How to SPOT a business opportunity scam

Business opportunity

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We’ll all looking for a lucrative business opportunity that will bring good returns. And, because many people want to make extra money working from home, it  leaves them vulnerable to the charms of smooth-talking con artists. But you can spot a home-working scam simply by asking these questions before proceeding:

1. Is this a job offer?

Fact: the most popular home-working cons involve persuasive letters and glossy leaflets that invite you to discover how to find work – but they don’t actually provide real work of any kind.

Important: see these offers for what they are – typically, booklets produced at home on someone’s computer, advising you in general terms how to be a successful entrepreneur.

And: you’re paying K100 or more for something that won’t tell you anything you didn’t already know – and it’s probably written by someone who’s failed to do it themselves! Otherwise they’d be earning money from that work rather than sharing this information with you.

Wiser: don’t waste your money on over-priced booklets by business failures and deadbeats – the market is awash with them. Instead, walk into the local branches of the major banks, say you’re  thinking of running your own home-based business, and leave with armfuls of useful books, pamphlets and leaflets; and all for free.

2. Does this claim to be a big money opportunity?

Tip: most con artists draw in their victims with offers of K500 a day, K10,000 a month, or even ‘unlimited earnings’.

Why: nearly everyone wants to be a big earner so these crooks pitch the stated potential earnings at such a level that they nag away at you until you give in and decide it’s worth a K50, K100 or K500 ‘registration fee’ to find out more. You take a gamble, and you lose – every time.

Reality: home-workers don’t make big money. The majority carry out routine work that pays between K20 to K50 per hour on average.

Guideline: check out what you’d earn doing this type of work on an employer’s premises . You might expect to earn a little more as a home-based worker because the employer will not have to pay tax contributions, provide equipment, heat and light premises, and so on. You’ll earn the same or less than the going rate as the employer will want to pocket these savings rather than give them to you.

So: if this so-called opportunity offers more than average earnings, it’s
almost certainly a scam.

3. Does this sound like an easy way to make money?

Tactic: charlatans want you to think the work is simple – so simple that anyone can do it, straightaway, and earn an immediate, lucrative return. Alarm bells: ‘simple’, ‘easy’, ‘instant’. Unfortunate: there is no such thing as a simple work/big money combination – simple work/little money and skilled work/big money deals are realistic but simple work/big money works only for con artists who prey on their naive victims.

Warning signs: ‘no education needed’, ‘no training required’ – you don’t make big money for easy work, unless you have a special talent, skill or training.

Proof: a successful business offering genuine work will have lots of satisfied
workers around, so ask for a list of their home-based workers and approach half a dozen chosen at random from that list. Evidence: crooks won’t produce a list – either because there aren’t any workers or they’re working long hours for little money and wouldn’t speak well of the organisation.

4. Is this an out-of-the ordinary, home-based opportunity?

Note: con artists lure in their victims by offering easy and big money – and then adding a twist. Technique: most people realize they won’t make good money stuffing envelopes, painting figures, doing ironing or typing – so the crooks promote work such as home publishing and mail order opportunities that people have heard of but know little about. These sound as though they’re lucrative and might just pay off. Note: money can be made in home publishing and mail order; but they usually require substantial upfront investment in terms of equipment, time and money.

And: the chances of failure are high. Statistic: one in three businesses fail
within the first year; and only one survives for five years or longer.

Remember: if you’re not fully familiar with something, you cannot expect
to understand and master it, and turn it into a money-spinner.

Bottom line: if you don’t know what you’re getting into, get out fast.

5. Does this involve me sending off money in advance?

Truth: scams always involve payments in advance somewhere down the line –
this is the money that’s going to be stolen from you. Typical: some home based work involves you buying materials from a business, putting them together and returning completed units for payment. The chances of you selling those electrical components or whatever to someone else is remote – you’re obviously going to complete and hand them in for payment.

So: to pay anything upfront should be unnecessary; and is certainly unwise.
Crucial: if this is a genuine and profitable business, someone, somewhere will have heard of it – the representative association of the industry and/or a regulatory body, as examples. Always: ask around – check the local phone directory and call the nearest chamber of commerce or local trading standards authority. If no one’s ever heard of this business, avoid it at all costs.

6. Is this a believable work opportunity?

Fact: home-working cons just don’t add up, if you think carefully and do your sums.

Sensible: never take facts and figures at face value – verify them with reputable sources such as the relevant trade association or the trading standards authority.

Common example: many scams involve mail order – ‘send off this circular
and you’ll get a 50% response rate’.

Check: anyone involved with direct mail will tell you that the average response rate is between 1.5% and 5% – and that’s a great return. 50% is unheard of – unless you’re a con artist.

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