Work at Home? Do Your Homework

An aspiring entrepreneur needs to research the business opportunities being offered, particularly the backgrounds of those pitching them

By Karen E. Klein

Q: I'm interested in starting a home-based business. Can you give me any tips on how to choose from the many opportunities offered?

---- D.S., Seaford, South Australia

A: There are many opportunities for would-be entrepreneurs to start businesses in their homes. Some of them involve little capital investment, while others require substantial outlays of cash. Unfortunately, not all of the wonderful-sounding opportunities aimed at future business owners are legitimate. In fact, home-business scams have long been popular with fraud outfits, so it is important to be cautious and thoroughly informed about what you're getting into -- especially before you send money through the mail or over the Internet.

In choosing any kind of business, experts recommend that you look to your own areas of expertise, experience, interest, and aptitude. Picking a business in an industry with which you are completely unfamiliar puts you at a real disadvantage, unless you are so interested in the particular field that you're willing to spend months researching it, and perhaps even years gaining experience by working for someone already established.


  So, first off, go with what you know and love. If you do, you'll have an edge because of your expertise and a built-in motivation. Next, investigate the possibilities for home-based businesses in your industry of choice, but be warned: Never, ever be lazy and accept the claims that fed to you without checking them, and then double-check them all over again. People who get scammed often allow themselves to be seduced by scenarios and sales pitches that are simply too good to be true. Never forget, getting something for nothing is rare in this world, particularly in business.

What can you do to minimize your chances of being exploited? Start by researching the business credentials of the people and the company offering the business opportunity. "Never take someone's word that they are who they say they are," says Travis Young, general manager for Press-A-Print (, an Idaho Falls outfit that promotes the business opportunities of selling advertising specialties.

While these next precautions may not apply in Australia, where you live, anyone about to make the move you are contemplating should get in touch with the Better Business Bureau (or its local equivalent) to ask about customer complaints regarding the company they are considering. They should also investigate the outfit's financial rating and creditworthiness with Dun & Bradstreet You can also contact your state attorney general, or the relevant local authority in Australia, to see if a disclosure document is required of companies that offer business opportunities. If so, ask the company you're dealing with to send you a copy of theirs.


  Such a document takes time and effort to prepare, so most shady operators will not bother to have one on file -- even if the state requires them to do so. A disclosure document will list important financial information (including whether the company has filed for bankruptcy recently) that can help you decide how reliable and successful they are. Good companies will have disclosure documents available even if they are not required by law.

If you're going to make a substantial investment in a home business, Young suggests that you invest a little more up front and pay a visit to the company's headquarters. That way, you can meet the owners and top executives in person, ask about their backgrounds, check out other businesses they've been involved in, and see firsthand what kind of operation they're running. "If they object to your visit, or try to convince you that it isn't necessary," Young says, "you might want to keep looking at other options."

Many home-business opportunities are pushed by salespeople who use a hard-sell approach. Check out those reps, too. How long have they been with the company? Do they actually operate a business of their own, or did they in the past? If not, why not -- especially if what you are being offered is such a great opportunity. Will they, or someone at their home office, give you one-on-one training in the business, on the same equipment that you'll be using at home? Are they going to provide you with marketing materials, sales leads, operations manuals, and suggestions for turning a quick profit? How about ongoing support and answers to your questions?


  If those sorts of questions don't elicit a response, you can be sure that the level of responses will drop off after you have put down your money. "If you are offered home-office support and you discover that this consists of an answering machine, pager, or a phone forwarded to someone's cell phone, you may find they aren't accessible at the time you need them most," Young says.

Additional cautions: Don't jump on a one-trick pony, or select a business that is trying to cash in on a fad that, like all fads, will fade quickly. Also, don't consider any business where you encounter pressure to "buy now" -- you'll need time to research and investigate, and besides -- a good business opportunity won't go away in two or three weeks, even months. Finally, make sure that you have what it takes to own a business in the first place. You can consider some illuminating personality questions on the Web site of the U.S. Small Business Administration that may help determine your suitability as an entrepreneur:

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