So you want to own your own business and be your own boss? When it comes to choosing a business that interests you and that meets your needs, the landscape is vast. Maybe you’re looking for a small, home-based business opportunity that allows you to use your sales skills or you’re specifically interested in an online business opportunity, one that will enable you to capitalize on the growing internet business opportunity trend.
Whether the prospective business opportunity you’re interested in is home-based, a distributorship, a licensee opportunity, a franchise or any other small business venture, there are five very important questions you must ask to ensure you choose just the right one for you:
- Is the Company in Compliance? ― Many states require any company that offers a home-based or other small business opportunity, distributorship, licensee opportunity or franchise to be registered with that state. It’s very important for you as a prospective buyer of any one of these kinds of ventures to make sure it is legitimate in every way. You must ensure that the company you are interested in affiliating yourself with has taken the necessary steps to be recognized in its home state as well as yours, if need be. In addition, depending on the exact nature of the business in question, Federal Trade Commission rules require that certain critical information be disclosed to you, usually in the form of a prospectus. Know your rights under the law before you buy into any potential business opportunity and make sure you get all the necessary documentation upfront.
- What’s Their Track Record? ― Any business you buy into has a track record, be it short or long, good or bad. You need to know what that is. How long has the company been in business? How long have the company’s major players been in business? What are their reputations like? Are they individuals with integrity who have the necessary experience to be of benefit to you and/or train you? Will they provide referrals? Keep in mind that the longer the company has been around and the more established its product or service, the greater the start-up costs may be. What is the financial strength of the company? Does it have a good credit history? Are there any complaints about the company that have been registered with the Better Business Bureau? It’s never a bad idea to have an accountant, attorney or some other trusted advisor delve into these kinds of issues on your behalf.
- What Are My KSAs? ― Knowledge, skills and abilities…you must know your KSAs well enough to know what business is right for you. Is the product/service you’re going to be selling something you know enough about to be successful? Is it something you feel confident you can be trained to do well and will the company train you appropriately? In addition to KSAs, do you have the right attitude to make it in business? These are all tough questions, but only you can answer them honestly so that you don’t make a big mistake and get into something you’ll regret later.
- Is It the Right Time and the Right Place? ― You have no business getting into any business unless you’ve done a thorough evaluation of the marketplace in which you intend to operate. Is there sufficient demand in the proposed area for the products/services your company will be providing? What does the competition look like, and how well are they doing? What do you intend to do differently that will set you apart? If your business is home-based and/or in an out-of-the-way location and will suffer for lack of foot traffic, do you have a well-thought out marketing plan to make up for any deficits that may occur as a result? If your business is entirely online, do you have a search engine marketing plan to ensure your competitiveness in that marketplace?
- Will This Business Realistically Turn a Profit and When? ― You may just love the product/service you’re selling, but will your potential customers? It’s never enough to just go on instinct, although good instincts are the hallmark of any good entrepreneur. And so is good, basic common sense. Common sense dictates that you know everything possible about the company you’re buying into when it comes to finances. Ask the major players to show you the numbers. If the business has been demonstrably successful elsewhere and you believe that success can be replicated by you in your own marketplace through your own hard work and dedication, then you can calculate what should be a reasonable return on investment and in what timeframe. You must examine what’s been done before in the context of a given set of circumstances so that you can adequately predict your own potential profitability. Only then will you have a true sense of what kind of working capital you’ll need to sustain your business during those first critical years.