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How to Evaluate A Home Business Opportunity
by Lionel H. Silva, PhD
Do you get bombarded with Internet home business opportunities every
day? I do! I spend many hours a week researching these. In this article
I will show you how to evaluate these opportunities. Most are just a
waste of time and money.
You can make money from a home business selling products and services in
two ways:
1. You and your employees do all the selling.
2. You get others to sell for you, and you share in the profits.
Let me explain these by showing you how I make money on the Internet. My
web site and e-zine promote several products and services like eBooks
and hosting services. I make money when someone buys one of these. With
some of them, like hosting services, I get paid every month the service
is used.
Direct Selling
This is an example of home businesses of the first kind. You get (like
through affiliate programs) or make products and services. You
sell them at a profit. Some home businesses advertised on the Internet
are of this kind. Like those that sell you an eBook with a web site to
promote them.
When you evaluate these, the most important features to look at are:
+ The quality of the product. Does it really benefit the customer? Will
you end up with happy customers that refer more people to you, or
unhappy customers? Would you use it?
+ The demand for the product. Is the product wanted and useful to many
people? Is it well understood by prospects?
+ How much competition will you have? Don't just look at direct
competition, those that sell the same product or service. Look at
indirect competition. For example if you are selling diet pills, all
other consumer choices to lose weight are your competitors. Even all
other choices to look better even if they don't involve weight loss are
your competitors. With a lot of competition you need to think about
differentiation: making your offer different than all the others.
+ Can you reach the people who want the product with an offer compelling
enough for them to buy? Does it have a guarantee? Can the prospect
sample the product free before buying? Are there added bonuses to add
more value to the offer?
+ Is the price right? What price will generate the most total profit?
Can you control the price?
Network Marketing or MLM
The second kind of home business is where you not only sell a product or
service, but you also recruit others to sell the product with both of
you sharing in the profits. This is commonly called multi-level
marketing, or MLM. The advantage to this is you get others working to
make money not only for themselves but for you too. One disadvantage is
you end up selling two things: the product and the business opportunity.
These businesses must be evaluated in two ways. First, be sure there is
a real product or service involved. Many of the MLMs advertised on the
Internet are just business opportunities. These are like pyramid
schemes: where you pay some money and convince others to pay money, that
you get a share of. These are usually illegal and unprofitable for most
of the people involved.
When there is a real product or service involved in an MLM, evaluate it
the same as for the product businesses above. In other words, be sure
the product has value, demand and is saleable. This is critical.
Next, look at the business opportunity. MLMs have many different
structures, like binary, breakaway, forced matrix and powerlines.
You need to look at:
+ The compensation program: is it designed to motivate you to sponsor a
lot of people, or to help others be successful (good compensation for
second and third levels).
+ Are payments one time or repeating? If the product is a consumable
like food or cosmetics, people will likely reorder generating more
income for you.
+ How many people do you need to personally recruit to break even? How
much do you need to pay to start getting paid? Some programs require
constant recruitment of new people. Some require little or none.
+ Is the company promoting the MLM stable and does it have integrity?
The MLM is only as good as the company promoting it. How long has it
been around? Is it a member of the Better Business Bureau or other
consumer protection company? Are they making unrealistic claims?
+ How much training and support will you get? How easy will it be for
you to help your recruits and downline be successful?
So when you get an ad for a home business opportunity, figure out what
kind of opportunity it is and evaluate it according to these guidelines.
This will help you avoid wasting your time and money.
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Lionel H. Silva, PhD publishes the popular free Internet Home Business
Secrets newsletter. Subscribers get many free bonuses
including free ads: http://getcash.ws. Visit Lionel's Guide to Starting
and Growing Work At Home Businesses at
http://starting-work-at-home-businesses.com. You can contact Lionel at
mailto:lsilva@getcash.ws.
© Copyright 2002 Lionel H. Silva, PhD All Rights Reserved
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