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How to Evaluate Any Business

Most people would agree that we are bombarded by so many business opportunities that as a wise man wrote, "they are wearisome to the flesh".  Therefore it is essential to know how to evaluate a business before getting involved. This will save you time, money and disappointment. The product and compensation plan are only a small part of the puzzle.  

Here are 7 questions to ask when evaluating any business:
  1. Does the owner/CEO have a proven track record?
  2. Is the product affordable, unique and something the masses want or need?
  3. Can I realistically make $250 - $500 per week part time or 6 -7 figures per year full time?
  4. Is it a FAD or a Trend (Fads are short lived, Trends are a lifetime)?
  5. Timing - At what stage of growth is the company in?
  6. Sponsor- Who is your sponsor or team? Is your sponsor or anyone close to your sponsor making significant money? Is he/she responsive? Can you easily get them on the phone?
  7. Do they have systems in place that anyone can follow - again think about the masses
You have to be able to answer YES to all 7 questions.
Now let’s talk about the product.
The product has to appeal to the masses, it shouldn't be a fad.
You want a product that people are already in the habit of using everyday and is recession proof, then show them how to get a better one or the same one cheaper. If you try to sell vitamins to someone that is not in the habit of taking vitamins in most cases they will stop taking them. Your customer retention rate will be higher with someone that already has the habit than with one you had to influence to form a new habit.
A consumable product builds residual income. You work hard to build your clients. If theproduct is good and consumable, you will have customer retention and thereby residual income. If you have to convince or train people to use the product, YOUR INCOME WILL BE SHORT-LIVED.
Now let’s talk about the timing.
They are 5 stages to every company:
  1. Formulation
  2. Concentration
  3. Momentum
  4. Scrutiny
  5. Stability
You want to get involved during the first 2 stages - the infancy stage. This is where the company has just finished formulating its product, management team and is starting to market. That is during the first 1 - 3 years. This is what is called ground floor. If you can get involved at that stage with a good company that has a good product and meets the other requirements, you have a realistic chance of making significant money. However if the product has a very wide appeal you can still make money in the other stages.
Bottom line: 
Think with your head, not your heart.
No matter how good the compensation plan is, it is of no use if no one buys the product.
If you have to convince people that they need the product, or have to explain how the product works, you are not going to make any significant money (unless you are the founder or close to the management team).
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