what’s real and what’s fake. With so many unqualified or inexperienced individuals making bold claims, the market has become flooded with fluff, making it harder for genuinely skilled coaches to stand out.
Here’s the harsh truth: coaching without proof is a tough sell. Before you even consider launching a coaching business, you need to build tangible, visible credibility. People want to see real results and receipts. Whether it’s through a successful business you’ve built, transformative client testimonials, or industry recognition, you need to showcase why people should trust you. Without that, it’s just another sales pitch in a sea of online noise.
💡 Pros:
✅ Low startup costs – all you need is a laptop and an internet connection.
✅ High-profit margins – you can scale by offering group programs, courses, and memberships.
✅ Can be highly impactful and fulfilling when done authentically with proven expertise.
⚠️ Cons:
❌ Overcrowded market – it’s tough to stand out without serious credibility or a unique niche.
❌ Distrust and skepticism – consumers are jaded by the overwhelming number of “coaches.”
❌ Slow trust-building process – unless you already have visible proof of success, gaining clients can be an uphill battle.
It seems like everyone has an app idea these days. Whether it’s the next big social platform, a game-changing productivity tool, or a niche service app, the allure of building a tech startup is strong. And why wouldn’t it be? After all, we’ve seen overnight success stories like Instagram, Uber, and TikTok. But here’s the reality: for every one success story, there are thousands of failures.
The tech startup space is brutally competitive and extremely risky. While the potential for massive returns exists, the barrier to entry is low, meaning anyone with a laptop and some coding skills can launch an app. However, scaling and sustaining a startup is where most entrepreneurs hit a wall. Building an app is only the beginning—the real challenge lies in acquiring users and keeping them engaged, which requires significant marketing dollars and ongoing updates.
Another challenge? Tech moves fast. What’s cutting-edge today could be obsolete tomorrow. Trends shift quickly, and if you don’t have the funding or flexibility to pivot and innovate, your startup can quickly become irrelevant.
Then there’s the funding misconception. A lot of aspiring tech entrepreneurs believe they just need a good idea to attract investors. But the reality is, without a proven concept, traction, and a solid team, most startups never secure funding. Bootstrapping a tech company is expensive, and even if you manage to raise capital, most startups still fail within the first few years due to cash flow issues, lack of product-market fit, or competition.
💡 Pros:
✅ High scalability potential – if you strike gold, the growth can be exponential.
✅ Low upfront cost to launch if you or a partner can develop the app yourself.
✅ Attractive to investors if you show strong early traction.
⚠️ Cons:
❌ Oversaturated market – for every successful app, thousands die in obscurity.
❌ High development costs – even a basic app requires constant updates, bug fixes, and marketing.
❌ User acquisition is expensive – getting downloads and retaining users often requires heavy ad spend.
❌ Long runway to profitability – many tech startups burn through cash for years before they see a dime of profit.
The goal of this article isn’t to discourage you from starting a business—far from it. In fact, many of the models mentioned above have produced incredible success stories, turning everyday people into millionaires. From Shein dominating the fast fashion space to influencers building thriving online coaching empires, these business models can absolutely be profitable.
However, the key takeaway is this: you need the full picture before diving in. While the success stories are inspiring, they often gloss over the intense competition, razor-thin margins, and marketing challenges that come with these ventures. It’s easy to be sold on the highlight reel, but behind the scenes, it takes consistent effort, strategy, and resilience to succeed.
💡 The reality? No matter what business model you choose, marketing is crucial. Whether you’re launching a drop shipping store, selling courses, or building a coaching brand, your ability to attract, convert, and retain customers will determine your success. The best product or service in the world won’t sell itself—it needs visibility, trust, and a compelling message.
✅ A few words of encouragement:
🌟 Remember: Every successful business you admire started with someone taking a risk. The difference between those who fail and those who succeed often comes down to knowledge, preparation, and persistence. With the right mindset, strategy, and willingness to adapt, that success story could absolutely be you.