Business Opportunities: How to Decide
Examples of business opportunities:
1. Vending Machines
2. Dry Cleaning/Laundry Services
3. Auto Parts
4. Men’s and Women’s Fragrances
5. Household Cleaning Products
6. Florists
7. Beauty Salons/Barber Shops
8. Vendor Carts
Before you sign a contract with one of these types of companies, however, you should be aware of the risks involved and the potential for profits.
Investment
With a business opportunity, you will have to make an investment. Typically, these range between $400 and $2,000, depending on the type of company and the amount of product needed. In addition to the initial investment, you must continue to put money into your business for it to grow. For example, if you have a vending machine business, you will have to pay to restock the machines, perform maintenance on broken machines, and to rent the location where the machine is located. The goal is for these ongoing costs to be less than the profits you make from their sales.
Liability
Before you sign a contract, make sure that you read it carefully and that you have a lawyer look over the parts that you don’t understand. Determining your liability should something happen with your business should be a huge factor in your decision. If, for instance, someone were to get their hand caught in the vending machine slot, would you be responsible for the medical bills, or would the supplier? Also, will you need liability insurance coverage? These costs can add up, and you should know what you are getting yourself into.
Training Programs
Will the supplier be providing a training program to acclimate you to the business? If you’ll be left all on your own, then you should choose a business opportunity about which you are knowledgable, or you will never get the business off the ground. Most offer a week or two-week training program that teaches you about the product or service and how to sell it.
Financing
Many suppliers of business opportunities offer assistance in obtaining financing and lines of credit. This is an invaluable service, and will help you get everything moving from the day you begin. Unless your credit record is spotless, you might have trouble obtaining financial assistance on your own.
Location, Location, Location
Since most business opportunitiesare retail outlets that count on steady streams of traffic, find out what locations the supplier is offering. If they are low-key, obscure places where you won’t see many people, don’t bother. You won’t make enough money, and there are better options. Some suppliers will negotiate on the location if they feel you are slipping away. Seize that chance and suggest your own locations.
Exclusivity Clauses
In the contract, your supplier might stipulate that you are not allowed to purchase product from any company other than the one he or she specifies. This can really cramp your style when profits start pouring in, or if you discover a better product at a better rate. If the contract includes one of these clauses, and you are worried about your welfare in that area, talk with the supplier and attempt to negotiate an alteration to the contract.
Bankruptcy
What if the parent company goes bankrupt? Ask this question, and listen carefully to the response. Although your loss will not be as great as with a franchise or the buying of an existing business, you still stand to lose some serious cash. Find out how bankruptcy would affect you and your business.
Carefully investigate all areas of a business opportunity before buying in. Ask for a list of existing providers and call them, asking what their experience has been and if they would recommend the opportunity to you. Contact the BBB, FTC, and the Attorney General to ask about negative reports, and visit other places in which people operate this opportunity.
