August 11, 2000
Top 7 Guidelines On How To Evaluate A New Business Opportunity
In everything you do there is a degree of risk, and while you might think that common sense is all one needs to evaluate a new business opportunity, common sense is not even half as common as most people seem to think.
Learning how to take a carefully calculated risk takes time. Here are seven guidelines to consider before you part with your hard earned cash:
- Some businesses have much more growth potential than others. The ones to avoid are "mom and pop" businesses where you are the one who has to do all the work or personally perform the service.
- Personal service businesses like hair styling, dentistry, copy writing, design, interior decorating, consulting, etc., are difficult to grow because practically everyone will want the personal attention of the owner rather than his or her assistant. Look for a business where you can hire the expert help you are likely to need.
- Don't ever buy work with money. If you do, all you will be doing is exchanging one type of employment for another. In fact, you should never buy or start a business with the intention of doing all the work yourself. While it may be necessary to do everything yourself in the beginning, the best way to grow the business is to graduate from owner/operator to owner/manager as quickly as possible.
- A chain is only as strong as its weakest link, so when you hire people, be sure to hire the best and be willing to pay the most. Since you have a business and a reputation to build, you cannot afford poor service or shoddy workmanship. If you only pay peanuts, all you are likely to be able to hire are monkeys.
- If your intention is to become rich before you get to be too old to really benefit from your success, money and power, being an inventor or a pioneer is not the way to go. Catering to an existing need is lot easier than having to educate the market on the benefits of your new product or service.
- Find a niche and fill it. Find out what's in demand and what is selling well. If you are not already an expert in your chosen trade or profession, you must become one. Either go to work for a competitor for a short while and and learn all you can while being paid, or study those businesses which are obviously successful to determine exactly why they are successful. Then try to think of how you might be able to compete by offering a cheaper service, a better service, or by offering some connected additional service your competitors do not provide.
- If you are thinking about buying an existing business, remember all the seller needs is one eye, whereas the buyer needs at least six!
A major concern is why the business is being sold. While the owner may tell you he/she is selling mainly for health reasons, there are usually two reasons -- the reason that sounds good, and the real reason!
You cannot be too careful. Look for certified accounts for the last three years -- and have your accountant go over them with a fine-tooth comb on your behalf.
Have your legal advisor check not only any lease involved, but whether there are any unresolved disputes, unpaid liabilities or any pending legal action against the company.
Extracted from, "How to Make Your First Million" by John J. O'Callaghan. Get more free tips and details about this new book by autoresponder. Send a blank email now to firstname.lastname@example.org.