From the July 2001 issue of Startups

Q: I want to work from home, but the idea of starting a business overwhelms me. I get e-mail all the time about making big money at home in just a few hours a week. I've sent in money for a few of these, but I've concluded the only way to make money from such opportunities is by convincing other people they can make money at home. Are there legitimate businesses I can start?

A: If you're not the kind of person who needs to march to the beat of your own drum, you may be a candidate for having a homebased business that someone else's cookie cutter has already created. Regardless, you'll have to heed someone's else drumbeat if you buy a franchise or business opportunity.

Whether the advantages of a prepackaged business outweigh the disadvantages is as much a personal decision as a financial and business one. With a franchise or business opportunity based on a viable concept, you won't have to invent or reinvent the wheel. Plus, you'll often get faster earnings and receive initial or ongoing assistance and support.

But there are potential disadvantages, too. First, virtually nine out of 10 corporations that sell franchises, business opportunities, and network marketing goods and services fail in their first five years. Common sense says you would therefore want to seek out companies that have at least a five-year track record-but that leaves out the possibility of getting in on the ground floor of a cutting-edge company that's maybe the one of 10 that makes it.

Second, there's the investment. In the case of a franchise, generally the more you pay for one, the more training and support you'll get. Business opportunities may come with or without training. You should consider your learning curve an investment. Even as a distributor for a direct-selling company (a term that includes both direct-sales companies like Avon and Tupperware and multilevel companies), you are apt to need to purchase samples, become a customer yourself, and go to meetings and training that you typically pay for.

Third, even though the business you buy may work for someone else, it doesn't mean it will work for you. Too many people think they'll be buying a business that runs itself, including getting customers. If you're considering a business that claims the contrary, the seller is probably manipulating you.

If you determine the advantages of a prepackaged business outscore the disadvantages, you'll want to carefully answer the following questions:

  • What would your territory be?
  • What is the product line like?
  • Is there a body of knowledge based on a proven track record?
  • Is there a valued name brand associated with the opportunity?
  • Will you receive training and ongoing support?
  • Is there a marketing plan you can implement, both on a local and national level?
  • Will you receive leads and referrals to paying customers?
  • Will you receive any software, equipment or other supplies?

Finally, always ask yourself whether you're buying something you don't already have or couldn't obtain on your own.


Paul and Sarah Edwards' most recent book is Changing Directions Without Losing Your Way. Send them your start-up business questions at www.workingfromhome.com or through us at Entrepreneur.