There are so many home based business opportunities in the market place and so many scare stories about companies failing, how can you tell which company represents the best vehicle for success? I offer you 10 pointers to watch for.

1. Is the product or service promoted by the company something which you will use yourself? All companies have a personal productivity requirement, it may be called something different or disguised in some way but it will be there. If the goods and services on offer are not something you would ever use this is going to be an expensive waste of money for you. Also, how it will be possible for you to promote something of which you have no personal experience? The only way to do this would be for you to have excellent sales skills, which most of us do not - the majority also lack the appetite and confidence for the hard sales approach.

By looking for a company which is providing goods and/or services in which you have faith and trust and which you are happy to use yourself, you give yourself the best start. At this stage do not be misled by monetary promises and the intricacies of compensation or marketing plans. At the end of the day, if no-one is going to use the goods or services you are marketing, you cannot succeed.

2. Look for a company which provides goods and/or services which people already use, preferably on a daily basis. It is much easier to promote things which people are buying already, you are not having to create a market, all you are asking them to do is to transfer an existing spend. No new money is required.

From your own point of view, I would hazard a guess that money is playing some part in your decision to start a home based business. It is important that you keep the “new” investment required to the minimum and you can do this by promoting goods and services you already use.

3. Be wary of companies which attempt to front load you with stock. It is important to keep the risk element of starting a new venture as contained as possible. It should not cost any more than £30 to join an organisation as this enrolment fee is designed simply to cover the cost of of administration in setting you up on the company records and providing a business kit. If you are asked to invest more, don’t be afraid to ask what this covers. Are you being “front-loaded” with product? This may or may not suit you. If the products are sample sizes or perhaps things you will use yourself this is justifiable. However, if you are being asked to invest in stock which will sit in your garage or spare room – please beware – Caveat Emptor! You may be told that such investment represents commitment – I say it represents unreasonable risk. At this stage of the game, how do you know whether or not you are going to be able to retail the stock? I don’t believe you have any way of judging.

4. Look at the sales process of the company. Are you obliged to market, take orders, place the order with the company, receive the delivery, repack items for the end user, deliver the goods and collect the money? Some processes include all or some of those elements and there is nothing wrong with any of that apart from the time it takes.

If you are going to act as a mini distribution centre you will need space, time and money to fund the purchases until such time as the customers pay you. It is important that you think this through, understand the process and are happy with the workload. Bearing in mind that most people starting home based businesses do so whilst keeping their full time employment, some sales processes can be a huge drain on resources of time, energy and money.

At the other end of the spectrum are entirely web based organisations. This again needs careful thought as the public are becoming increasingly wary of web scams and it will take a lot of hard work and persuasion to convince you potential customers that your offering is real. These businesses sound wonderfully easy and lucrative – the reality is often very different.

5. Are there geographic dependencies? If you are required to collect and deliver orders you will be restricted to a reasonable radius of your home for you to be in with any chance of being able to provide a reliable cost effective service. What then happens if you move? Do you have to start all over again in a new area? If there are geographic dependencies, how many consultants or distributors are already operating within your area?

Look for a company with no such restrictions, a company which provides drop-shipping services at the very least.

6. What are the trading terms of the company, the refund policies and guarantees? You will, especially in the first instance, be selling to friends and relatives and you do not want anything to go wrong! You also want to be spending your business time in productive activities, growing your business and income. So, look for a company that offers a water tight guarantee policy so your customers have no risk and you have no administrative burden dealing with complaints.

It helps here if your customers have been used to dealing direct with the company to obtain their products, despite the fact that you were the one who introduced them to the business. You will automatically be dis-associated from the complaint and your friendships will not be at risk either.

7. Look for a company which gives something back. Everybody likes something for nothing! A lot of companies do provide extra for customers but the cost of these is often borne by the consultant or distributor. How about a company which gives something which costs you nothing?

8. Look at the track record of the company. There is a value judgement to be made here regarding risk v reward. If the company is new there is possibly an opportunity for you to “be in” at the beginning but you will also be sailing in uncharted territory. You may enjoy high risk and the potential of high reward but I can tell you that there is nothing more devastating than to see an enterprise, to which you have devoted months of time and energy, disappearing overnight.

A company which has been around for 10, 20 or even 30 years has proven itself to be real. There is the possibility that there will even be some brand awareness in the eyes of your potential customers, although this is not always the case. Don’t be put off just because the company is established – it simply means they are doing something right! A lot of these companies regularly open up new territories and I am unaware of a single one that has reached saturation point anywhere.

You may want to look on the internet to research potential companies but do this in an open frame of mind. How often do you think people bother to publish their good stories to the net? I’m afraid it is always bad news which travels fast. I suspect you will find disappointing stories about every business on your short list, if you search hard enough. Remember there are two sides to every story and I invite you to check out the facts before making your own judgement. Ask questions – if you feel fobbed off, let the alarm bells ring. If you are given an explanation and more information you can make up your own mind as to whether this is a factor which should influence your decision to join.

9. Only now begin to look at the money. Examine the marketing plan and ask to see actual, audited figures to support the income potential being claimed. I beg you not to be dazzled at this stage by promises which may prove to be hollow. Don’t be swayed by a 50% commission with one company compared with 20% at another. 50% of zero is still zero! Business and compensation plans are invariably complex and don’t feel overawed or embarrassed that you don’t immediately understand these documents in their entirety. Things to watch for are:

* Your monthly activity requirement. How much are you expected to spend personally to qualify for your commissions and bonuses? Is this set at a level which is manageable for you? I know you eventually plan to earn money to cover the cost of this but initially you will be funding this yourself.

* Approach schemes that pay you for new enrolments with care, especially if that fee outweighs the investment the new customer is making. The numbers simply do not stack up if you are, for instance, to be paid £75 for each new customer if that customer is only paying £25 to join. From where is the balance to come? Be sensible and don’t be deceived! Some companies run special promotions to enhance enrolment rates and I would not be as concerned about these as the cost can be born on a limited basis.

* Look for a plan which provides you with residual income. This will often tie in with the type of product or service the company is offering. The ideal is something which people consume or use and re-order on a weekly or monthly basis. These repeat orders will produce residual income which becomes your pension.

* Watch out for “breakaways”. These are not always a bad thing but do ensure that you are always fully compensated for the people you have introduced into the business regardless of how far they advance.

* Be wary of any compensation plan which rewards you for “frontloading” on stock – this is the surest way of ending up with a huge credit card bill and a garage full of deteriorating items.

10. Be clear about your reason for wanting to start your home based business. Don’t be persuaded or cajoled by enthusiastic distributors. Look for companies which encourage those already in the business to support new people. Question what training and support is provided – FREE OF CHARGE!

Know that this is one of the most noble ways of earning a living in the 21st Century – provided you pick the right company to represent. It is also the only sure way I know of standing any chance of achieving financial freedom.

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