Questions & Answers with Mark McKeller

How To Decide Between A Franchise And A Business Opportunity:

Q: I have found a business that excites me, but I really don't know much about the parent company. How can I be sure that they will be around long term?

A: In reality, you can't be sure. No matter the company's history or current situation, there is no assurance that the principals of the company will want to continue business long term. And healthy financial statements really don't matter. Owners don't have to be broke to quit business, they may just cash in their chips. A better question: "Is it relevant to me if the parent company is around long term?" Of course, you should expect active involvement from the company early on, but it's best to choose a business where your long term survival does not depend on it. Investigate how you would survive without the company. If it is not clear how you could, ask the company directly. If they cannot show you how to survive long term without them, you may want to choose another business.

Q: There are so many business opportunities out there, I feel lost trying to find one that's right for me. How can I investigate more effectively?

A: Your search for a business does not start with an opportunity magazine, trade show or classified ad. It is pointless to try to choose a business without first having a very clear picture of what you want. Not what type of business you want, but what you want to achieve in your life, and how a business will fit in. Do you want more control over your life? More money? To spend your time more wisely? Will the business be part time or full time? How much money do you have to invest? How much time per week can you devote to your business? Do you live in a city or a small town? Will you work alone or with others? What type of person are you? Are you a marketer? Are you technical? Do you like inside or outside work? You must answer these questions and others to understand what to look for in a business. The representatives of any credible opportunity company should ask you these questions right away, to help you determine if their business is for you. Be wary if they don't.

Business Plans:

Q: I think I have found the home business I want. Should I write a detailed business plan before I commit to the business?

A: Writing a detailed business plan before you start your business may not be the most effective use of your time. Obviously you want to be as sure as you can before you start. That information should become apparent if you talk to those already involved in the business. In other words, check business references.

Next be sure your financial situation is solid. The company selling you the business should be able to offer information on the start-up capital and financial reserves you will need. Your initial questions should concern how long it takes for cash flow to catch up to expenses. Be prepared to meet those expenses and, of course, your personal cost of living for whatever start up time is required.

Ultimately, success depends on your ability to attract customers. So, before committing to a business purchase, ask about the company's marketing plan. Determine your primary customer groups and learn their needs.

Ask about the company's marketing philosophy and proof that their approaches are tried and tested. Then, put yourself in the customer's place. Would you believe in the product or service being offered? Answer truthfully and thoughtfully. If you harbor any doubts, those doubts will be reflected in your dealing with prospective customers. Without customers, there is no future. Finding the answers to these questions does not require an elaborate business plan. That does not mean you avoid setting goals for yourself. Start your business and work it for a few weeks. Then, sit down and write your goals and projections based on your experience and that of others in your business.

The belief that a business plan is an essential first step to buying a business may be somewhat overstated, especially for home-based businesses. Working from home does not require the same overhead or payroll responsibilities of a conventional business. Your main expense is your time.

One final thought...NEVER rely on a business plan alone to raise capital. Mary Bacchler, CEO of Racing Strollers Inc. provided excellent advice in Inc. Magazine (February 1996). "A good plan will help you get a loan about as much as a nice suit will. Like a classic business suit, a good business plan helps you fit in and puts people at ease. It's like camouflage. It will not get you the loan or the investor's money if you otherwise look dumb or lack the assets to guarantee the loan."

How To Avoid Scams:

Q: In looking for a business, how can I be sure what I am considering is a viable business? How can I trust the company selling the business?

A: In purchasing almost any product or service, businesses included, the research responsibility rests squarely on your shoulders. However, just as the Consumer Product Safety Commission issues warnings on unsafe products and the National Highway Transportation Safety Administration influences the recall of unsafe automobile equipment, the Federal Trade Commission requires that a franchisor disclose certain information to you required by law. In some states, business opportunities are also required to meet disclosure requirements.

Normally, a franchisor is prepared to accommodate your request for information. However, if you have problems or want more information, you can write the Information Services Division, Federal Trade Commission, Washington, DC. The F.T.C. only requires disclosure. Fourteen states mandate that you be provided with a complete prospectus. Those states are: California, Hawaii, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. The Office of the State Attorney General in your state can direct you to the proper information source.

You may also wish to contact the Better Business Bureau and, possibly, a credit reporting service if you have any misgivings about a particular franchise. The International Franchise Association is also a good source for information.

While the credibility of the franchise organization or business opportunity should always be researched, it may be even more important to determine the viability of the enterprise represented by either a franchise or a business opportunity. Talk to referrals - those in the business already - three or so should be sufficient. If possible, seek out referrals whose situation is similar to yours in income requirements, time available to devote, geography, and market demographics. The business seller should be able to provide you with ways to test the market in your area as well.

Use common sense. Does the business seem logical and sound? Do you perceive a realistic market for the product or service? Are you comfortable approaching the market and can it be done working as a home-based business? Will you be provided with all the tools to conduct business, with or without help from the parent company? Even if the business has a support network, you are essentially on your own and you must feel confident in your ability to succeed on your own. Finally, does the opportunity seem too good to be true? If so, it probably is!

How To Investigate The Business You Want:

Q: There are so many business opportunities, I feel lost trying to find one that's right for me. How can I investigate more effectively? ---John P., Bellevue, WA

A: This is a great question because it goes to the heart of owning a business . .. your priorities. What you do is often less important than what you want to achieve. Before you open a business opportunity magazine or go to a trade show or answer a classified ad, you must deal with your personal expectations. You should not expect to analyze an opportunity in the absence of knowing what is important to you.

Do you want more control over your life - more money - or to spend more time with your family? Do you want to work full-time or part-time - alone or with others - at home or on the road? Are you strong in marketing - sales - technical? How much money do you have to invest? Do you have other income or will the business be your sole source of support? Does your family support your decision to own a business?

A credible opportunity company should ask you these questions right away. Be wary if they don't ask. It is in their best interest to attract people who fit into their type of business and who, as a result, have the best chance of succeeding.

Dealing With The Fear Of Investing:

Q: I think I have found the business I want, but I can't seem to take that final step to buy it. How do I deal with my fear of investing?

A: First, you need to understand that your fear is natural. Deciding to start a business in your mind is one thing; writing the check to get started is quite another. Apprehension is entirely normal when venturing into the unknown. If you didn't have some apprehension, you would be both unusual and, possibly, foolhardy. After all, you are embarking on a significant change in your life. That change may be expensive and possibly irreversible - especially if you're quitting a job to start your business.

Second, do not confuse the emotional decision to start a business with the rational analysis of whether a particular business suits you. These are separate issues and confusing them can result in your becoming paralyzed with the fear of buying.

If you have made the conscious decision to get into a business, affirm that decision by acknowledging you must invest money in that business to be successful. There is no other way - you have to spend money to make money. Now that you are comfortable with that fact, let it go! Stop thinking about the money and get on to the most important issue of investigating particular businesses.

Choosing a business that's right for you involves some simple, straightforward questions. Be honest with yourself. Can you afford the business? Is the business worth the investment? Is the potential return on your investment adequate? And, the often forgotten question, will I be happy and fulfilled doing what I must do to succeed in "this" business? These answers are much easier to develop once you are comfortable with the "MONEY" question. Moreover, your all important analysis of the business opportunity will be more rational in the absence of the emotional turmoil of the money issue.