7 Businesses NOT to Start [Slideshow]

Now may be a great time to start a business — but that doesn’t mean it’s a great time to start any business. In fact, there are some ideas and industries that you’d be smart to avoid. Here are seven of them:

News about this frozen treat is mixed. Crain’s New York Business recently reported that frozen yogurt shops in Manhattan are closing due to oversaturation. But Nation’s Restaurant News reports several chains are rapidly expanding. Personally, I think this trend is on its last legs (there are five shops within three miles of my house), but if you do want to open a yogurt shop, you might want to focus on smaller suburban or rural markets where the concept hasn’t yet peaked.

Cupcake pioneer Crumbs announced plans to go public earlier this year. And cupcake stores are still popping up in many places. So why not open one? Because cupcake stores are hard to make profitable. In many regions, the concept is oversaturated and consumers perceive cupcakes as “yesterday’s news.” (According to research firm The NPD Group, cupcake sales declined 18 percent last year.) If you want to sell these sweet treats, tread carefully. Look for a region without much competition, make sure your profit margins are high and your business model is solid, and think about going mobile.

Starting a restaurant is notoriously tough, and the recession hasn’t made it any easier. According to the Bureau of Labor Statistics, in 2010, food service was the third-hardest-hit industry in terms of layoffs. Although the economy is picking up steam, restaurant sales aren’t keeping pace. Research firm Mintel reports that 60 percent of consumers cannot afford to eat out regularly, and 24 percent plan to spend less at restaurants this year compared to last year.

“Previous years have seen this mature industry's performance shrink, and the next few years may see those who remain taken to the cleaners.” This is how research firm IBISWorld sums up the dry cleaning industry. Casual workplaces mean less need for dry cleaning, widespread layoffs have further hurt sales, and environmental concerns mean pressure to invest in expensive “green” equipment and processes. Bottom line: This low-margin business competes heavily on price, making it a poor startup choice.

It’s long been difficult for U.S. manufacturers to compete with cheap goods from overseas. The recession hasn’t helped: The Bureau of Labor Statistics reports manufacturing accounted for 25 percent of layoffs in 2010 and 36 percent of layoffs in 2009, and projects some 1.2 million more manufacturing jobs will be lost by 2018. Making specialized or unique products that consumers or businesses will pay more for can offset the higher costs of manufacturing onshore. But complex regulations and tough competition mostly make manufacturing more headache than reward.

Despite its glamorous reputation, publishing has always been a tough industry. Now, shrinking ad revenues, rising paper costs and new technology have thrown it into a tailspin. The industry has suffered mass layoffs, and the Bureau of Labor Statistics predicts it will shrink an additional 5 percent by 2018. With even formerly deep-pocketed veterans like Newsweek struggling to survive, is this really an industry you want to be in?

Speaker of the House John Boehner and the “Jersey Shore” gang may be sporting golden glows, but even Snooki can’t solve the tanning industry’s problems. The number of tanning salon franchises has declined steadily in the past few years, according to Maria Anton, franchise editor for AllBusiness.com. Whether due to wallet-watching consumers, concerns about skin cancer, or a 10 percent tax on tanning salon users imposed by health-care reform legislation last year, it seems the sun may be setting on this industry.

All that said, you know (or should know) your market best. Almost everyone would have warned against franchising a hamburger restaurant, but Five Guys Burgers and Fries is rapidly expanding, and it’s only been franchising for nine years. No matter what kind of business you’re trying to start, the key is to proceed with knowledge and caution.

Want the scoop on more trends that can grow your business? Sign up for Rieva Lesonsky’s free TrendCast reports at www.smallbizdaily.com. Rieva is CEO of GrowBiz Media, a content and consulting company that helps entrepreneurs start and grow their businesses. Follow her at twitter.com/rieva.