Are you searching for business opportunities? A business opportunity is a packaged business investment that allows the buyer to begin a business. Before buying a business opportunity, there are things you should consider first.
Things To Consider When Researching Business Opportunities:
1. Purchasing a business opportunity
If a franchise sounds too limiting for you but the idea of coming up with your own business idea, systems and procedures sounds intimidating, there is a middle ground: business opportunities.
Unlike a franchise, however, the business opportunity seller typically exercises no control over the buyer’s business operations. In fact, in most business opportunity programs, there is no continuing relationship between the seller and the buyer after the sale is made.
In general, a business opportunity refers to one of a number of ways to get into business. These include the following:
- Dealers/distributors are individuals or businesses that purchase the right to sell ABC Corp.’s products but not the right to use ABC’s trade name. A distributor may sell to several dealers, while a dealer usually sells direct to retailers or consumers.
- Licensees have the right to use the seller’s trade name and certain methods, equipment, technology or product lines. You can call your business XYZ, but you are an independent licensee.
- Vending machines are provided by the seller, who may also help you find locations for them. You restock your own machines and collect the money.
- Cooperatives allow an existing business to affiliate with a network of similar businesses, usually for advertising and promotional purposes.
- Network marketing/direct sales programs feature a low upfront investment — usually only a few hundred dollars for the purchase of a product sample kit — and the opportunity to sell a product line directly to friends, family and other personal contacts. Most direct-selling programs also ask participants to recruit other sales representatives. These recruits constitute a rep’s “downline,” and their sales generate income for those above them in the program.
2. Checking it out
Researching a business opportunity is a more challenging task than investigating a franchise. And if the business opportunity you are considering does not provide buyers with a disclosure document, you get a lot less information, so you have to do a lot more legwork on your own.
Whenever possible, follow the same steps you would for investigating a franchise. Contact the Better Business Bureau to see if there have been complaints against the company, and if the company is registered with D&B, a financial report will give you details on its financial standing and other information.
Also check with the regulatory agency — either the Commission of Securities or the Commission of Financial Institutions — in the state where the business opportunity has its headquarters.
Finally, see if the business opportunity seller will provide you with a list of people who have purchased the opportunity in the past. Don’t let the seller give you a few handpicked names; ask for a full list of buyers in your state. Try to track them down, and talk to as many as you can. Were they satisfied with the opportunity? Would they recommend it to friends?