Risky business: 44% of small firms reach Year 4

Transportation
Take vehicles for hire. All operators pay high insurance premiums, suffer during oil spikes and have tons of competition. And each mode of transportation has its own risks too. In New York City, where the number of taxis has been fixed since 1937, the price of a taxi license is upward of $400,000 — a stiff entry price to do battle, even in a $1.8 billion market. Then you have to find trustworthy drivers to pull in revenue — unless you enjoy working grueling 10-plus-hour shifts yourself. As for liveries, their welfare depends on connections with local hotels and businesses. Network poorly and you're done.

Apparel
Clothing retailers don't have it much easier. Last year's bubble skirts might have looked great on you, but your customers may not have found them so flattering. Retail's risky — it only takes one slow season to end up swimming in inventory. And differentiating your shop among a cadre of giants, from Nordstrom to Urban Outfitters, is no mean feat even with a healthy marketing budget, which most entrepreneurs don't have. "There has to be some special reason that you're there," says Howard Dawidowitz, a New York-based retail consultant. (For more on starting a clothing retailer, see "The Fundamentals of Retailing.")

Restaurants and bars
Budding restaurateurs have an uphill slog too. "Food businesses in general are deceptively familiar," says Clark Wolf, a New York-based food and restaurant consultant. "That's part of the magic and part of the serious danger." Restaurants often fail because they are undercapitalized: Getting ready for opening day — from fitting out the kitchen to complying with city health codes — can run in the hundreds of thousands of dollars. Once you open your doors, get ready for your staff to walk out through them at a moment's notice. And oh, yeah: Most food-service vendors like cash on delivery, so a slow week can make it hard to buy next week's ingredients or alcohol.

Communications
How about a purveyor of handy-dandy cell phones and other PDAs? Even the smallest towns in the U.S. have several companies hawking mobile devices, including telecom giants such as Verizon and Sprint Nextel. Low margins plus established competitors equals high risk for independent dealerships.

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Which industries are a better fit for the faint of heart? Surprisingly, real estate — including landlords, agents and developers — has a relatively low risk profile, according to Fair Isaac's data. Professional services and licensed trades score well too: Think insurance brokers, doctor's offices and law firms.

Yes, the world is full of lawyers. Too bad people actually need them.

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