We Can’t All Be on Shark Tank - What to Look for When Investing in a Business Opportunity
You have a friend or a family member who is starting a new business opportunity, and they have asked for your help. They want to know if you will invest in their new idea that is sure to get off the ground.
Or you know of someone who has joined a business opportunity. This may be an MLM or some other opportunity that they have discovered, and they can’t wait to tell you about it in the hopes that you will join them.
While it’s true that we can’t all be on Shark Tank, we can still invest in business opportunities. How do you know a good deal when you hear one? New opportunities come all the time, but only some of them will be ones that you will want to invest in.
So, what should you look for when deciding if a business investment is right for you? While this answer depends on your personality and life goals, there are some things you can look for when making your decision. Here are some of the things to consider before saying “yes” to an opportunity.
Successful businesses are ones that have a sense of order. They know who they are, who their ideal customers are, and they have all the numbers crunched. They are prepared. They have an identity, and are confident in what they are and provide to customers.
Before deciding to invest in someone, make sure they have a clear business plan and strategies in place, and ask to review and read. This is less relevant for established companies, but it’s still good to make sure you understand the core values and the plans for the company’s growth and future. Because you’ll be investing in this business, you want to make sure it reflects your own values and is a company you can stand behind.
When you invest in an opportunity, you’d ideally want some sort of return on that investment. Whether that investment means paying for a starter kit to sell a company’s products, investing money into a startup, or paying for a strategy or license to replicate an existing business model you expect to see a return on your investment in the future.
To ensure this, you need to examine the company’s plan for delivering these returns. Will you be given help to sell products to ensure you make back what you earned?
Are you investing in equity for the company? What is the projected profit margin, and how soon should you expect to see one?
Are you letting a friend borrow money to get their business off the ground? What percentage of profits will they pay you, or are you charging interest on their repayment plan?
It can be hard to bring this up, especially if you are considering investing in a startup that is founded by a close friend or relative. But remember that in this case, your personal relationship doesn’t matter. It’s your right to know and understand the opportunity they are presenting to you, and what you can expect from them in return. It’s business, and needs to be treated separately from your personal relationship with them.
If you are investing in an already established business opportunity, this is especially important to look into. Is this company well known? If so, what is the reputation of this company?
It’s important to look into the opportunities before accepting and investing in them. What has made them be successful? What do their current customers experience? And keep in mind that just because someone close to you finds the opportunity appealing, that doesn’t mean it’ll be the right choice for you as well.
Some competition in a product or service is a good thing. It means that there’s a market and a demand for it, so the idea itself is sound.
Sometimes, however, too much competition is steep, making it harder to stand out in the marketplace. If you’re competing with a household name, it may not prove to be as profitable as you’d like. So it’s best to do your research, or ask them to provide you with their own research, into the opportunity’s biggest competitors, and what they are going to offer to stand out from the crowd.
Social proof encompasses things like testimonials and reviews from customers. Look into the content on their social media accounts. It’s important for any business to have social proof because it lets people know that other people have found the company and their products satisfactory. It helps to establish a reputation of trust.
If people like the products or services they are offering, you’ll know that it is on the right track and worth consideration. If not, then you’ll know that the product may need to go back to the drawing board before any investments can be considered.
Here at Biz to Biz, we are dedicated to your success. We know that starting a new opportunity can be scary, and we believe it’s worth the risk. Knowing when to invest in something isn’t always an easy answer. It doesn’t matter if you wish to invest in someone else, or in your own business venture.
Biz to Biz also has created a Certified Business Partner program that has the tools, technology, and strategies in place for you to build your own networking chapters. If you are currently looking for a new opportunity and you are passionate about empowering entrepreneurs you can learn more about our partner program here.
With over 15 years of experience in building successful networking groups, helping small businesses profit and thrive, we believe networking groups are the key to any entrepreneur’s success. Our chapters are designed with entrepreneurs mindset, and specific challenges in mind. Our strategy is unique and proven. Our members love Biz to Biz because it has helped them build relationships, increase their confidence, and increase their word of mouth referrals. You can attend as a guest or learn more about our chapters here.
