Deciding to pursue a business opportunity almost certainly means deciding to spend money. Unfortunately not all business opportunities are created equally, some are good, some are bad and some may even be scams. So how do you decide which business opportunity to invest in?

There are several factors you should consider when making you evaluation of a business opportunity, which are:

Avoiding The Scams

To avoid becoming a victim of the scammers, when evaluating a business opportunity you should consider if the information about the opportunity includes:

• The full contact details for the business? Which should include a named contact and a full postal address, which isn’t a PO box.
• The suppliers history/record in this business, you want to know if they have a proven track record.
• The suppliers viability as an ongoing concern, ask to see their last three years accounts if possible, don’t settle for anything less that the last three years of published accounts. If they are a UK based company copies of their accounts are also available from Companies House.
• Expect testimonials from others that have brought into the business opportunity. Testimonials should be provided with relevant contact details so you can follow them up and verify they legitimacy.
• Previous years accounts from a pilot or from existing franchisees - does the opportunity really pan out, or is it theoretical?
• Is it realistic, put simply, if it sounds to good to be true, it probably is.
• Will they give you enough information to evaluate the business opportunity before you commit, if not then they are probably trying to hide something.
• Are the charges clearly explained and reasonable?
• Is there a guarantee?
• Can you sample the product?
• Is it a recognised brand?
• Is it absolutely clear what you are buying?

Is It A Business Opportunity That Suits You?

• Is the business opportunity affordable?
• Is the business interesting? Are you passionate about the business that you’ll be in? If not look elsewhere.
• Do you have any relevant experience?
• Can you aquire the skills/experience/expertise to run the business?
• Do you know someone in the industry, or a related industry? If so ask them to check over the opportunity as they might spot obvious problems that you wouldn’t.
• Who are your competitors if you pursue the opportunity? Don’t be fooled into thinking there are no competitors, every business has competitors. If there are no competitors it might well be because it’s not a viable business.
• What are your personal goals, why are you looking for a business opportunity and does this opportunity satisfy those goals?

Is It A Viable Business Opportunity?

• Is there a market, if so is the market growing, stable or shrinking? Who says the market exists?
• Is the market in your location, if so is it big enough to support the business opportunity, or put another way, can reach a big enough market from your location?
• What are the risks associated with the business?
• Has the business opportunity been proven by a pilot, other franchisees or even elsewhere (overseas). Does the business model stand up to scrutiny?
• Defensible, how prone is the business opportunity to competitors? Are competitors likely to be able to undercut you or offer a better product or service that you can’t match?
• What is your exit strategy?

Is It A Worthwhile Business Opportunity?

• What will you make? Is the Return On Investment (ROI) worth the risks involved? Will you actually make more money that would would be investing in a less risky proposition?
• Are the financial projections complete and are they reasonable? Have your accountant or your friend with industry experience review them.

If you’re still not sure, then visit my business forums and ask about the opportunity. If you’re selling a business opportunity then please feel free to contact meif you’d like me to review it on this blog.

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