On a Mission

Evaluate the Prospects

Beware the temptation to evaluate an opportunity based entirely on its money-making potential. That potential is largely illusory at this stage: When all is said and done, the money you'll make will be determined predominantly by your personal effort, talent and persistence. What you need to know from the business opportunity seller and other buyers is that the product quality is consistent and that it will be delivered on time, meets a market need and corresponds with your expectations.

Avoid the fundamental mistake of projecting your optimism onto the business concept. Placing breath alcohol-level analyzers, table-top poker machines or breath-mint vending machines in bars may sound like an exquisitely profitable idea. But for all you know, these machines may be impossible to place due to the legitimate concerns of bar owners: Suppose the machines aren't covered by their insurance. Or, unbeknownst to you but common knowledge among bar and lounge owners, these types of machines may break down often and not make much money.

Don't acquire a garage full of useless machines before you discover the realities of the business. Find out whether there's a real market for the product or service the business opportunity offers. If the market is speculative or the product is so novel there's no established market, proceed with caution.

Disclosure Heraldry

The laws of the Federal Trade Commission and 25 states regulate the sale of business opportunity programs, and most of them require the delivery of a disclosure statement well before the purchase is made. That disclosure statement contains a wealth of information about the seller and its financial standing, as well as the training offered and services provided when you buy into the program. It also contains copies of any contracts you'll be asked to sign.

As good an idea as this is, only a small percentage of business opportunity programs actually comply with these disclosure laws. Many programs fall outside the legal definitions of a regulated business opportunity, while other companies simply ignore the requirements of the law.

Ask the seller's representative early in the sales process whether a disclosure document is available. If you receive one, review it carefully. It will save you time tracking down the basic information from the seller and may contain the names and addresses of other buyers in your area.

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