A Tale of Two Opportunities

Evaluating a Business Opportunity

The single most important aspect of a business opportunity investment is your fit with the program. Does it fit your plans, the skills you bring to the program and your financial resources? No amount of great product, substantive training or glossy brochures can overcome a poor fit. The best answer to this challenge is to assess your goals, how you think a business opportunity can help you reach those goals, and what you expect to enjoy most about being in business. Be sure to write down your notes on these thoughts and keep them nearby for reference.

What is the most common mistake people make when deciding to purchase business opportunities? As you look over the seller's materials, you may delude yourself into the purchase: "This product or service is so good (or cheap or valuable or innovative or clever) that it will sell itself. " Banish this thought immediately! There is nothing-nada-that is so good it will sell itself. You had better be prepared to do some selling. That means cold-calling people who won't give you the time of day. You'll have a lot of doors closed in your face and phone prospects hanging up on you-you have to be prepared for that bruising experience. How are your sales skills? Most business opportunities, when you boil down the hype and enthusiasm, are little more than independent sales jobs that you own, so your skills need to be sharp.

Gathering information about a particular business opportunity investment can be difficult. The person you most want to interview is someone who purchased the business opportunity and has had some success with it. Ask the seller for a list of owners in your part of the country. Assuming you receive a list, get on the phone with some of them. The key question to ask: "Knowing what you know now, would you make this purchase again?"

A body of federal and state laws purports to regulate business opportunity sales (see "The Regulators" on page 30), but unlike the franchise laws discussed below, the statutes are inconsistent in their definitions of what constitutes a business opportunity, and they do not cover much of the hyperactive business opportunity marketplace. Despite the designs of the legal authorities, odds are that you probably won't receive any sort of meaningful disclosure document. Make up for it by asking the seller the right questions (see "Question Everything" on page 31).

You could also visit the company headquarters to get a personal impression of the business. This won't be practical in many situations (why make a $1,000 trip for a $650 investment?), but it starts to make more sense at higher levels of investment. Check in with the Better Business Bureau and the FTC, and by all means contact your state consumer protection authorities for information on a particular seller or on business opportunity investments in general.

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This article was originally published in the May 2005 print edition of Entrepreneur's StartUps with the headline: A Tale of Two Opportunities.

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