8 Signs a Business Opportunity is a Scam

by | Jul 10, 2020 | Business Tips

You see business opportunities advertised everywhere, especially if you’re looking out for a new income source.

But beware!

Many opportunities in the small business sector are scams, disguised as legitimate offers, and they are more likely to part you with your cash than make you a profit.

Other opportunities  fail to mention the risks or potential downsides involved though they aren’t strictly scams.

The key to finding a legitimate offer is to keep your guard up and investigate the claims being made. If an idea sounds too good to be true, you probably have a good reason to be suspicious.

Avoid taking anything at face value and investigate all the costs. Many times, there are considerable start-up costs that are only mentioned in the small print, if at all. Whenever you’re dealing with a considerable amount of money, proceed with caution.

Watch out for these signs that you might be dealing with a scam:

1. It’s too easy

Anything that claims to be ‘turnkey,’ ‘easy,’ ‘automatic,’ or claims to be little or no work should be examined with skepticism. If it were that easy, wouldn’t they just set up several income streams for themselves and keep it a secret?
If it’s easy and actually works, everyone would be doing it for themselves.
That would make the competition fierce, which would destroy any profits very quickly.

2. It’s vague

Vagueness is a warning sign. If the offer is vague enough that you don’t even really understand what is involved, that’s usually a sign to stay away.

Companies with legitimate offers want to give you all the details. They are proud of what they have to offer and want to tell you about it.

3.  Unclear Revenue Stream

How does the company making the offer make money? Do they primarily make revenue by charging you for training, advertising, a website, and other fees? Are they invested in your success with the product or not?

4. The Warranty has Loopholes

You might find warranties that use words like “possible,” “can,” “may,” or “potential.”

Companies with legitimate products and offers wouldn’t require a weasel clause in their warranty. You want to associate with a company that has an iron-clad warranty.

5. It’s Far from Home

Are the people offering the opportunity located in some obscure country. Legitimate opportunities can come from anywhere, but if the company in question is located in someplace like Liberia, there’s reason for additional caution.

Also, make sure that your state or country jurisdiction covers contracts for  the type of business and size of transaction you’re thinking of getting into. Scammers are more likely to operate where there’s no penalty.

If you live in the U.S., be especially weary of opportunities that cost less than $20,000 and involve an out of state company. It’s too costly and difficult to sue an out of state company with the current commerce laws. Federal prosecutors typically won’t look at anything less than $30,000 because they are simply too busy.

6. The Offer Has Too Much Emphasis on Marketing

Marketing is important, but the product you’re selling is even more critical to success in business. If an offer talks more about the magical marketing than the magical product, it’s more likely to be a scam.  A great business opportunity has a great product, exclusivity, or a great brand behind it. The marketing should come second.

7. You Heard about it in a Short Ad

Ads in newspapers and magazines that have little information besides outrageous claims and a toll-free number are often too good to be true. Just because the ad is in the Wall Street Journal doesn’t mean it’s legitimate.

8. They Put Pressure on You to Decide Quickly

When faced with a business opportunity, move slowly and be cautious. If you are pressed to make a quick decision, that’s probably a good reason to say “no.” Keep an eye out for the warning signs and protect your money.

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