It's Open Season on Bizop SCAMS!
24th April 2019
As always, this week’s BLOG is born out of real life situations following queries from our real life clients experiences.
We have written this BLOG with the hope it will help others stay safe and well informed in the often choppy waters of the Business Opportunities Marketplace.
We are often approached by clients who are interested in starting their own business and have seen a business opportunity advertised.
As experienced Business Advisors we know how to quickly identify enough information on the business opportunity and its provider to establish whether the investment might be worth pursuing.
Here is our 10 Point checklist of ways to protect yourself.
NB: Also use it to check out someone you intend to do business with!
1) Is the business trading as a Limited Company?
- If so you can find out a lot of information for free at the Companies House website.
2) Track the Director(s) previous Companies Online.
- Did they all close quickly? Are they still trading? Were they in similar fields to the current offering?
3) Check the Company’s last accounts.
- If their Business opportunity costs, say £15000 and their accounts are showing a loss this would be a good question to raise with them.
4) Be very wary of Tax Evasion, it’s a Criminal Offence.
- answers such as this are a MAJOR Red Flag “We make more than that but obviously we show a loss in the accounts, no one wants to pay more tax than they have to.”
- The translation of that sentence is. “We are happy committing serious fraud against the Inland Revenue by failing to disclose our true position and we will have no compunction in taking your money and using it in the same cavalier fashion.”
5) Check their Privacy Statements and GDPR compliance.
- What are they going to do with your personal data? Will you get a Data Processors contract? What do they expect you to do with your customers data? Are they a member of S.H.I.E.L.D? You can Search for the Company here: www.transitionlawshield.com
6) Is the business registered for VAT?
- The VAT threshold is £85,000 per annum, there is usually no valid reason to register for VAT unless your turn over is at or approaching the threshold, except to make a business look larger and more trustworthy than it actually is (PLUS the VAT makes your fee for joining the business increase by 20%)
7) What assistance do you get to find new customers?
- Very often business opportunities are nothing more than a chance to pay to be someone’s self employed commission only salesperson. Do they have a marketing method, marketing materials and ideally a USP or are you left to build your business by just ‘knocking on doors’?
8) Can you do the job Yourself?
- Small franchises and business opportunities are often quite expensive for something you can easily do on your own. Consider how the business works and whether the money you are about to pay could be used to set yourself up in the same or a similar business.
9) Do they provide specialist knowledge and assistance?
- If buying the business opportunity gets you specialist knowledge you don’t possess or allows extensive successful commercial experience to be brought to bear on your behalf that is a good reason to consider it. Are they members of trade or professional organisations?
BUT Do make sure any claims are evidenced either by a number of satisfied customers or some other trustworthy means, not paid for Online 'star' ratings or made up testimonials bought from the Internet.
10) There are some excellent 'bizops'. All we say is check!
- It is truly said that a fool and their money are easily parted, some say they were lucky to get together in the first place!
We strongly recommend you take some advice from an experienced business assessor, especially if the sums are quite large to start your new business. A small amount spent on good advice could save you thousands maybe hundreds of thousands in the long run.
Finally, remember this:
We are dedicated supporters of small business and encourage anyone with the desire and resilience to become an entrepreneur, to seriously consider taking action towards their goals!
Do not imagine this blog is designed to stop you becoming successful in business, in fact quite the opposite because it is at the start of a new venture where strong foundations are laid and the more information and successful investigations you complete now, the stronger your foundations will be and the greater chance of success you will have.
If you need professional assistance with assessing a business opportunity that you have in mind contact the Business Consultancy team at Transition Law on 0330 2233 506 or visit us Online at www.transitionlaw.com.
Be Safe and Enjoy Your Business!