How to Research a Business Opportunity

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“Key man insurance.” Protect your business if you lose a partner or key employee. Also, insure yourself to safeguard your spouse and family.

Life insurance for employees. Consider offering a term policy. This is a benefit you can offer and even underwrite as an added value.

Health insurance. A comprehensive health insurance policy will help you recruit and retain good employees. It will also help employees stay healthy and productive.

Property insurance. Obtain broad property coverage to protect you from a variety of losses in case of theft or disaster.

As a business owner, you've probably encountered many different business opportunities. Some of them may turn out to be money makers, while others may be more trouble than they're worth. The trick is to research each [COLOR=black]business opportunity properly to make sure that it has the potential to be successful.

A business opportunity involves the sale or lease of any product, service, equipment, etc. that will enable the purchaser-licensee to begin a business.
The licensor or seller of a business opportunity declares that it will secure or assist the buyer in finding a suitable location or provide the product to the purchaser-licensee.
The licensor-seller guarantees an income greater than or equal to the price the licensee-buyer pays for the product when it's resold and that there is a market present for the product or service.
The initial fee paid to the seller in order to start the business opportunity must range between $400 and $1,000.
The licensor-seller promises to buy back any product purchased by the licensee-buyer in the event it cannot be sold to the prospective customers of the business.
Any products or services developed by the seller-licensor will be purchased by the licensee-buyer.
The licensor-seller of the business opportunity will supply a sales or marketing program for the licensee-buyer that many times will include the use of a trade name or trademark.
The laws covering business opportunity ventures usually exclude the sale of an independent business by its owner. Rather, they are meant to cover the multiple sales of distributorships or businesses that do not meet the requirements of a franchise under the Federal Trade Commission (FTC) rule passed in 1979. This act defines business offerings in three formats: package franchises, product franchises and business opportunity ventures.
In order to be a business opportunity venture under the FTC rule, four elements must be present:
10. The individual who buys a business opportunity, often referred to as a licensee or franchisee, must distribute or sell goods or services supplied by the licenser or franchisor.

11. The licensor or franchisor must help secure a retail outlet or accounts for the goods and services the licensee is distributing or selling.

12. There must be a cash transaction between the two parties of at least $500 prior to or within six months after the licensee or franchisee starts the business venture.

13. All terms and conditions of the relationship between the licensor and the licensee must be stated in writing.

If the market research is too time consuming for the owner, then it might be worth using a consultancy or market research agency to ask the questions and providing sufficient quantitative and qualitative data that can determine whether there is a sufficient market place. Alternatively business angel finance can be provided for suitable business opportunities.[/COLOR]