Over the last three-plus years of my employment at the Small Business Development Center there has never been a more depressing time than the occasions that I have seen someone throw away their money on ‘business’ opportunities that in reality hold very little chance of being successful.
Although I have been writing a series about the process of starting your own business in my last few articles, today I have decided to change the subject because I feel so passionately about this issue. While these opportunities are not scams because the companies providing them are offering a legitimate business model, they are extremely difficult to successfully implement.
The types of businesses that I am speaking about are internet-based businesses that offer the opportunity to sell a service or product via their websites. As previously mentioned, these business models are legitimate, and in some small cases viable, but overall the chances of succeeding are rare. Most of the time, the opportunity is to sell some product or service, from books to travel agencies, to individuals that want to make a few extra dollars in their spare time.
The investor is told they will be provided a website for a fee, and all they have to do is generate traffic to their website. The provider will ship the product being offered and the investor will reap the rewards.
The first problem with these business models is that most of the time the investors do not know very much about the industry in which they are placing their faith. Additionally, the products, while plentiful, may not be very good. In fact, I have seen business models that allow you to sell thousands of books that really appeal to a very small, if any, market segment.
The worst part about these types of ‘opportunities’ is the fact that the company offering them always demands upfront money for providing a website that is nothing more than a template. After investing $1,000-$2,500 in these websites investors realize they do not know how to generate traffic. In an effort to salvage their initial investment, the investor will turn to the same company who will sell them website optimization solutions for a substantial fee.
After the investor notices this step is not very effective, they will turn to other solutions such as Google Adwords or contact a local website designer for help. Overall, the investor will pour a few thousand dollars into the investment that had very little chance of generating any real income to begin with.
My advice when seeking or being approached by such companies is to do some research into what other people are saying about them. You can do this by googling the company’s name and including the word "scam." Most of the time you will find relevant message board material or filed complaints against these companies. The last thing you want to do is simply invest your money without checking into the background of the people that you are handing your money to. A few minutes on these sites could save thousands of dollars that you will never be able to recover.
"Business Tips" was written by Mr. Pedro Ramirez, Business Development Specialist and Certified Business Advisor II of Angelo State University’s Small Business Development Center. For more information on the topic of this article or the services of the ASU * SBDC, contact him at Pedro.Ramirez@angelo.edu.