Honest Business Opportunity Or Fraud?

By Ted Riley
Posted Monday, November 8, 2004

INTRODUCTION

There are so many small business opportunities out there it can be very hard to tell a scam from a good way to make money. The internet seems to have generated more scams than honest business opportunities, but you can turn the tide against scams and learn what is legitimate from illegitimate almost at a glance these days. (If you are armed with the right information!)

ARE ALL MLM COMPANIES SCAMS?

The most common of the scams these days seems to be many of the multi level marketing or MLM companies around. Many MLM companies offer a legitimate way to work from home but they are given a bad name by the ones that are involved in the pyramid style of business that has been in existence for probably as long as the existence of currency.

SEPARATING THE GOOD FROM THE BAD

The way to tell them apart is very easy and it is done by looking at whether or not you are paid purely on the basis of getting more people to join the organization. If it runs purely on this principle it is a scam and it is also illegal.

In America there is an organization that was put together for the specific purpose of protecting the small business opportunity from people who are selling fraudulent ideas called the FTC. They have a list of all the scams that have been registered with them so it is a good idea to check any prospective business opportunity against their data base of frauds so that you don’t catch this after the fact. Most countries have an equivalent of the FTC. For example in Australia it is called the Department of Fair Trading. It is just a matter of finding the one in your locality and getting in touch with them.

Most scams for the small business opportunity work on the principle of over charging for a particular good or service, so it may be helpful to compare what you will have to charge to make a profit with other types of companies that are providing the same or a similar good or service.

Many others target the work at home business with the idea of the investor having to outlay many thousands of dollars for an inventory of stock which the investor will have little or no chance to move in the foreseeable future. One way to get around this is to make sure that your small business opportunity only needs you to buy a sales kit or demonstration goods that are provided at little or no mark up from the cost incurred by the parent company.

The company that offers a small business opportunity without any form of training is also very likely to be a scam. A company that does not do everything in its power to make sure that all of its members are capable of making the company money is either incompetent or fraudulent, and either way you do not want to be involved.

RESOURCES

There are also many websites that offer a service of legal advice on not only the small business opportunity but every facet of home business, and you can access this information at relatively low cost. These sites usually revolve around preventative law so it is best to consult them before you sign any checks. One of the best is Rod Cook’s site MLM RESOURCES and it specializes in the laws which govern the most popular work at home business, the MLM.

Another very helpful web site is the MLM WATCHDOG INDEX. This site is dedicated to letting people know about the home business scams that are new to the market and they have warnings posted often before any government agency can do anything about a small business opportunity that proves later to be a scam. It pays to do your home work before you invest in a home business idea because, not only may you be the victim of a scam, but you may be an unwitting accomplice in an illegal home business.

About the Author
Ted Riley is an entrepreneur and educator interested in teaching others on the benefits and rewards of having your own home business. He writes frequently for the web site "A Grandmother's Business", a web site dedicated to the needs and equirements of the mature woman entrepreneur and job-seeker. To see more articles like this visit: (http://www.grandmabiz.com/)

Ted Riley is also the managing editor for Web2Voice.com. Web2Voice is dedicated to bringing consumers and small business entrepreneurs useful articles that are thought-provoking, timely, and informative.