WORK AT HOME
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Do Your Homework Before Starting a Home-based Business
By James Martell
Net Guides Publishing, Inc.
Glance at any magazine aimed at mothers and chances are you will find at least a half a dozen ads extolling the huge profit and minimal effort involved in home-based businesses.
Here are a few samples from a recent issue of Working Mother: "Stay home! Make money addressing envelopes." "90 percent profit! Home-based, honest, ethical, extraordinary." "Earn money reading books." "This is big. Best nutritional home-based business opportunity in America."
If it sounds too good to be true, it is. Just recently, the Federal Trade Commission blew the whistle on a medical billing business opportunity that claimed people could make $10,000 a month starting up computer-run billing centers - without leaving home. The company agreed to pay the FTC $100,000 and turn over a corporate jet to reimburse defrauded customers.
Not so long ago, the Better Business Bureau of Western Pennsylvania issued a consumer alert about a company called A.M.I., which promoted an envelope-stuffing operation it claimed could net people $2 per envelope. Few details were given about the work, but would-be business owners had to send the company a $39 "refundable" deposit to get started.
Unfortunately, the real agenda behind envelope scams is to get people to sell other people on the idea of addressing envelopes for money. Machines do most of the large-scale envelope stuffing, according to the U.S. Postal Service.
On the bright side, there are some legitimate opportunities for making money at home. Like anything worthwhile, they require hard work, training and experience - all of which honest business promoters will tell you from the outset.
"Discovery Toys works if you work - you do need to put time into it," says Emily Krisko, a sales director for Discovery Toys, a California-based company that sells educational toys, books and software.
Mrs. Krisko, who sells $100,000 in Discovery products every year, got started in the business in 1979, a year after the company was founded. She was living in Hawaii, raising four children and began selling the toys to family and friends.
Building the business doesn't happen right away - that's a mistake a lot of people make. If you're coming from a full-time job, you have to expect a change in income. Discovery sales representatives must make an initial investment of $99 to get started selling products. Although money is made from product sales, bonuses also are awarded for lining up new sales consultants. This is known as a "multilevel marketing opportunity," which can be lucrative if you are one of the first to sign up customers - and the product is appealing.
Similar direct sales opportunities exist with cosmetics, nutritional products and cleaning supplies. Familiar names include Mary Kay, Amway and Avon, but there are hundreds of lesser-known companies based on the same merchandising techniques.
If you are drawn to this type of work, you must be willing to pester friends and relatives for initial sales. Once you've tapped this market, it could be tough to find new customers. One thing to consider: How many other consultants would you be competing against? The company should be willing to provide this information so you have some idea of how big a market you can expect.
Before signing a contract or sending money, be sure to get in writing from the company a list of what you are expected to pay and what the company will provide for that money. You should also get details on any restrictions you might face in selling products and written substantiation of potential earnings. Be sure to talk to similar investors and verify all income claims.
* "The Work-At-Home Sourcebook," by Lynie Arden , Live Oak publications. Discusses legal, tax and other practical considerations of working at home.
* "The 21st Century Entrepreneur: How to Start a Home Business," by Michael Antoniak, Avon Books. Offers good discussion about what it takes psychologically to successfully run a business from home.
* "How to Run Your Own Home Business," by Coralee Smith Kern and Tammara Hoffman Wolfgram, NTC Publishing Group. Gives history of home-based businesses and explores different aspects of working at home.
* "Start Smart Your Home Based Business," by Bernadette Tiernan, Simon and Schuster Macmillan Co. This book provides an in-depth look at the technological needs of a home-based worker.
* The Better Business Bureau keeps track of complaints about work-at-home schemes at its Web site (http://www.bbb.org). The site also includes a tip sheet on how to recognize common work-at-home scams and advice on how to sort out legitimate opportunities from scams.
* The Federal Trade Commission (http://www.ftc.gov) is a must stop for anyone seriously considering a work-at-home business opportunity. The FTC posts news releases on companies it has prosecuted, as well as giving out general information on how to avoid scams.
* Consumer fraud information also is collected by state attorneys general. In Maryland, the Web site is: http://www.oag.state.md.us (click on the consumer protection division). This site also gives computer users the opportunity to file a complaint against a company working within the state.
* The National Consumer League maintains two Web sites of interest: http://www.natlconsumerleague.org contains general consumer information, news releases and upcoming legislation affecting consumer issues; a second Web site, http://www.fraud.org, is dedicated to tracking on-line fraud.
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