BUYING A SMALL BUSINESS OPPORTUNITY CAN BE BEST

A small business opportunity, another type of business that is often bought, needs some explanation.

Typically any small business opportunity is one where you buy only the means to start a business. You buy the materials or equipment needed to go into business for yourself and you are then on your own.

You run the business as you like with no further input from the seller, and no further fees or royalties. You name the business as you like.

Compared with buying a small business, lock, stock and barrel, buying any of the many small business opportunities can be cheaper and with less risk if you select carefully.

Buying a franchise on the other hand means having to strictly adhere to all the franchisors rules and regulations. Not for you if you like your freedom!

Can a Small Business Opportunity be right for you?

There are many business types that can be classified as business opportunities and here to give you some idea of the range, I will list the major types:-

• Distributorships

  Many large businesses will appoint distributors to help sell their products. The appointed distributor can be an individual or a company and has the right to sell the products of the parent company, but does not have the right to use its trade name.

  If you buy a distributorship you can generally also sell on to dealers within your authorized area.

• Dealerships

  Similar to a distributor, but will normally sell only to end customers and sometimes retailers.

  Both distributors and dealers can use their supplier’s trade name to advertise their goods, but cannot call themselves by this name. For example, you could be a Hitachi dealer and use all their supplied advertising, but you could not call your business Hitachi Suppliers Corp.

• Affiliate Cooperation

  For promotional or advertising purposes many businesses selling the same products or service, band together to help keep costs down. If your business is similar to other businesses in its needs, then being affiliated to them can be worth while. Many a small business opportunity can be found with affiliates.

• Licensees

  Many companies will license their technology, equipment etc and allow you to buy the right to use such under license.

  In many cases they will teach you their processes and sell you their machinery, raw materials and supplies, provided you sell, in some cases exclusively, their products. You will be allowed to sell under their trade name, but remain an independent business.

• Network Marketing

  Here you buy, usually at low cost, the right to sell the product of a Multilevel Marketing or Network Marketing company (sometimes called a direct sales company).

  Many such network marketing companies are very popular, with names like Tupperware, Avon, etc and can be operated part time, making for a very flexible business.

• Vending Machines

  Millions upon millions of vending machines are available and in use worldwide. Many of the machine manufacturers will sell these machines and provide training in their use and maintenance.

  They also provide spares and in many cases also supply maintenance.

  After buying any such machines, you locate them, restock and collect any money from them.

In general there are a great number of small business opportunities for you to choose from that will get you into starting your own business. Remember however, that in all cases, you have to study the potential market for the business you are thinking of buying.

Is there a niche waiting for such a business? If so you could have a winner!

Let’s now have a look at some of the pros and cons of such businesses.

Advantages of buying a small business opportunity

• All you are buying is the package to enable you to start your own business, so you are your own boss from day one.
• The seller of the package has no control over your business, which is not the case when buying a franchise business.
• Your investment is limited to paying for goods and services only. No liabilities for you, as can be the case when buying a small business that has already been in business for some time.
• There is some buyer protection in many states in the USA. These can be checked for through your Attorney General’s Office.
• In most cases you will have the value of a well known brand name for the goods you are selling.
• Buying a small business opportunity is definitely less restrictive than buying a franchise and normally easier than buying a small business.

• Often there is no further relationship with the seller after the sale. You are on your own with no after sales service. You need to understand and plan for this before buying.
• You can be conned into buying a business opportunity with promises of very high earnings. If you are not careful, you can be hit and the seller runs away with your money! So investigate the opportunity thoroughly before committing yourself.
• The multi-level marketing business, if reliant on recruitment of further representatives and not sale of product, can be classified as a pyramid scheme and so be illegal. Watch out for MLM businesses with no track record.

There are many opportunities in business, but all business opportunities need to be checked out before any decision is made.

The more well known the business you are looking to buy, the less checking you will need, but beware! Less checking does not mean no checking!

All small business opportunity sellers need some checking by you, not only to see if the seller is honest and the business viable but also to see if they have what you want.

The more thoroughly you check the less likely you will be burnt and the more likely you will end up satisfied, so:-

• Contact the seller and ask for a full list of people they have sold too in your state or area. Don’t let them give you their pick of 4 or 5 names; obviously these will only be the best. Contact as many of these people as you can and ask for their reactions to having bought such a business. Do they recommend the product or service?
• Use the guidelines supplied in buying a small business or buying a franchise. Many of them apply to buying a small business opportunity.
• Check the seller with your state’s agencies, such as the Commission of Securities and the Commission of Financial Institutions. They will be only too willing to let you know if the seller is in compliance with regulations or has any pending lawsuits.
• Check with Dun and Bradstreet and your Better Business Bureau.
• Finally use your common sense, if you don’t like it, don’t go for it.

The more effort you put into checking out what is right for you, the better your chances of buying a small business opportunity that will be successful.

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