The more unique the combination of the elements, the ore unique the business opportunity, the more control an institution (or individual) has over the elements, the better they are positioned to exploit the opportunity and become a niche market leader. The Federal Trade Commission (FTC) is an independent agency of the united States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of anti-competltlve business practices, such as coercive monopoly.
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Types of business opportunities FTC describes the most common types of business opportunity ventures as follows: Distributorship Refers to an independent agent that has entered into an agreement to offer and sell the product of another but is not entitled to use the manufacturer’s trade name as part of its trade name. Depending on the agreement, the distributor may be limited to selling only that companys goods or it may have the freedom to market several different product lines or services from various firms. Rack Jobber It involves the selling of another company’s products through a distribution system of racks in a variety of stores that are serviced by the rack Jobber. Typically, the agent or buyer enters into an agreement with the parent company to market heir goods to various stores by means of strategically located store racks. The parent company obtains a number of locations in which the racks are placed on a consignment basis.
It’s up to the agent to malntaln the inventory, move the presents the store manager with a copy of the inventory control sheet which indicates how much merchandise was sold, and then the distributor is paid by the store or location which has the rack-less the store’s commission. Vending machine routes This is very similar to rack Jobbing. The investment is usually greater for this type of business opportunity venture since the businessperson must buy the achines as well as the merchandise being vended, but here the situation is reversed in terms of the pay procedure.
The vending machine operator must pay the location owner a percentage based on sales. The big secret to any route deal is to get locations in high-foot-traffic areas, and of course, as close to one another as possible. If your locations are spread far apart, you waste time and travelling expenses servicing them. In addition to the three types of business opportunities listed above, there are four other categories you should be aware of: Dealer Similar to a distributor but while a distributor may sell to a number of dealers; dealer will usually sell only to a retailer or the consumer. Trademark/product licenses Under this type of arrangement, the licensee obtains the right to use the seller’s trade name as well as specific methods, equipment, technology or products. Use of the trade name is purely optional. Network marketing This is a generic term that covers the realm of direct sales and multilevel marketing. As a network marketing agent, you would sell products through your own network of friends, neighbours, co-workers and so on. In some instances, you may gain additional commissions by recruiting other agents. Cooperatives
This business is similar to a licensee arrangement in which an existing business, such as a hotel or hardware store, can affiliate with a larger network of similar businesses, often for the sole purpose of advertising and promoting through a common identity. As a rule of thumb, a franchisee receives more support from the parent company, gets to use the trademarked name, and is more stringently controlled by the franchisor. Business opportunities, on the other hand, don’t receive as much support from the parent company, generally arent offered the use of a trademarked name, and are independent of the parent company’s operational guidelines.
As we’ve previously noted, there are numerous forms of business opportunity ventures. Some are even turnkey operations similar to a lot of package-format franchises. These business opportunities provide everything you could possibly need to start a business. They help you select a location, they provide training, they offer support for the licensee’s marketing efforts, and they supply a complete start-up inventory. Unlike a package-format franchise, however, these types of business opportunity ventures arent trademarked outlets for the parent company.
The company’s name, logo and how it’s legally operated are left solely to the licensee. Many times the only binding requirement between the seller and the buyer is that inventory be purchased solely through the parent company. Of course, all these stipulations are outlined in the disclosure statement and contract. The advantages of Business opportunity Requires a lower initial fee than a franchise Although the number of low-investment franchises has increased, the fee to get into a business opportunity is still considerably lower.
The FTC requires a $500 minimum investment for an opportunity to be considered a business opportunity, but there are many that fall under this set fee, although most average around $2,000 o $3,000. A proven system of operation or product Existing systems serve to maximize efficiency and returns and minimize problems. It’s simply a matter of passing on experience, still the best teacher. Whether they admit it or not, most people like having their hands held once in a while. During crises, the parent company is there to help the licensee over the bumps.
Many people like this idea of safety in numbers. Intensive training programs In any new business, a lot of time and money are consumed during the learning period. A good business opportunity venture can eliminate the majority of ineffective oves through an intensive training program. Because of its financial size, credit line and contractual agreements, the parent company offering the business opportunity can often arrange better financing than an individual could obtain. Financial leverage is an important consideration in any investment situation.
Professional advertising and promotion Most small businesspeople dont spend sufficient money on advertising. When they do, their efforts are often poorly conceived and inconsistent. Many business opportunity ventures supply the buyer with print advertising slicks, radio ads, TV storyboards, etc. in order to provide a better marketing effort. Some business opportunity ventures will even have a cooperative advertising agreement under which they will split the cost of print, radio or TV ads. This type of marketing help is especially beneficial in large metropolitan areas where the cost of media is prohibitive to the one-shop owner.
Ongoing counselling Most business opportunity ventures offer support not only through training but also through counselling from a staff of experts who offer assistance that no independent could afford. Legal advice is available to a certain degree. The most fficient accounting systems-perfect for those particular businesses have been designed by experts in the field. Some licensors offer free computer analysis of records, and through comparison with other units can pinpoint areas of inefficiency or loss as well as profitable aspects of the business that are being neglected.
Site selection assistance Experts in site selection and marketing choose locations using all the scientific tools available. Professional negotiators arrange leases and contracts to the best advantage, using the power of a large organization to influence landlords and other important fgures. Purchasing power Many times, the parent company’s tremendous buying power and special buying techniques can bring products, equipment and outside services to the licensee at a much lower cost than an independent could ever get. No ongoing royalties In a business opportunity, unlike in a franchise, there are no ongoing royalties to pay to the seller.
The profits are all yours. Under ideal conditions, business opportunities are a good, low-investment way to get into business with minimum risk and a good chance for success. But nothing in this world is perfect, so here are some problems that can be expected: Poor site selection The majority of business opportunities are consumer-oriented retail operations which rely on good location, visibility and easy access to the establishment. Most buyers of business opportunities casually accept the locations chosen for them. DON’T!
Look it over thoroughly yourself. You might even hire an outside marketing consultant to evaluate and possibly argue with the parent company’s choice. Having a better location could literally mean millions of dollars in profit over the course of 20 years. Lack of ongoing support There is usually no requirement for the business opportunity seller to offer ngoing support of any kind. If the seller decides not to supply information or guidelines that could help you once you’re in operation, you may not have much recourse that is available to you. Exclusivity clauses Are you restricted to selling only the manufacturer’s merchandise? If this is the case and you deviate for any reason whatsoever, you run the risk of the licensor cancelling the agreement. If you do buy from other sources, it will be very hard to hide-most parent companies will require you to open your books for examination at pre-designated periods of time. Any irregularities will be spotted at these times. Most mart buyers of business opportunities will negotiate the point in the agreement stipulating sources of supply in case product quality is inconsistent. Parent-company bankruptcy Another pitfall is the possibility of the parent company overextending itself and going bankrupt. While this is not as serious in a business opportunity as it would be in a franchise, you still run the risk of losing the business because your property contracts may have been financed through the parent company. You should carefully investigate any business opportunity you’re considering. Get a list of operators from the parent company and call them. Have a lawyer look over any agreement drafted by the parent company. Make sure you receive a disclosure statement.
Then carefully evaluate the licensor. Don’t let anyone hurry you. Make sure a responsible company backs the business opportunity. When choosing a business opportunity, keep in mind that if you buy an opportunity from a company with a sizable number of outlets that’s been in business for at least three years, you’ll pay more for this established concept that you would for a newer one. If you’re considering a more recently established business opportunity, you should check out the parent company’s history to evaluate its uccess and longevity in its particular field of operation.
If you were to ask a business consultant how to evaluate the “right” business opportunity for you, you would probably receive these guidelines: 1. Make an honest evaluation of yourself and your abilities If you’ve been behind a desk for many years, will you be happy calling on businesspeople and selling them an intangible service? If you’ve been a field salesperson for years, will you be satisfied selling snack foods behind a counter? 2. You must run your business enthusiastically Will you be happy introducing a new product or an unusual service that the ublic knows nothing about?
Can you generate excitement for an item not nationally advertised? 3. You must have complete knowledge of the product or service with which you are involved If the parent company gives you little or no training in technical or management know-how, be wary of the business opportunity. If the licensor-seller has organized all the operating knowledge into a standard operating manual, look with favor upon this business opportunity. 4. Make a market evaluation of the product or service to be offered Is the time right to introduce it to the public?
Is there a need for this type of item, and what is its otential in relation to competition? 5. Find out how many buyers have been in the business successfully for a respectable period of time A legitimate business opportunity will even provide you with phone numbers of other buyers, so you can verify that they’re generally satisfied with the opportunity and that the seller is capable of fulfilling his or her promises. 6. Check the training and experience required to run the business properly Is there a suitable curriculum of training? What is the scope of training?
Does your background fit its requirements? to the financial leverage requirements? Can you make more in another type of usiness? 8. Do you have to work more hours to make the same amount you do now? Can you invest the same amount in the business opportunity yet operate a larger operation and get a better return on investment? 9. Check with current operators to see how they’re making out Are they happy with their businesses? What problems do they have, if any that are common to all units sold? 10. Research company’s history Is it a new firm with little expertise and experience?
Is it an older firm whose regular products have satisfied customers for years? Are the business opportunities all offshoots of their regular business? 1 . Is there financial strength and strong credit behind the business opportunity? Can the licensor-seller give you an escrow agreement to deliver a building, equipment, leasehold improvements, inventory, etc. , as the unit is made ready for your use? Check out the bank references given by the licensor-seller; discuss the company’s financial strength with the appropriate managers. 12.
Evaluate the policies and plans of the company with the associations and business groups in which the parent company or seller is involved. 13. The Better Business Bureau will give you a report if others have lodged previous omplaints against the company. 14. Having an attorney, accountant or business consultant conduct an in-depth study of the company may be an excellent idea. 15. Visit the headquarters of the licensor-seller Talk to the personnel and the training director. Visit the original prototype of the business being sold. Evaluate other outlets.
Expose yourself to the other outlets’ products and services to determine the quality dispensed. In the preceding section, we outlined numerous things you should do to ensure that you’re choosing a venture that will be appropriate for you personally, and will epresent a sound investment. It’s important that you cover all your bases before signing a contract with the seller. The following are some strategies you should use to protect yourself. Have legal representation Your attorney should be present when you’re negotiating with the licensor- seller.
At the very least, your attorney should go over the contract to purchase the business opportunity and advise you as to whether or not you should sign it in its present condition. He or she should explain what each aspect of the contract means so that you understand what you’re signing. Have financial representation Your accountant should look over the financial statements of the licensor- seller. In addition, he or she should be able to check out the financial strength of the company and determine whether the business is a viable financial investment for you. Make your own independent survey of other owners of business opportunities sold by the parent company Are they happy with the company? Did the company do everything it promised? Is the company good to work with? Does it give its distributors help? Does it send out advertising materials? What do they feel are he strengths of the opportunity? If they had to do it over again, would these licensees buy another unit? Would they advise you to buy a unit? Contact competitors This will verify the status of the company in the industry.
A competing company will tell you in a hurry what the company’s weaknesses are. You’ll also get an opportunity to see whether or not the business opportunity compares favourably in terms of pricing and so on. Check the credit of the seller Your accountant or the person auditing the business opportunity can help you with this. Be sure you understand everything you’re signing Read the disclosure statement, the purchase agreement and the advertising bulletins carefully. Check the credibility of the parent company The parent company doesn’t have to be big in terms of dollars to be credible.
Use your common sense and advice from people you trust to determine whether or not a company seems credible. In many cases, small companies are a great people in the company. They are going to be training you and working with you. This is a tremendous advantage, as opposed to working with somebody five or six rungs down the ladder that may be Just doing a Job. Are the seller’s people truly interested n you? Do they seem to be sincere? Did they check you out thoroughly? Are they concerned with the kind of buyer that will be carrying their banner? This is very important.
If they’re Just interested in taking your money, you’re in trouble. Check the performance of the parent company Are the seller’s claims backed by performance? Do the claims that the seller make when advertising their product, for example, stand up at the store level? Do the current operators you’ve talked to confirm the profit claims that the seller makes? Check the company’s management It’s not enough that theyVe got a good idea. Do they have the management strength to be able to train you, help you and keep the company running for another 20 years? Know all the costs and obligations, both yours and the seller’s What costs are you going to have to incur? What are your obligations on an ongoing basis? Is the company going to train you? Is training at your own expense? In most cases, you have to pay your own expenses to the training site. How long will the training last? Do you have enough money to sustain yourself while you’re in training and before your business starts earning money? What kind of ongoing supervision will the company give you? Determine what type of advertising program is available from the licensor Will that advertising program work for you?
Check your local market. For instance, if you’re buying a business opportunity in which you’ll be selling bathtub liners, will advertising in trade magazines really help? Also, what are their ads like? Is the copy good? What about visual art? Don’t negate the possibility that their advertising program will hurt you more than it will help. Just because you’re dealing with a company that has experience in the field, their marketing campaigns aren’t necessarily going to be successful. Are you getting value for your initial purchase price? Examine the list of equipment, fixtures, inventory, operating supplies, etc. nd call a few suppliers dealing in these items. Compare the prices those suppliers quote you against the business opportunity’s prices. You may be able to purchase everything, including the inventory, for less money yourself than you could by affiliating with the licensor. Ten business ideas for the Filipino Additionally, there are quite a number of inquiries about earning a living in the Philippines that are posted in one forum, so somebody thought about writing about ome business ideas that she believes could generate a decent income. Agricultural are a top product…
Indeed, some of the finest fruits and vegetables in the world are produced here. Therefore, low-level food manufacturing has some potential. She is thinking with an eye towards quality. 1 . Bottled Holy Water The thought was to make a deal with the Church and produce a product, Spirit Water: Good for the body and soul! ” Nice bottle, with a different holy card tied to each bottle around the neck, so that customers could collect them all (Print 250 different ones up). She made the proposition to Father Carlos (50/50 split), but he had reservations since it comes too close to selling indulgences.
That being said, there is a monastery in the States doing something similar, so perhaps it is feasible elsewhere in the country. 2. Flavored Lambanog There are a couple small brands already out there, but why not use lambanog as a base for other drinks? Using tropical fruits and herbs, it can become totally a native product. See if aging the product in oak changes its’ character (or Bamboo barrels). Sell in the resorts and tourist areas. 3. Flavored beer Mango beers, Pineapple beer, are similar to the Lambic made in Belgium (From Cherries, Peaches, and Raspberries there).
Buy a brewing kit and give it a try. If palatable, it could Just work. Great label: Topless girl holding two strategically placed mangoes, pineapples, rambutans, etc. , depending on the flavor. Different label girl each month. 4. Philippine “Origin” Chocolates Quality stuff for export. Use local fruits and local cacao. Premium price. 5. Mozzarella di Buffala Carabao milk is virtually identical to the buffalo milk in Italy. Only reservation is if there are enough local buyers in Manila, given the short shelf life nd difficulty keeping refrigerated.