When you’re starting a business, it’s only natural to want to keep your risks as low as possible.
Risk in business comes in three categories:
- Failure — that takes an emotional toll and could set you back financially
- Liability — new legal risks resulting from your business
- Startup costs — how much money it takes to get your new business off the ground
But risk is relative. No one ever talks about the risk of staying at a job you hate. What does that do to your mental health and relationships?
The bad news: no business you start will be immune from these risks.
The good news: there are specific actions you can take to set yourself up for success.
For example, working with mentors, protecting yourself from liability, and keeping your startup costs low are all ways to reduce your risk.
The Lowest Risk Businesses to Start, Statistically
The Bureau of Labor Statistics keeps all kinds of data on business failure rates, so we have actual hard data on which businesses are actually the lowest risk.
Fun fact: The BLS doesn’t mention “failure”. Instead they call it “Survival Rate” — I like that term better!
Here are the businesses with the highest 3- and 10-year survival rates.
|3 Year Survival Rate
|10 Year Survival Rate
|Agriculture, forestry, fishing, and hunting
|Real Estate and Rental and Leasing
|Accommodation and food services
|Finance and Insurance
All of these fare better than the nationwide average survival rate for all private businesses. Those clock in at 61.2% making it to year 3, and 34.6% making it to year 10. (Based on 2022 data from 2012 startups.)
The downside to this data is it isn’t super detailed. And just because agriculture has a low failure rate doesn’t mean you should go out and start a farm!
(Side note: You can passively own part of a farm with our partner AcreTrader.)
With that in mind, here are some more actionable suggestions on low risk businesses to start.
1. Building a Helpful Website
Websites are super low risk businesses to start, and have great earning potential. All you need is an idea, a domain name ($10-20), and web hosting (as low as $5/month).
Of course there’s a learning curve here like there is with all businesses, but the articles you publish can earn traffic and revenue long after you’re done writing them.
One of my favorite examples is Andrew Fiebert’s GiftLab.co. He publishes curated lists of gift ideas for very specific audiences, and earns affiliate commissions from Amazon and other stores when people buy his recommendations.
The site solves a real problem — coming up with gift ideas — and he reported it having earned over $1.2M in total affiliate commissions in its first 5 years.
Suggested Playlist: Affiliate Marketing
Make money online by sharing relevant products and services with your audience. Here’s a killer playlist packed with actionable advice from the pros.
The next low risk business idea to start is freelancing. Simply put, this is where you get paid to solve a problem for someone else — often remotely.
Freelancing usually doesn’t cost any money to start, and you can begin work right away.
What service could you offer?
Take an inventory of your current interests and skills. For example, I’ve been paid to do freelance writing, book editing, and even virtual assistant recruiting. I earned $25-35 an hour, but more specialized skills can command even higher rates.
Once you have a service in mind, you can put it up for sale on sites like Fiverr, or connect with clients in relevant Facebook groups.
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3. Local Services
We spend a lot of time on ways to make money online, but there are plenty of opportunities in your hometown as well. Homeowners spend over $13,000 a year on maintenance and improvement projects.
That means you could start a business offering:
All of the above have low startup costs and strong hourly earning power. You may even already have the equipment needed.
For liability protection, I recommend an affordable general liability insurance policy.
4. Flipping Products
Becoming a reseller is a low risk business because you can start with whatever level of initial inventory investment you’re comfortable with. You can even start with items lying around your house!
It’s a game of buy low, sell high. If you love the treasure hunt of finding great deals, this can be a very profitable side hustle.
Resellers typically source inventory from flea markets, garage sales, and thrift stores. I’ve even found profitable inventory on the shelves at Walmart and Home Depot. From there, you can list the items on eBay or Facebook Marketplace.
Several members of Side Hustle Nation earn a full-time living doing just that!
5. Reselling Furniture Returns
One specific niche under the flipping umbrella is worth mentioning separately, and that’s reselling furniture returns. This unique low risk side hustle is a great way to make money if you have a truck or larger SUV.
How it works is you join Sharetown as a local “reverse logistics” rep. Sharetown partners with direct-to-consumer mattress and furniture brands to handle their return requests — when the customer decides they don’t want to keep the item.
The company then dispatches you to go pick it up (that’s where the truck comes in) for free. Then you’ll clean it up, photograph it, and list it for resale on sites like Facebook Marketplace.
The Sharetown reps I’ve connected with target $150-250 per flip — and the kicker is you don’t have to pay Sharetown for the inventory until the item sells.
Similar to freelancing, consulting is another low-risk business to start. The easiest way to get started is what I call “software with a service.”
In this model, you piggyback on the popularity of an existing or up-and-coming software product. Ideally, it will be a tool you already use and love, but new software tools come out all the time.
For example, Paul Minors began creating tutorial content about Asana on YouTube. He’d provide some helpful tips and guidance, and as a result of his videos, companies started to reach out for consulting and training. When we spoke, Paul was earning thousands of dollars a month — working from home.
It doesn’t cost anything to become a consultant, and the liability is very low, making it a very low risk business.
7. Print on Demand
Next on this list is print on demand, which is a low risk brand of e-commerce where you don’t have any physical inventory. How it works is you upload digital designs to sites like Redbubble, Merch by Amazon, and Etsy, and when someone orders, they create the product and send it to the customer.
The model is ideal for:
- phone cases
- and more
Print on demand sellers often use Canva to create their designs, and earn $1-10 per sale. At those rates, it’s very much a volume game, but if you like creating fun designs, it can still be a viable business.
8. Digital Product Sales
Businesses where I can create something once and sell it over and over again definitely appeal to me. In this category, you’ll find low risk businesses like:
- Online courses
- and even software
These digital products take time to create, but can generate passive sales for years. For example, I’ve earned almost $80,000 in self-publishing author royalties since 2012:
My friend Rachel earns over $10,000 a month selling printable files on Etsy. These are things like chore charts, meal planners, and budget templates that people can find and buy on Etsy.
Another low risk side hustle is tutoring. You can do this with almost no startup costs and take students in person or remotely.
To start, it might make sense to niche down to a specific subject or test. For example, Matt Fuentes makes up to $1,000 a week tutoring for the SAT and ACT.
Top tutors command rates of $80-100 an hour or more, and the only overhead is their time.
10. Product Licensing
One of the most interesting businesses I’ve come across is product licensing. This is where you sell your ideas for new products to larger companies, in exchange for a percentage of future revenues.
For example, Nate Dallas sold a Pictionary-like card game to Mattel, that ended up being worth over $300,000 in royalties! Not bad for just coming up with idea and making the pitch!
Again, the only startup costs here are your time and possibly some prototyping or design software. After that, the company handles the manufacturing and marketing — and fronts any product liability.
11. Real Estate
Finally, real estate rounds out this list. Rental businesses have an higher-than-average 10-year survival rate according to the BLS.
And it makes sense — everyone needs a place to live! (Plus there’s the old Mark Twain line about buying land: “They’re not making it anymore.”)
Real estate has a higher startup cost than most other businesses on this list, but has some distinct advantages as well:
- You can buy with leverage — meaning you may only need 20-25% down payment
- The tax code favors real estate investors
- Property tends to appreciate over time
My friend Dustin Heiner was able to retire early after building up a portfolio of cash-flowing rental properties. When we spoke, he was earning around $15,000 a month in passive income.
If your local market is too expense, platforms like Roofstock can help you shop for profitable houses elsewhere, often with tenants and property management already in place.
Balancing Risk and Reward in Starting a Business
With any new business, you need to find something that aligns with your goals. Just because a business has low risk doesn’t necessarily mean it will get you where you want to go.
It makes sense to answer two questions:
- What is the realistic worst-case scenario if this idea fails?
- What is the realistic best-case scenario if this idea works?
In most businesses — especially these low risk ones — a failure isn’t life-threatening. If you keep your costs low and minimize your liability, you’ll be able to dust off and try something new.
But give some thought to the other side of the equation: what if it works? Would that be a win for you? Does the business have scale? Could it eventually run without you? (If that’s a goal you have.)
The ideal low risk business to start is one with an outsized upside or reward. Todd Tresidder from FinancialMentor.com put it this way:
The way a smart wealth builder works is they always build their plan for the big gain, but then they always guard for small losses. And by tilting with big gains and small losses, what happens is your wealth becomes inevitable. It’s just a question of sample size at that point. And that’s the unique thing about business … you can be wrong 99 times out of 100, and still have all the wealth you need.
And the lowest risk way to start any business is to start it as a side hustle!
Frequently Asked Questions
What are the lowest risk businesses to start?
According to the Bureau of Labor Statistics, agriculture, manufacturing, and utilities are the lowest risk businesses to start. More practically, you might consider low overhead, low liability businesses like freelancing, content creation, or reselling products.
What percentage of small businesses fail?
Overall, 38.8% of new businesses fail within 3 years. Within 10 years, 65.4% will have closed their doors.
How can I minimize risk in starting a business?
You can reduce your risk in entrepreneurship by investing in mentorship, selecting the proper entity for liability purposes, and minimizing your startup costs.