Business Opportunities � Why Pre-Packaged
BizOpps Are Not Worth The Money
By Charles Phelan
Pick up any "business opportunity" magazine at the local newsstand,
and you'll see a glossy attractive publication designed to attract people
who are actively seeking ways to earn extra money, buy a franchise, or
open a business of their own. After all, it's the American Dream to own
your own business and get rich, right?
You've probably heard the old saying, "Most people are too busy earning
a living to make any money." Common sense tells us that we're not going
to get rich working for someone else (with the possible exception of the
lucky folks who started with Microsoft or Google in their early days and
got rich through stock options). The average American employee lives from
paycheck to paycheck, with barely enough income to cover living expenses,
leaving nothing for investment toward building wealth for a comfortable
retirement. Hence the allure of the "Business Opportunity."
As you flip through one of these "BizOpp" magazines, you'll see a wide
variety of advertisements for different types of businesses, ranging from
simple "starter kits" for around $29 all the way to sophisticated franchises
costing $100,000 or more. For most people, it's impossible to raise enough
capital to consider opening a true franchise. The franchise fees alone
are often prohibitive, running into tens of thousands of dollars even for
the lesser known businesses, or several hundred thousand dollars for better
known companies. And that's not even including the outlay required to actually
open the doors for business.
At the other end of the scale, most people are aware that the cheap
starter kits and "business in a box" packages are basically junk. But that
leaves a whole host of medium-priced business startup concepts, ranging
in price from around $500 on the low end to $10,000 on the upper end. I
refer to these as "pre-packaged business opportunities."
To explain why pre-packaged businesses are usually a waste of time and
money, I'll use windshield repair as an example. As I write this, I'm looking
at an ad for a training program that costs $3,000, including starter materials.
In case you don't know what I'm referring to here, the basic idea is that
small chips, cracks, or holes in automobile windshields can be repaired
using a special liquid material that seals and repairs defects. This is
obviously much cheaper than replacing an entire windshield. Hence the "opportunity"
to start a business that helps people save money on their windshield repairs.
Now, in case you're thinking, "There's no way I would want to be in
that business," please bear in mind that I'm just using this as an example
out of hundreds of possible different business concepts advertised in the
same fashion. And of course there are many people who would be attracted
to such a "business opportunity" -- people who really like cars, people
who already know quite a bit about auto repair, and so on. Plenty of individuals
are attracted to a business idea like this, which is why this particular
"opportunity" has been around for decades.
Now, here's the real question. Can you seriously expect to shell out
$3,000 for some starter materials and training in the windshield repair
business, then put a sign out, and expect to start earning money right
away? Of course not! This is the #1 flaw with pre-packaged business opportunities:
you still have to figure out how to market the product or service on your
own.
Let's take a closer look at the windshield repair business. Let's say
your goal is to make $50,000 per year in net income. If we assume that
you can charge around $50 per windshield repair, at a material cost of
around $10, then you have a gross profit (not counting your labor) of $40
per repair. To make $50,000 net, you'd need to find 1,250 windshields per
year that required fixing. That translates to more than 100 repairs per
month, and you'd need to keep this up month in and month out to meet your
income goal. That works out to 3-5 repairs per day, depending on how many
days per month you work.
Now, if you had 1,250 cars lined up down the road, all ready for the
repair work, it would be nice easy money, right? But FINDING those 1,250
cars and then SELLING those 1,250 car owners on your service will be the
real problem. In other words, you don't really have a windshield repair
job here. You have a SALES job, pure and simple. Most of your time will
be spent finding business. Obviously, finding one car at a time will be
totally impractical. Instead, you'll need fleet accounts with major car
dealerships, auto repair shops, car rental agencies, and so on. And you
can bet that a number of other people (some of whom bought the same pre-packaged
business that you did) have also solicited the same companies for their
windshield repair business.
So again, what you really have here is a sales job. If this were a truly
profitable business, then the company selling you the "opportunity" would
not be making all their money selling pre-packaged businesses to people
like yourself. Instead, they would be making their money by rolling out
the service across the country and selling windshield repair directly to
fleet accounts on a nationwide basis. But they know that there is actually
more money to be made in the BizOpp world, preying on people who have the
dream of starting their own business.
The message here is that any pre-packaged business opportunity that
sells in the $500 to $10,000 range is typically worthless and a complete
waste of your time and money. Please bear in mind that these numbers are
just a guideline, and you must always exercise good judgment when evaluating
any business opportunity. Just because a "hot" pre-packaged opportunity
is selling for more than $10,000 does not mean that it is necessarily legitimate.
Many rip-offs cost a lot more than that. But generally speaking, the promoters
of these schemes realize they are aiming at people who can't pay a lot
of money to get started in business. So the packages are marketed in a
way that will maximize the number of people that can afford to buy in.
If you are serious about starting your own business, then a pre-packaged
opportunity is not the way to go. It might seem like an easy answer to
your problem, but the very fact that it's being sold as a packaged business
probably means that there's no real money to be made without a long hard
sales grind. You're much better off doing your own research, coming up
with your own business ideas, and then testing your ideas with small advertisements
to see if your concepts have any real potential. That's how many businesses
get their start. You'll have a much better chance of making it in the world
of business or self-employment if you ignore those BizOpp magazines entirely!
|
