Feb 15 2010
How To Avoid Business Opportunity Scams
There are thousands of business opportunities, network marketing companies, distributorships and franchises available.
So how do you know which ones are legitimate and which are scams?
My last post gave you a quick way to evaluate a network marketing business, so this post is to help you spot bad deals that are not network marketing.
Avoid business opportunities where their focus is on how much money you can make with how little time, work or investment. Those full page ads in magazines showing a guy standing in front of a mansion with an exotic car holding a fistful of hundred dollar bills is a good example. Legitimate businesses don’t make ridiculous claims.
The money making opportunity in those ads is not to actually do the business they are promoting, it’s to sell you their opportunity like the advertiser is doing!.
Also avoid the ads that don’t tell you what the business really is. “Blind” ads get a higher response rate because people cannot rule something out if they don’t know what it is. Many of these ads make money by selling the leads they create to other people selling business opportunities.
Avoid anything where you do not see how you make money and how the company makes money and why they need you.
I once evaluated a vending business for a friend. The company provided the vending machines, provided the product to sell and got the machines placed for you. All you have to do is service the machines.
Sounds like a good deal, right?
Not really. Their promotional literature leaves out a lot of critical info, but I uncovered this one with a common sense test. Why do they need me? Why don’t they just hire an employee to service the machines?
The answer was, that when all the time and costs are considered, I would not make the $50/hour they claimed, I’d end up with more like $6/hour and have to provide my own vehicle and pay for gas.
Now I see why they need me – I would be servicing their machines much cheaper than they could ever do it themselves….
Another example, my sister-in-law got all excited about a mystery shopper opportunity. She loves shopping and this looked like a way to get paid $500 for each review she sent in.
This one was a total scam, they wanted her to send in a cashier’s check for $2,500 to get started. There again, the way the job market is these days, a company could probably get hundreds of people eager to do this for $10/hour.
Make sure you see the logic how everyone benefits because if you don’t, it’s like they say about a poker game – if you don’t know who the sucker at the table is, it’s you!
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