According to the FTC, fraudulent business opportunities are generally promoted in high trafficked avenues online like daily and weekly classifieds as well as in magazines. The advertisements are made to look legitimate. However, if you pay close attention to the details and know what to look for, you can reject such opportunities right away. Especially with today’s current economic climate and lack of traditional jobs, many people are turning to entrepreneurial business opportunities. This article will address 5 basic ways to sniff out a good business opportunity.
Can You Recognize a Good Business Opportunity?
An individual with an entrepreneurial spirit should not fear starting a new business opportunity. There are many legitimate and viable options available. It takes time to be able to recognize a good business opportunity because you must do your research. Some of the basic business opportunities include the following types.
- Distributors – Independent agents contracted to sell a company’s products or services
- Franchises – Ownership of a business via an investment fee and support of a franchise
- Vending Machines – Selling products and paying location owner percentage of sales
- Website Procurement – Acquiring an established business with its own website
You can find out more information on how to research a business opportunity as well as details on how the FTC protects businesses and consumers from fraudulent activities.
How to Find a Viable Business Opportunity
When searching for a viable business opportunity, it is important to first understand your goals, current financial situation and what you are specifically looking for. When you have a grasp of those needs and wants, you can ascertain which factors of the prospective business opportunity make it the right one for you. Regardless of the type of business opportunity, it is important to consider the following five factors that need to exist in the opportunity you’re considering.
1. Meeting an Existing Need
One of the first factors to consider is whether or not the product or service meets an existing need in the consumer market. If there is no need for the product or the market is already saturated with such items, this opportunity will not be viable for you. For example, if you are choosing to enter into a distributorship for a major direct sales company, ask yourself whether or not the products meet an existing need. If the product is consumable, you have more of a chance for customers to continually buy from you—such as with health and wellness or personal care products rather than pottery or candles.
2. Works Well Within Your Current Locale
If you find a business opportunity, but the target market is solely in Alaska, and you live in New York that may not be the best business opportunity for you to buy into. It all depends on your current work-life situation. The ideal factor to consider when seeking the perfect business opportunity is to find one with a target market within your current locale. Additionally, you can work with a company that has a global target market, with most of your work then being done online. It is important to consider the current economic environment of your target market. For example, do the consumers who need your product have the funds to purchase them? If you can find a product that everyone needs and can afford to buy, then that is a winning combination for a business opportunity for you.
3. Resources Make the Business Work
Most of us have heard the adage that you need money to make money. For the entrepreneur, this is especially true. Many business opportunities require an initial investment. Some can range from $49.99 for a starter kit as a distributor for a company to thousands of dollars for a franchise. Considering the factor of your own personal resources is another vital aspect to deciding whether or not the business opportunity is the right one for you. If you need to take out a loan in order to have enough money to cover the initial investment costs, then you must be absolutely certain that you will receive a return on your investment. However, no one can be entirely certain about the return you will receive. Doing your due diligence by thoroughly researching all factors of the opportunity will increase your chances of making a wise decision.
4. Market Value of the Product
A fourth consideration is the factor of whether or not the product or service is priced right for your target market. You may have the best and most innovative product in the world. However, if it isn’t priced right, you are not going to gain many sales. However, there are many factors that determine how to price a product correctly—including production costs and the amount of profit for the manufacturer and any distributors or investment partners. Your product must be competitive with the market and still be attractive enough to get consumers to purchase while still rendering you a comfortable profit margin.
5. Market Ripeness for the Product
This factor basically encompasses a final review of all the factors to consider. You need to honestly review whether or not it is the right time for you to step out and start a new business opportunity. Additionally, you need to consider the ripeness of the consumer market to purchase your product and whether or not you will receive repeat customers. Timing is everything as they say, and it holds true for embarking on new business opportunities as well.
Entering into a new business opportunity should never be done without careful consideration of all the five factors as discussed in this article. The product must meet an existing need and work well within your current locale and work-life situation. Additionally, you need the resources to make a business work. The market value of the product and the market ripeness must all work together in your favor in order to receive a good return on your investment.