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Business Opportunities: Success and Failure Statistics as Well as Possible Prevention
By: Vishal P. Rao

Let's face it, business opportunities are a rather quick, easy way to start a business. They are usually "turnkey" operations, where someone that buys into a program either online or offline is provided with all the necessary elements of immediately being in business for themselves. Business opportunity programs can also be cost effective, as many abound, and finding one within a restricted budget is rather easy.

The biggest challenges faced when choosing a business opportunity program are the following:

Choosing one that suits an entrepreneur's needs and skills as well as interests.
Choosing one that pays enough in commissions on goods or services that makes it lucrative enough to turn a healthy profit.
Choosing one that is wanted and needed by customers/clients.
Choosing one that does not exist in an already glutted market. This would lead to too many choices of other providers and a rather limited market for the business owner.

The sad facts are that because of the easy start up, and the rather quick "fix" that business opportunities present to potential entrepreneurs, business opportunity members can quickly enter a business and just as quickly leave it. Turnover can be quite a problem. Since little initial investment is required, many members "jump into" a business opportunity at whim, and quickly find that running a business is a whole heck of a lot of work!

The reason for the failure rate is also attributable to certain outlooks and requirements that many business opportunity "joiners" fail to consider when joining:

Is the business opportunity nothing more than empty promises, the old "too good to be true" adage? Unfortunately, these types of offerings run rampant both online and offline.
Is the business opportunity catering to a dying market? Markets can fluctuate, so due diligence is needed. Research into markets, just as with any other business is paramount.
Is the business opportunity solvent? Talk to other members, and do research. Become aware of any problems in payments/revenues before you join.
Is the business opportunity flexible? Does the Biz Op restrict members in their advertising methods, or are they inflexible and "distant" in their approach to members' concerns/problems.
Is the business opportunity viable? Viability should be financial as well as personal. In other words, does the Biz Op have a great financial track record and does it meet the needs of "you" personally, as far as personal satisfaction and approaches to sales and marketing?
Is the business opportunity working within the confines of federal, state and local laws? Depending upon where a member lives, these laws can vary widely!

The real statistics on failures of small businesses, many of which now are business opportunities and franchises, are well documented by the United States Small Business Administration: www.sbaonline.sba.gov/. Business statistics provided by the United States Department of Labor, report that in 1994, the number of businesses that failed that year were divided into the following categories:

Bankruptcies (a 15.4% increase from 1993).
Failures (a 17% increase from 1993).
Terminations (.3% increase from 1993).

The Small Business Administration attributes these failures and the evolving higher percentages to the fact that there are now MORE small businesses in the United States overall, with a 49% increase in numbers since 1982.

The Small Business Administration also states specifically that statistically, only one in seven can be considered a true "failure", leaving unpaid obligations in their wakes. Others simply sell or shut their doors for a variety of other reasons.

Since most business opportunities, at least initially, open with less than 100 employees (many are simply the owner, as sole owner and executor of all business "chores"), then most Biz Ops are indeed "small businesses" and as such all the pertinent failure statistics can be applied to them. What is really surprising and rather "staggering" is the fact that most business failures are not due to outside forces, but those that the business owner has complete control over! These issues included lack of marketing know-how, lack of record keeping, lack of management competence, lack of financial management, and other business basics such as controlling employees and the inability to seek outside assistance and advice!

The wise business owner, whether or not involved in a business opportunity, will seek to learn and implement proper procedures, and investigate proper methods of operation throughout the life of a business.

If this is done, a Biz Op owner, or any small business owner, has less of a chance of becoming the "latest failure statistic"!

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About The Author

Vishal P. Rao is the owner of http://www.home-based-business-opportunities.com - One of Internet's leading website dedicated to starting, managing and marketing a home based business.

This article was posted on April 26, 2005

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