How to Evaluate a Home-Based Business Opportunity


Picture from Direct Sales Leads

The beginning of a new year is when many people decide to have an extra income source from a home-based business opportunity. If you choose a good one, you can make extra money. If you pick a bad one then you can end up losing a lot of money and time.

The first and most important thing is that when listening to a presentation on it, ask yourself if what they are saying applies to this company or can it apply to any company or business opportunity. Say that a woman is considering dating a man and asks him to tell about himself. He then says that he is a man and then starts to tell you what is good about men.

He then tells how  Tom Cruise, John Travolta and George Clooney are men and they have a lot of talent and money so you should date him since he is also a man. This does not help you to decide if you want to date this man. One method of distracting you from the above is to tell you about the industry that it is in. For example he may say that this is in a $50 billion industry. Now this does not matter at all. One company can sell $100 million a year in a $500 million industry and another company can sell $10,000 a year in a $80 billion dollar industry.

Direct Sales, Multi-level Marketing (MLM) and Network Marketing

Another way to distract you from telling you specifically what they are all about is to tell you what they are not about. Like they may say it involves no selling, no buying, no begging, borrowing or stealing. Most home-based businesses are in the direct selling industry. Most of these are in multi-level marketing (MLM) or network marketing.

In the latter you can just sell to people if that is all that you want to do. You can also recruit other people into your group and you can make money on what they sell or the sales of people that they bring in. Also the difference between a direct sales company and an MLM company is a fine line. Most direct sales companies allow you to recruit others when you have done a certain amount of selling. In MLM you can recruit others without being good at selling.

Here is a list of the top 100 direct selling companies in the world from Direct Selling News for 2013. It tells how much business they did in 2013. A company can say that they will be selling a trillion dollars a year, but the future cannot be predicted. On the other hand it is easy to see what a company has done in the past.

Number one is Amway (MLM company) that does $11 billion a year. I once went to an Amway meeting in a hotel that had a group mostly of doctor and lawyers (and their wives). They sell supplements and other things.

Number two is Avon that is a direct sales company with catalogs. It does about $11 billion a year in sales. Number 3 is Herbalife. It is an MLM company that does about $4 billion a year in sales. It is also on the stock market. Its products are made mostly from herbs. Number 4 and 5 are not USA companies like the first 3. Number 6 is Mary Kay that sells cosmetics similar to Avon. It sells about $3 billion a year.

Number 7 is Tupperware that sells about $3 billion a year. People in this company sell mostly with parties. First they find someone that is willing to have a party at their house and invite their friends to it. In exchange for doing this, they get free products. Then at the party the products are demonstrated.

Illegal Pyramid Schemes

Now there are illegal pyramid schemes. These do not sell a product but have people pay like $100 to join. Then they get others that also pay $100 to join and this money is paid to the person who got him in and the person that got that person in and who got that person in. This is known as an upline, while the people in your group that you got in and who they got in is known as your downline.

It is easy to see that something is illegal since there is no product sold. But sometimes they will try to appear legal by selling something. So in the above example, you pay $100 to join. So they make it appear to be legal by giving you a candy bar for your $100. But then the company is taken to court and proved to be an illegal pyramid since the product is inconsequential (meaning not significant or important).

One thing that the illegal pyramid promoters have is a hate for products. Since Shaklee created an eco-friendly cleaner decades before people ever heard of eco-friendly or saving the environment, the haters call it soap. They say that in our MLM company (actually illegal pyramid scheme) we do not sell soap or soapy soap or soapy soap that was cleaned by soap.

Ponzi Scheme

A Ponzi Scheme is illegal. It is an investment deal where you invest money in it and get money (almost like a dividend from a stock) at different intervals of time.  For example you put $100 into it and a month later get back $200. Then 3 months later get back another $200.

The money that you get is from the initial amount that new people put into it. They can keep doing this as long as they keep getting new people into it. Of course people can build on this scheme to make it sound like the money is coming from something else.

One MLM Company That Changed America

There is an MLM company called Forever Living Products. It started many decades ago and is still in business even though I did not see it on the above list. Many decades ago it introduced a single herb or plant for healing to America that no one had ever heard of. They claimed that this plant was a miracle for healing. They put it in many products even including a soap and skin care product.

They claimed that this plant was the best thing for burns even though the FDA does not allow them to claim this since they did not spend millions of dollars to test it against a placebo. But many people grow this plant now in their homes and it is now in thousands (literally) of different personal care products in America. They still grow most of it of it in the United States. The plant is called aloe vera! Here is what Wikipedia says about it:

Aloe vera is a succulent plant species that is found only in cultivation, having no naturally occurring populations, although closely related aloes do occur in northern Africa.[1] The species is frequently cited as being used in herbal medicine since the beginning of the first century AD. Extracts from A. vera are widely used in the cosmetics and alternative medicine industries, being marketed as variously having rejuvenating, healing, or soothing properties. There is, however, little scientific evidence of the effectiveness or safety of Aloe vera extracts for either cosmetic or medicinal purposes, and what positive evidence is available is frequently contradicted by other studies.[2][3][4][5]

Here is what says about aloe vera:

Research backs up the ancient use of topical aloe vera as a skin treatment, at least for specific conditions. Studies have shown that aloe gel might be effective in treating psoriasis, seborrhea, dandruff, and minor burns and skin abrasions, as well as radiation-induced skin injuries. Aloe gel also seems helpful in treating the sores caused by genital herpes in men.

There’s also strong evidence that aloe juice (also called latex) taken by mouth is a powerful laxative.

Another Distraction From The Business

Another way to distract you is to tell you about something similar to them. For example you start a software company and tell people to buy stock in it since Microsoft is also a software company and the people buying stock in it at the beginning are now rich. Of course this has nothing to do with your software company. Newer small MLM companies have a lot more room for growth but only one out of 100 MLM companies lasts more than 5 years.

11th on the list is an MLM company, Primerica, that sells insurance if I remember correctly. Shaklee is 18th on the list and has been around for many decades like Amway and they sell supplements and eco-friendly cleaners. I promote TriVita that is number 80 on this list. It has grown significantly from the year before and they are just starting now (January 2014) to add products to their catalog from a company that they merged with a year before this.

It is an MLM company with unique nutritional products (including products made with herbs from the Amazon rainforest) and it mails great looking catalogs every month to everyone in the company (they have their own in-house printing press). For more on it see 2 Product Lines Become One.

To demonstrate how I know about many different ways to make money at home, there are endless variations of selling information through the mail or online. The product can be bought through the mail or online since all it is, is information. You can just mail someone one sheet of paper with the information.

Now a part of the above is selling information about making money. Here is a basic one that is not illegal but I personally consider it unethical. You see an ad in the paper that says “Get thousands of people to send you $5 through the mail. To learn how, send me $5.” Then the information says to just place an ad like the one you answered in enough papers to get thousands of replies and then send them what I just sent you when you receive the money.

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4 Responses to How to Evaluate a Home-Based Business Opportunity

  1. Very good information! With so many home business opportunities out there, its hard to choose correctly and become successful. This post is great because it informs people about what is out there. Good job!

  2. Pingback: David Cameron’s jokes for journalists target Boris and bald spot – BBC News | dailytopicalbusinessnews

  3. rsmithcando says:

    Your analogies and descriptions are helpful in spotting “businesses” that are nothing more than smoke and mirrors. Thanks for the advice!

  4. Pingback: Jose Manuel Barroso: nearly impossible for Scotland to join EU – | dailytopicalbusinessnews

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