Guidelines for Choosing a Business Opportunity
First, ensure that your business opportunity is compliant with all applicable business opportunity statutes. These laws vary from one state to the next. Also, make sure it is registered in any required states. Next, determine if the offering prospectus is available to buyers for the business opportunity that you are interested in. If the business opportunity falls under the FTC rule then you will need to provide specific information.
Consider the following when choosing a business opportunity. If a company has a large number of outlets and has been in business for more than three years, it will likely cost you more to buy this business opportunity. To evaluate the success and longevity of a parent company, it is worth looking at its history.
Do a honest assessment of your capabilities and yourself. You can’t be happy selling intangible services to businesspeople if you have been working behind a desk for years. You can’t be happy selling snacks behind a counter if you have been a field salesperson for many years. Do you enjoy introducing new products or unusual services to the public? Are you able to generate excitement about an item that is not widely advertised?
It is essential that you have a thorough knowledge of the product/service with which your involvement is related. Be wary of any business opportunity where the parent company provides little or no technical or managerial training. This business opportunity is highly recommended if the licensor-seller has organized all operating knowledge into one standard operating manual.
Do a market analysis of the product/service to be offered. Is it right time to offer the product or service to the public? Are there any market needs for this item? What is the potential of competition?
Check out the number of buyers who have been in business for a reasonable amount of time. You will be able to verify that other buyers are satisfied with the business opportunity.
Make sure you have the right experience and training to manage the business. What training curriculum is available? What is the training scope? Is your background compatible with the requirements?
How does the company’s profit to sales, time and service requirements and financial leverage requirements compare? Is it possible to make more money in another business type?
Are you willing to put in more hours to earn the same amount as you are now? Is it possible to invest the same amount but run a bigger operation with a higher return on investment?
Ask current operators how they are doing. Are they satisfied with their businesses? Which problems are they having, if any?
Investigate the company’s past. Are they a young firm that has little experience and expertise? Are they an established firm with a long history of satisfied customers? Do the business opportunities come from their regular business?
Five Factors to Consider When Assessing a Business Opportunity
1. Market Size
Market size is one of the most important aspects when evaluating business opportunities. Do some market research. Find out if the market exists for your opportunity and how large it is.
You need to make sure that there is enough demand before you can move forward. Although you don’t have to appeal to large markets, it helps to understand the market. It is also helpful to know how engaged the market and what they will pay for it.
Do you have any relationships that could help you leverage the business opportunity? Do you know someone who can help you capitalize on the opportunity? Technically-minded people can be a great resource for you in certain areas of the opportunity. How are you able to build relationships with potential customers or investors? If you have more connections, it is more likely that the opportunity will run smoothly.
3. Capability to manage cash flow
Next, consider how you can manage cash flow. Do you have the necessary funding to start your business? How can you continue funding the business each month? Take a look at your business plan to determine how cash flow will be managed. It is important to ensure that the business can sustain itself over time.
4. Management Skills
What skills do the people involved have? When evaluating your business opportunity, it is important to be open about what you can bring and what you can’t. Look at the management when looking for business opportunities to expand or invest in. What are their skills? Are they competent and diverse? Are you confident in the ability of the principals?
5. Passion and persistence
It is possible to overcome a slight talent shortage with passion and persistence. Do you work with people who can do the job?
Are you confident that they are passionate about making things happen? Do they have the ability to approach problems with a positive attitude and solve them?
You must have passion and perseverance to start your own business. Even when things seem difficult, will you persevere? It is crucial to do your research and be confident in your team, plan and that you can push through.