Shark Tank's Robert Hervajec Reveals The Three Businesses He Would Never Start And Why

Robert Herjavec, the Croatian-Canadian business mogul known for his tech ventures and TV appearances, has seen it all in the startup world. However, his vast experience has taught him that not all business concepts are cut from the same cloth.

In a recent TikTok video, the 62-year-old "Shark Tank" investor revealed the three business types he'd never touch. His insights offer valuable lessons for anyone considering starting their own venture.

1. Restaurants: A Deep Dive Into Cash And Time

At the top of Herjavec's list is the restaurant industry, a category he swiftly dismisses due to two primary factors: cash and time. Herjavec argues that these two commodities are invaluable for any entrepreneur, and restaurants notoriously drain both at an alarming rate.

"The failure rate of restaurants is huge," he points out, referencing the well-known statistic that many restaurants close their doors within their first year of operation. However, it's not just the high risk that deters Herjavec.

Restaurants also demand a substantial time commitment. Owners often find themselves tied to long hours on-site, managing staff and operations, leaving little room for flexibility or scalability. Codie Sanchez, a multi-millionaire entrepreneur and CEO of Contrarian Thinking echoes Herjavec's sentiment, believing that the restaurant business is almost always a losing proposition.

Restaurants consume vast amounts of time, require significant cash infusions, and offer meagre returns. Even profitable restaurants often struggle to generate substantial returns on investment.

2. Retail Fashion: A Gamble In Time And Inventory

Herjavec also bypasses the retail fashion industry, citing similar reasons: time and money. The fashion business, mainly retail, demands substantial upfront investments in inventory, hoping these items will sell months later.

"You buy inventory today hoping you made the right decision and it sells in eight months," Herjavec noted. This extended timeline between purchase and sale adds an element of uncertainty that many entrepreneurs find daunting.

Not only must fashion businesses navigate unpredictable trends, but they also grapple with managing sizes, returns, and potentially unsold inventory.

Despite AI's transformative impact on retail and luxury fashion, the industry's seasonal nature remains a significant challenge. Store owners must constantly predict future trends, often facing substantial financial risks.

Herjavec's message is clear: retail fashion demands more than just passion for clothing—it requires a high tolerance for financial risk.

3. Personal Services: A Personal Challenge

Herjavec also discourages entrepreneurs from entering the personal services industry, including businesses like hairstyling and dog walking. He argues that these ventures are essentially about selling themselves, making them difficult to scale and sell.

Many enter the personal services sector intending to franchise their business. However, Herjavec points out the inherent challenge: these businesses are often fragmented. He acknowledges that they can be lucrative but emphasises their limited resale value.

Personal service businesses often rely heavily on the individual running them, limiting their potential for growth and franchising. While they can provide a steady income, they are typically small-scale operations, ideal for those seeking a comfortable lifestyle rather than those looking to build a scalable, sellable business.

Lifestyle vs. Scalability: Choosing The Right Path

Herjavec's advice is clear: while some businesses can generate income, they may lack the scalability and long-term potential that investors like him seek. Restaurants, retail fashion, and personal service businesses are often time-consuming, cash-intensive, and challenging to sell, making them less appealing to entrepreneurs aiming for high investment returns.

For aspiring entrepreneurs, Herjavec's perspective reminds them that choosing the right industry can be the difference between a lucrative, scalable venture and a time-consuming lifestyle business.