NFIB

Evaluating Business Opportunities That Arrive in the Mail
03/ 28/ 2002

Everyday, business opportunities arrive unsolicited in mailboxes across the country. One might think that these opportunities have a fairly high chance of being a scam, and indeed such is the case. Many are legitimate, however, and in today's Workshop, Jeffrey Moses uses his experience with one such direct-mail offering to show how an interested person can evaluate the business step-by-step.

The mailer that was received focused on making money working "from the comfort of your own home." This is the dream of many people, but upon examination of the business, this promise proved to be far from the truth.

The business involved vending machines. A free seminar was being offered in my area, and if I signed up, a $1,000 check would be sent to me. That sounded pretty good, but on closer examination, I noticed that the check was a "rebate" check. Translation: it would be good for use only as part of the down payment needed to get into the business, or for partial payment on product for the vending machines. Of course, the company will make plenty of money even after the $1,000 "rebate."

I called the toll-free number included in the brochure. The receptionist was polite, but could give me very little information about the business itself. Clearly, the company wanted people to attend the meeting, where undoubtedly top-quality salespeople would give a compelling pitch. I was informed, however, that the business involved vending machines containing snack items and beverages. I asked if the business involved selling the machines to established businesses, and if I would have to travel to re-stock the contents. The answer was yes on both counts. With these facts established, how could I expect to work "from the comfort of my own home" when I would have to spend quite a bit of time on the road visiting stores and other locations to sell people on the idea of setting up one or more of the vending machines -- and then having to travel regularly to restock the merchandise and take money from the machines?

The mailer promised that a person would need to work only about 15 hours a week and could make in excess of $50,000 a year. This brought an immediate question to mind: if the job is so easy and brings in so much money, why wouldn't the company simply hire low-wage employees to do the work, and in the process keep all the profit? The answer: The work would not be easy. It would involve extensive direct sales and repeated follow-up. If everything was as simple as promised and took only 15 hours a week, the company wouldn't need me.

The business opportunity, however, is legitimate. I have personally known people who made money in the vending machine industry. But it was hardly a get-rich-quick situation -- they worked hard and long to build their business. They found that many established companies (car dealerships and garages, large stores, malls, etc.) already had vending machines -- and had acquired them directly from major suppliers.

The mailing I received was slick, a great example of modern direct-mail. My name was printed on the letter, as though the package had been sent to me personally. There was little direct mention about the type of business (they want you to go to the seminar, not read about the opportunity in the quiet of your own home). And there was no mention about the amount of money that would be required to get started. I must admit I was a little curious about this last item, but I decided not to go to the seminar (I've been to many in the past). I'm sure others did attend, and some of them probably signed up and might make some money.

The point is -- read between the lines on a mailing like this. Find out as much as you can before you take the time to attend a seminar. Ask for brochures in advance of the seminar, and if none are available, ask why they aren't. If you decide to attend the seminar, be skeptical, and examine the company's record as thoroughly as possible before paying a sign-up fee. At the seminar, don't allow high-pressure tactics to rev you into signing up too quickly. If an opportunity comes your way that seems to fit with your personality, take a week or more to gather and weigh all the information before writing a check.

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