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Answer to Question #50726 in Economics of Enterprise for biruk

Question #50726
Discuss the key decist variables in screening and selecting opportunities .

Expert's answer
In the preceding section, we outlined numerous things you should do to ensure that you're choosing a venture that will be appropriate for you personally, and will represent a sound investment. It's important that you cover all your bases before signing a contract with the seller. The following are some strategies you should use to protect yourself. Have legal representation. Your attorney should be present when you're negotiating with the licensor-seller. Have financial representation. Your accountant should look over the financial statements of the licensor-seller.Make your own independent survey of other owners of business opportunities sold by the parent company. Are they happy with the company? Did the company do everything it promised? Is the company good to work with? Contact competitors. This will verify the status of the company in the industry. A competing company will tell you in a hurry what the company's weaknesses are. Check the credit of the seller. Your accountant or the person auditing the business opportunity can help you with this. Be sure you understand everything you're signing. Read the disclosure statement, the purchase agreement and the advertising bulletins carefully. Check the credibility of the parent company. The parent company doesn't have to be big in terms of dollars to be credible. Use your common sense and advice from people you trust to determine whether or not a company seems credible. Check the performance of the parent company. Are the seller's claims backed by performance? Check the company's management. It's not enough that they've got a good idea. Do they have the management strength to be able to train you, help you and keep the company running for another 20 years?Know all the costs and obligations, both yours and the seller's. What costs are you going to have to incur? What are your obligations on an ongoing basis?Is the company going to train you? Is training at your own expense? In most cases, you have to pay your own expenses to the training site. How long will the training last? Determine what type of advertising program is available from the licensor. Will that advertising program work for you? Check your local market. For instance, if you're buying a business opportunity in which you'll be selling bathtub liners, will advertising in trade magazines really help? Also, what are their ads like? Is the copy good? What about visual art?

Are you getting value for your initial purchase price? Examine the list of equipment, fixtures, inventory, operating supplies, etc. and call a few suppliers dealing in these items. Compare the prices those suppliers quote you against the business opportunity's prices. 

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