Sunday, December 2, 2007

Home Business Due Diligence

In the Home Business arena Due Diligence is a term that is overlooked but causes much financial loss than if it were done properly. If you want to run a successful home business you must do your "Due Diligence" when looking at a business opportunity. Without it you will be setting yourself up for failure. This site is not designed to sway you into any particular home business, it is just to point out what to look out for when deciding to enter a home business. This is certainly not a complete listing of issues to address but are some of the most important that stand in the way of making your home business a success.

First lets look at the description of Due Diligence as it appears in Wikipedia. "In business transactions, the due diligence process varies for different types of companies. The relevant areas of concern may include the financial, legal, labor, tax, environment and market/commercial situation of the company. Other areas include intellectual property, real and personal property, insurance and liability coverage, debt instrument review, employee benefits and labor matters, immigration, and international transactions."

When running a home business it must be approached with the same precision as you would approach anything else that you do. You must ask intensive questions and if you don't feel comfortable with the answers you get don't enter into the particular business. Let's list some of the points that are the most obvious in making sure that your investment pays off. For ease of reading I will list them and discuss them at the same time. The order is not important so don't read anything into the listing order and also don't read anything into our offering. If you want any more information on what we offer the listing is at the bottom of the page.

    • The first and I think one of the most important points is, does the Home Business offering have live on-line training. Who conducts the training? Is it conducted by people who are successful or by people who are just as new to home business as you are? You want to learn from people who are already successful and not someone who never made it before. You see, we do things based on feelings and emotions and unless the person teaching knows what it feels like to make a lot of money and run a successful business, then how can they teach you.
    • Secondly it is important that you make sure that there is a mentality of running a business from the "top down" instead of the "bottom up". Make sure that the education you are going to receive will teach you how to run a business as a CEO, and not an employee. It doesn't matter if you have a multitude of degrees in business, unless you have run a business as a CEO you will be at a loss. I see it on a daily basis. People proudly announce "I have a degree from XYZ University in business, I know what I am doing!" This is why most home businesses fail because they don't know what they are doing, they just think they do. Their ego is getting in the way of success. Learning how to run a business as a CEO will teach you how to delegate, instead of duplicate what others who have failed in the past have done.
    • Delegation instead of duplication! Make sure that you are not being taught how to duplicate someone else's losing strategy. The MLM and Network Marketing opportunities all teach duplication strategies. They teach you how to duplicate what others have done without paying attention to the simple fact that the majority of home businesses fail. Statistics show that one business out of ten will survive five years. The same statistics will follow for the next five years, and these statistics include businesses outside of the home business arena. So if duplication worked then there would be more people being successful in home business, and there are not. You want delegation management, which is where you are taught how to think and act like a CEO, and build your business from "the top down" delegating the task's to the necessary people that will get the job done. This strategy teaches you how to hire a Sales Manager, and have the Sales Manager hire the sales people. You want your Sales Manager to be accountable for all of their responsibilities. You do not want to be an employee in your own business, ever.
    • Make sure that the system you are purchasing gives you the ability to be at the top of the money chain. MLM and Network marketing opportunities all make money off your actions so no matter what anyone says you are working for someone else, and your down-line is working for you and someone else. So many time people are sold a business opportunity by some one above them who does no work and lives off the actions of people below them. There is a term for this but I will not use it here.  At some point resentment sets in and people get upset. You know what I mean. Make sure that you are on top of the dollar and that you control it. 'The best type of home business is where you are the system owner and all you pay is a disclosed up front fee which allows you to represent the product and the company. From each sale you pay a prescribed fee for the sale of the product. The system that you represent must provide you with the tools to sell your product but other that you are getting all the money and you pay your own expenses. When you control your money then you are controlling wealth but when you rely on others to pay you, then you become their employee and not a business owner. There is a term called "one up" where you pay a fee to represent the system and then your first sale goes to the person who sold you the system, but after that you don't pay anyone anything except the developer of the system you are selling, and that's usually for the ability to run the technology behind the scenes for you and your future system owner. Its similar to the Manufactures Representative business where you represent the product and the provider of the product wholesales it to you for a very low price, then you retail it to your customer for the retail price. The retail price is set and never changed. But you are the head of your company not the company that manufactures the product. You must handle all your customer service and any related problem that your customers have. The manufacture of the product will only handle your questions or problems. Your are running the show for your customers!
    • Your training has to be state of the art and utilize all new technology. This way you will be able to run a global business and sell your products to others all over the English speaking world. Technology is important since outsourcing is becoming the standard for doing business efficiently, you want to make sure that you have substance behind you. You want the teaching to be state of the art as well as customer service. You want to pick up the phone and call people when you have questions or want help. If you are representing a company where there are many system owners, you want to make sure that system owner you do business with is unique in the whole company. If you are going to buy from a particular system owner within a specific company, make sure that system owner will give you all that you need to grow your business successfully. They have to be a good mentor, or find another system owner that can provide what you need. If the system owner has training in place than ask to see the training structure. Using technology to monitor sales activity and know who is worth keeping or not is a great tool for your Sales Manager. Technology can do marvelous things so make sure you align yourself with a company that realizes this and will teach you how to use it.
    • As a business owner you should never do anything as an employee. Your employees have to do it. As a home business owner make sure that you align yourself with a system that has prospecting down to a science. You want your sales people to be able to prospect with ease. You also want to have in place tools for your Sales Manager to use to track sales and the progress of their people. Make sure the company you align yourself with will assist you and teach you how to find, and hire your Sales Manager. What to look for in a Sales Manager and when to recognize whether the candidate is capable of doing the job or not. Many times Sales people are excellent at selling themselves but terrible at selling the product. Unfortunately this is more the case than not, so you want to make sure that you can see through the smoke. You must be trained on what to look for.
    • Next you want to find a product that will give you great rewards financially. You want to find a product that can provide you with a good return on investment [ROI]. So many times people get into a home business that requires a small amount of money up front. People do this because they listen to the hype of making millions of dollars on the internet not paying attention to the simple fact that without world wide distribution it is not possible to take a low priced product and get large dollars in the door early enough to offset the initial cost. It is a known fact that the lower the price the harder the product is to sell. Usually the lower the price the higher the competitiveness of the product. A product that has a higher price is easier to sell because it is usually unique. Also the higher the price of the product the more you can pay your sales staff and still make a substantial profit. Products that are low in price are things that require huge distribution, so the people selling you these opportunities tell you that you can market on the internet and have world wide distribution to make large sales. If you are selling a product that returns back to you a small percentage of the price, will require massive advertising through SEO [Search engine optimization} and SEM [Search engine marketing] activities to get sales. You now are among all the other people who believe that they can get rich on the internet by selling a low ticket item. This is where many fail because it is very hard to sell a competitive item. You want a product that has good eternal value. What that means is that people can see where the product you are selling has value for them and value to others. When you take on a product how can it help you, and also have value to other people through out life. In other words does it change lives?
    • Have a good mentor to teach you . No home business worth its salt will be without a mentor to teach you and get you started. There is a book called "Think and Grow Rich" by Napoleon Hill, that talks about having a master mind group in place to learn from. You want people that have been successful to mentor you, to make sure that you don't make mistakes and end up in a business failure. The business opportunities that sell the lower priced products will not do this because the person selling you the opportunity has really no clue how to run a business. Wealthy people have others that they listen to on a mentoring basis and so should you. When joining a home business opportunity make sure that the people mentoring you are competent to mentor you. Mentoring is different than training, mentoring is when your mentor holds you accountable for getting things done and holding you responsible for your bottom line.
    • What kind of tax advice will you get? Make sure that the home business you decide to enter understands maximization of the tax code and will guide you to get proper accountant advice. Done properly the tax savings you will realize as a result of being a home business owner will more that cover the cost of getting into the business. Everything you do in your home business becomes a tax deduction and as a business owner you now have all the advantages of the big corporations but you need to know how to take advantage of them.
    • Don't get caught up in MLM or Network Marketing unless you fully understand the facts that you are really working for someone else and not yourself. Of course it is cheap to get into and there is a reason for that. Most people don't last and end up spending money for items related to the business, which makes them a customer for the company that is selling the products. The home business owner ends up being a sales person for the business with others getting a piece of their sale.
    These are a few of the items to look for when doing your Due Diligence and if I have missed any I would welcome anyone to let me know of others. If you want more information about home business simply fill our the form [Click here] and you will receive a series of articles that I have written titled "Home Business Truths". If you would like to call us to learn more about our mentoring process and how to build a home business call 610-280-7000 and ask for Rachel Coleman. She will put you together with one of our Associates to explain our mentoring process, and how we can coach you to achieving incredible success in starting and running a home business.
     

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