With the economy still sluggish and credit remaining tight, many people are searching for ways to make some extra income. It's important to be alert to the many business scams which are currently being aimed at consumers. Unscrupulous people are working overtime on schemes to take your money and run- leaving you with nothing in return.
If you are considering a new business venture, it's smart to remember some simple facts.
- Making money takes hard work and usually involves long hours.
- Don't pay any type of fee to anyone for the promise of a job.
- Do your homework. Research can help you avoid financial loss and heartache down the road.
There are some important things you need to know before investing in a new business opportunity. The law requires that opportunity sellers give you very specific information about the venture so that you can make an informed decision. Any business opportunity which costs more than $500 to invest in is required to give you written disclosures about the company. They should include the following:
- The names, addresses and telephone numbers of at least ten people who live relatively close to you so that you can meet with them and investigate the opportunity.
- The number and percentage of previous investors who have made as much or more in profits that the seller claims you will make. This should be a good indication of what you can expect.
- An explanation of how the seller arrives at the profit information. There should be an explanation of how the profits are calculated so that you can determine if what the seller claims is reasonable.
Before you buy or invest in a new business, learn everything you can about it. The following suggestions can help guide you through the process.
- Study all disclosure documents. Fully read and understand these documents and the proposed contract.
- Personally meet and talk with as many current owners as you can. Find out if the information in the disclosure documents matches up with their experiences.
- Investigate the claims about potential earnings and get these proposed numbers in writing.
- Don't jump at the first opportunity. Shop around and compare.
- Listen to all sales presentations with a clear mind and critical ear. Remember that success takes hard work. If there is talk of "easy money", be wary. The law requires sellers to wait 10 business days after giving you the documents before accepting your money or having you sign any contract or agreement.
- Make sure everything you are promised is in writing. Oral promises mean nothing. If a seller doesn't want to put something in writing, look elsewhere.
- Ask a professional for advice, if needed. This could be an attorney, accountant, or business advisor.
- Contact your state Attorney General's office and the Better Business Bureau for information regarding any company you are considering investing in. Also do internet searches by entering the company's name with words like "scam" or "complaint".