The Benefits of a Business Opportunity

This option requires a lower initial payment than a franchise.

The fee for a franchise opportunity that requires low investments has increased in number, but it is still significantly lower than the minimum investment required by the FTC. FTC requires that a business opportunity be considered a business possibility if it is to be considered. There are many businesses that meet this minimum requirement, though most cost between $2,000 and $3,000 on average.

A system or product that has been proven to work.

Systems exist to maximize efficiency, minimize problems, and increase returns. It’s simply about passing on knowledge, which is still the best teacher. Most people appreciate having their hands held every once in awhile, whether they like it or not. The parent company is always there for the licensee in times of crisis. Many people love the idea of safety in numbers.

Programs of intensive training.

The learning phase of any new business requires a lot time and money. Through intensive training, a good business opportunity venture will eliminate most of the ineffective moves.

There are better financing options.

Due to its financial size, credit lines and contractual agreements, the parent company can often offer better financing than what an individual would be able to obtain. It is important to consider financial leverage when making an investment decision.

Promotional and advertising professionals.

Advertising is not a major expense for small businesses. Their efforts are often poor-conceived and inconsistent when they do spend money on advertising. To help with their marketing efforts, many business opportunity ventures offer print advertising slicks, television storyboards, and radio ads. A cooperative advertising agreement may be signed by some business opportunity ventures, where they will share the costs of printing, radio, and TV ads. This type is especially useful in large metropolitan areas where media costs are prohibitive for the owner of a single shop.

Permanent counseling.

Business opportunity ventures often offer training and counseling, as well as support from experts who provide assistance that no one else could afford. Legal advice is also available. Experts in this field designed the most efficient accounting system for that particular business. Some licensors offer free analysis of your records that can be compared with other units to pinpoint inefficiencies or losses as well as profitable aspects of your business.

Assistance in selecting a site

Site selection and marketing specialists use all scientific tools to find the right locations. Professional negotiators use the influence of large corporations to influence landlords to arrange leases and contracts to their best advantage.

Purchasing power.

Many times the parent company has the buying power and special purchasing techniques to bring products, equipment, and other services to the licensee at a far lower cost than an individual could.

No ongoing royalties.

A business opportunity does not require the seller to pay ongoing royalties, which is unlike a franchise. Profits are yours.

The Advantages and Disadvantages to a Business Opportunity

If the conditions are favorable, business opportunities offer low-risk, high-return ways to get into business. However, there are certain problems to be aware of.

Poor site selection.

A majority of business opportunities can be described as consumer-oriented retail businesses. They rely on location, visibility, and easy access to the place. Most business buyers will simply accept the location chosen. DON’T! It is worth taking the time to review it. It is possible to hire an outside consultant to review and perhaps argue with the parent company. A better location could mean millions in profit over 20 years.

Mangel of support.

Sellers of business opportunities are not required to provide any ongoing support. If the seller does not provide any information or guidelines to help you once your business is established, you might not have many recourse options.

Clauses of exclusion

Are you allowed to only sell the manufacturer’s product? If that is the case, and you decide to sell anything other than manufacturer merchandise, the licensor could cancel the agreement. You cannot hide if you purchase from other sources. Many parent companies will ask you to open your books at predetermined times. All irregularities will be discovered at these times. The best business buyers will negotiate the provision in the agreement that specifies the sources of supply for products of inconsistent quality.

Parent-company bankruptcy.

A second danger is that the parent company may overextend itself or go bankrupt. Even though this isn’t as severe in a business opportunity, it could still mean that you lose the business.