How to evaluate a home business opportunity.

Posted by Frank Marafiote

July 18, 2007

My visit to Stephanie Foster’s blog, Home With The Kids, was a real treat. After looking over the front yard for a while, I read her piece on How Should You Review a Stay at Home Business Opporunity.

What grabbed me right away about Stephanie is the authenticity of her voice and her experience. Her way of presenting her views gives them a tremendous amount of authenticity.

I have been thinking about the same topic: how does someone know if a home business opportunity is worth the effort?

Before going any further, let me mention that I do not currently offer a home business opportunity. The only one I am concerned about right now is my own! I do offer services via Emerge and as an affiliate to services that I think can help your business. But “yes, I have no bananas” — so I am no plugging my own opportunity that I want to sell you.

Although some of my 25 years of marketing and advertising experience is bound to creep in, I have tried to keep this a simple as a I can and focused on home businesses:

1) Is is real?

I consider this the most important question. Thanks to the web, people are frequently being offered opportunities that do not really exist. Yes, they exist on a web page just like an advertisement in a magazine exists. But is there really a company? Products? A legal entity? Real customers? Real software that works? A real office — in a home or a business with a telephone and people who work there?

2) Is there a need?

You will no doubt requires customers. Do they really need your product or is their interest sole based on the fact that you are their cousin or best friend? Would they want this product from anyone other than you. Create high/medium/low sales estimates.

3) Can the customer buy?

Wanting something and being able to afford it are two different things. Can the people who want your product really afford it?

4) Will the customer buy?

OK, I want your product, I can afford it, but will I buy it? Maybe there are risks or discomforts that are holding me back. Maybe I think I can get a better deal. Maybe a better product is coming out soon? You need to explore these reasons or — no sale!

5) Can you win?

Is the product competitive? On promotions? On Pricing? Is the timing right? Is your company competitive? In production? In your sales and distribution? In management?

6) Is it worth it?

There are as many reasons for starting a home business as there are people starting them. So let’s take a first look at this questions from the perspective of your lifestyle. Will this opportunity offer you the chance to live your dream live? That’s an important question.

7) Is the return adequate?

Simple math. Are you getting back in income the level you need to a) support the business, b) pay your bills, c) have something leftover to use for your other goals?

8) Does it satisfy other needs?

These needs are often very unique to your situations: an obsession about running your own show, putting your daughter through college, getting an operation that you needed, taking care of a sick relative.

To summarize, the three main questions are:

1) Is it real
2) Can you win?
3) Is it worth it?

Sure we can do more qualitative analytical stuff with business and market numbers, but these questions are the basics. Especially with #1 — don’t take shortcuts. If something looks like a rock, turn it over! You might be pleasantly surprised.

If you need help with your home business marketing plan, consider taking our FREE email home business planning course . It is a 12-day program that will get you well on your way to running a successful enterprise.

Last “to do” — help another small business owner. It’s a big world and a land of plenty. Don’t be afraid to help. There’s enough to go around for everyone.

All the Best!

– Frank