Business opportunity. The very name of the investment concept
captures the hope on which it is built. Excitement leaps off
advertisements that do their best to convince would-be
entrepreneurs they can make money, possibly a lot of money, with
the product line or dispenser system or device they offer. Images
of sudden wealth tantalize the imagination. Advertising text tells
Horatio Alger-type stories of the rise from personal poverty to
quick riches upon the discovery of that simple
"secret"--and it can be yours!
The world of the American business opportunity sizzles with hope
and possibility. The variety of business packages is staggering,
and the promise of outrageous financial success is almost tangible.
The challenge, of course, is to identify the real
opportunities--the ones that will work for you--and to avoid weak
or exaggerated (or worse) offerings.
The First Steps
The first task of any business--opportunity investor is to
identify what you want out of the investment and what talents you
bring to the business. For instance, if your priority is to be able
to work at home, that limits the types of business packages that
will fit your needs. Do you want to work part time only, or would
you prefer to do seasonal work at a particular time of the year?
Jot down your thoughts and plans; it will help you considerably
when you plunge into the business-opportunity marketplace.
Content Continues Below
You should also give some thought to the type of work you want
to do. If you want to get out and deal with people face to face,
make a note of it. If you're seeking an ambitious sales program
with an attractive line of products, this will send you in yet
another direction.
Finally, figure out how much money you want to make. Be
conservative in your estimates of what you can generate with the
business opportunity, and by all means, pay no attention to any
exaggerated revenue-potential claims your sales representative
makes. Plan on a slow start as you learn the business, and a steady
growth rate based on the time and energy you plan to commit to the
effort.
Assess the Risks
How much money can you afford to put at risk? You'll find
business-opportunity package prices that range from less than $100
to more than $10,000. Listen up: All business-opportunity packages
are, without exception, high-risk investments. You have to be ready
to lose your entire investment. Can you afford to lose $2,500--or
whatever amount the package costs? Don't kid yourself that this
can't happen to you. As easy and profitable as the program
seems during the sales presentation, you may find it's not that
easy to make money, for whatever reason. So go in with your eyes
wide open, and, whatever you do, don't bet the rent money.
Law and Order
Twenty-six states and the FTC regulate the offer and sale of
business opportunities. That regulation varies widely among these
authorities--as does the definition of what constitutes a regulated
business opportunity. In its 1979 Franchise Rule, the FTC adopted a
narrow definition that actually excludes many business-opportunity
ventures from coverage. The FTC staff is now in the process of
rewriting the definition from the ground up. Variations among the
state laws make it difficult to predict what will be required of
any particular company in a given state. It's even difficult to
generalize about the scope of business-opportunity regulation.
But we'll generalize anyway. When you boil down the laws, a
business opportunity is generally defined as any set of goods or
services offered by a seller (for more than $500 or as little as
$100, depending on the state) that enables the purchaser to begin
or maintain a business, in which the seller makes one of several
specified representations about the package investment. Obviously,
it's an extremely broad definition.
What does this usually mean in terms of legal compliance? Under
the FTC Franchise Rule, the business-opportunity seller must
deliver a full-disclosure document at least 10 business days before
the purchase. Under most of the state business-opportunity laws, a
regulated seller must register its offering with the appropriate
agency. The seller must also provide each prospective buyer with a
copy of the registered disclosure document a specified number of
days prior to the buyer paying money or signing a binding
contract.
Does this mean you'll receive one of these disclosure
documents before you purchase a business-opportunity package? In
some instances, you certainly will; in many others, you'll
receive nothing in the way of disclosure. Some companies
legitimately feel they are not required to provide disclosure; for
instance, if their packages sell for $400 in a state that sets the
definition at a $500 minimum investment. Others simply ignore the
registration and disclosure requirements, banking on lax
enforcement by state and federal agencies.
Page 1 |
2 |
3 