How To Evaluate A Home Business Opportunity

How does someone know if a home business opportunity is worth the effort? As a home business owner myself, and as some who is asked by clients to help them decide on a home business, I thought it was time to put some of the basics down in writing.

Although some of my 25 years of marketing and advertising experience is bound to creep in, I have tried to keep this a simple as a I can and focused on home businesses:

1) Is is real?

I consider this the most important question. Thanks to the web, people are frequently being offered opportunities that do not really exist. Yes, they exist on a web page just like an advertisement in a magazine exists. But is there really a company? Products? A legal entity? Real customers? Real software that works? A real office: in a home or a business with a telephone and people who work there?

Before “buying in” to the business opportunity, send an email and ask for references and testimonials with names of people you can contact. If you don’t hear back or don’t like what you hear, move on.

2) Is there a need?

You will no doubt require customers. Do they really need your product or is their interest solely based on the fact that you are their cousin or best friend? Would they want this product from anyone other than you? Is it possible that you are so in love with your idea that you do not see its real market potential, either positive or negative? Do some low-cost market research. Create high/medium/low sales estimates.

3) Can the customer buy?

Wanting something and being able to afford it are two different things. Can the people who want your product really afford it? Another angle on this is whether customers are “willing to spend” money for your product or service? They might have the actual cash to buy, but if they don’t see the value you in it, you’ll never see the cash.

4) Will the customer buy?

OK, I want your product, I can afford it, but will I buy it? Maybe there are risks or discomforts that are holding me back. Maybe I think I can get a better deal. Maybe a better product is coming out soon? You need to explore these reasons or no sale!

5) Can you win?

Can you sustain your business over the long term? Is the product competitive? On promotions? On pricing? Is the timing right? Is your company competitive? In production? In your sales and distribution? In management?

6) Is it worth it?

There are as many reasons for starting a home business as there are people starting them. So let us take a first look at this questions from the perspective of your lifestyle. Will this opportunity offer you the chance to live your dream life? That is an important question. Aside from money, what are the other benefits your new business will offer you?

7) Is the return adequate?

Simple math. Are you getting back in income the level you need to a) support the business, b) pay your bills, c) have something leftover to use for your other goals?

Does it satisfy other needs?

These needs are often very unique to your situation: an obsession about running your own show, putting your daughter through college, getting an operation that you needed, taking care of a sick relative.

To summarize, the three main questions are:

1) Is it real 2) Can you win? 3) Is it worth it?

Sure we can do more qualitative analytical stuff with business and market numbers, but these questions are the basics. Especially with #1, do not take shortcuts. If something looks like a rock, turn it over! You might be pleasantly surprised.

Your last “to-do” is to help another small business owner when you can It is a big world and a land of plenty. Do not be afraid to help. What goes around, comes around, and there is enough to go around for everyone.