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 companies and TV appearances, has seen it all in the startup world. However, his extensive 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 types of businesses he would never touch. His insights offer valuable lessons for anyone considering starting their own business.

1. Restaurants: A deep dive into cash and time

At the top of Herjavec’s list is the restaurant industry, a category he quickly discards due to two main factors: cash and time. Herjavec argues that these two commodities are invaluable to any business owner, and restaurants are notoriously consuming them at an alarming rate.

“The failure rate of restaurants is huge,” he notes, referring to the well-known statistic that many restaurants close their doors within the first year of operation. However, it is not just the high risk that deters Herjavec.

Restaurants also require a significant time commitment. Owners are often tied to long hours on site, managing staff and operations, leaving little room for flexibility or scalability. Codie Sanchez, a billionaire entrepreneur and CEO of Contrarian Thinking echoes Herjavec’s sentiment, believing that the restaurant business is almost always a losing proposition.

Restaurants are time-consuming, require significant cash infusions, and offer meager returns. Even profitable restaurants often struggle to generate a substantial return on investment.

2. Retail fashion: a bet on time and inventory

Herjavec also overlooks the retail fashion industry, citing similar reasons: time and money. The fashion business, primarily retail, requires substantial initial investments in inventory, with the expectation that these items will be sold 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.

Fashion companies not only have to navigate unpredictable trends, but are also faced with managing sizing, returns and potentially unsold inventory.

Despite AI’s transformative impact on retail and luxury fashion, the seasonal nature of the industry 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 passion for clothes: it requires a high tolerance for financial risk.

3. Personal services: a personal challenge

Herjavec also discourages entrepreneurs from entering the personal service industry, including businesses such as grooming and dog walking. He argues that these companies are essentially about selling themselves, which makes them difficult to scale and sell.

Many enter the personal services industry with the intention of franchising their business. However, Herjavec notes the inherent challenge: These businesses are often fragmented. He acknowledges that they can be lucrative, but highlights their limited resale value.

Personal service businesses are often highly dependent on the person 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 looking for a comfortable lifestyle rather than those looking to build a scalable and marketable business.

Lifestyle vs. Scalability: Choosing the Right Path

Herjavec’s advice is clear: While some companies can generate revenue, they may not have the scalability and long-term potential that investors like him are looking for. Restaurants, fashion retail and personal service businesses are often time-consuming, cash-intensive and difficult to sell, making them less attractive to entrepreneurs looking for a high return on investment.

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.