Is The Juice Worth The Squeeze?
When friends or colleagues reach out to me for advice on buying or creating a new business, I always go through a series of questions for them to answer for themselves. You need to discover for yourself if the reward is worth the effort. This is how I think about it when presented with opportunities:
1. Do your skills fit with the new lifestyle? Take a serious look at yourself and your abilities. If you've been a worker bee working behind a desk for many years, will you be happy calling strangers and selling them a service? If you've been a field salesperson for years, will you be satisfied selling from one location?
2. Does it excite you? You need to run your business enthusiastically – this is nonnegotiable. Will you enjoy launching a new product or an unusual service that the public knows nothing about? Can you generate excitement?
3. You must have complete knowledge of the product or service that you’re considering. If the parent company gives you little or no training in technical or management know-how, be wary of the business opportunity. If the licensor-seller has organized all the operating knowledge into a standard operating manual, consider bonus points for the business opportunity.
4. Evaluate the market for the product or service to be offered. Is the time right to introduce it to the public? Is there a need? What is its potential with respect to competition?
5. If you’re buying into an established business, find out how many buyers have successfully been in the business and how long they’ve been around. A legitimate opportunity will even provide you with contact information of other investors, so you can get the real scoop.
6. Know what kind of training and experience is required to run the business. Is there an actual curriculum of training? How long is it? Does your background align with its requirements?
7. What is the company's profit ratio to sales; to time and service requirements; and to the financial leverage requirements? Can you make more in another type of business? This is important! You’re signing up a lot of effort to make money, make sure the juice is worth the squeeze.
8. Are you signing up to work more hours to make the same amount you do now? Can you invest the same amount in the business opportunity yet operate a larger operation and get a better return on investment? Is there incredible long term potential that makes it worth the effort?
9. Check with current operators to see how they're doing. Are they happy with their businesses? What keeps them awake at night?
10. Research company's history. Is it a new company with little expertise and experience? Is it an older firm whose regular products have satisfied customers for years?
11. Is there financial strength and strong credit behind the business opportunity?
12. Evaluate the policies and plans of the company with the associations and business groups in which the parent company or seller is involved. Can you live with that? Are they up to date?
13. The Better Business Bureau will give you a report if others have lodged previous complaints against the company. Have you checked it out?
14. Having an attorney, accountant or business consultant conduct an in-depth study of the company may be an excellent idea. I have also run background checks on the owners or other investors.
15. Visit the headquarters of the licensor-seller. Talk to the personnel and the training director. Visit the original prototype of the business being sold. Evaluate other outlets. Expose yourself to the other outlets' products and services to determine the quality dispensed.
At the end of the day, the more research you do before you sign up, the more informed your decision will be. There are a lot of questions to answer but finding out and passing on an opportunity can save a ton of heartache.