Due Diligence For MLM And Business Opportunities
Friends and Internet neighbors, you often hear about how you need to do your due diligence before you join any business opportunity. Since most people that join business opportunities have little or no experience with owning a business, most people do not know what the due diligence process is.
Today I want to take some time and give you some information about what you should be looking for when you do your due diligence.
First, what is due diligence?
Due diligence is the process of investigation carried out for the purpose of providing information with which to evaluate all the costs, benefits, and risks for a financial transaction.
In other words, after you complete the due diligence process you know what you are getting yourself into before you spend your money.
Here are some key questions you need to answer in the due diligence process for a business opportunity:
Company Information – What is the business address, phone number, and owner’s full name or CEO’s full name?
Representative Information – What is the representative’s business address, phone number, and full name.
Company Age And Finances – How long has the company behind the business opportunity been in business? Are they profitable and have they gone bankrupt in the past?
Legal Background of The Company and Owners – Has the company or certain key personnel been the subject of civil or criminal actions involving misrepresentation, fraud, violation of the securities laws, or any unfair or deceptive practices within the past ten years?
Total Business Opportunity Operational Expenses – What are all the expenses for running the business opportunity?
Product or Service – Does the product or service work as advertised and is it priced competitively?
Competition – Do you have a unique competitive advantage by joining this business opportunity? How big is the market you are entering? Is the market growing or shrinking? How many other representatives are you competing against in your area?
Earnings – How much money on average does a representative make with the business opportunity.
Risks – What are the risks you face in running the business opportunity?
Reputation – What is the reputation of the business opportunity in your community? Image is extremely important. Talk to customers and other businesses in your area to find out the reputation of the business opportunity.
Many business opportunity scams will run you through an introduction to the business opportunity and try to sign you up immediately. They do not wish you to do any due diligence. A business opportunity representative that is unable to answer basic questions about their opportunity may not be offering a legitimate opportunity to you, and this can be an early sign that the opportunity is not worth your time or money.
My recommendation to you is that you spend at least a full week doing your due diligence before you join any business opportunity. If you are presented with a complex contract or compensation plan, you should consult a lawyer before you sign it.
Don’t just believe. Verify what they are telling you is true.
Think about how tough the interview process is to get a good job. Stop thinking like an employee and start thinking like a business owner. Verify any claims that are made to you before you join a business opportunity. Put them through the same though interview process any business owner would put you through to work for them.