Starting a Business

Determining if a Biz Opp Is a Scam

Think that homebased business opportunity is a scam? Here's how to know for sure.

This story appears in the June 2006 issue of Startups. Subscribe »

Are you tempted by offers that promise you can make thousands of dollars a week working from home? Stop and think before you get involved. While there are legitimate opportunities to work at home, offers that promise instant riches with little work are generally scams. Legitimate opportunities to work at home come in the form of franchises or nonfranchise businesses, or if you're good at sales and recruiting, direct selling.

How can you tell the difference between what sounds good and what is good? We suggest you test any opportunity for three things: suitability, legitimacy and marketability. Start by asking yourself if there's a match between what you can and want to do and the work involved in the homebased opportunity. Consider direct selling, for example-only about 5 percent of people who sign up with direct-selling companies have the skills to make money at it.

To determine a business opportunity's legitimacy, check out Entrepreneur.com's FranchiseZone and BizOpp Zone , and the Better Business Bureau's site. Be aware that not finding complaints is no assurance of legitimacy, and if you contact a fraudulent company, they may provide false testimonials.

Checking for marketability means determining if you have access to enough potential customers to make a particular business viable. The market may be saturated, and what will sell in one community might not sell in another.

Remember, if a work-at-home offer sounds too good to be true, it probably is. By taking time to do a triple check, you can become a victor, not a victim.

Authors and career coaches Paul and Sarah Edwards' new book is a new edition of Making Money With Your Computer at Home. Send them your questions at www.workingfromhome.comor in care of Entrepreneur.
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