Instead of a Buying a Small Business – How About a Small Business Opportunity?

If you can’t come up with your own small business idea and if the idea of owning a franchise is not appealing to you, why not buy a small business opportunity?

A small business opportunity is nothing more than a packaged small business investment that allows the buyer to begin a small business.  Typically, the seller of the small business opportunity exercises no control over the buyer’s operation.  This is what differentiates a small business opportunity from a franchise where the franchisor exercises control over just about every facet of the operation.  Technically speaking, all franchises are business opportunities, but not all business opportunities are franchises.

Dealers and distributors are good examples of  small business opportunities.

Dealers and distributors  are individuals or businesses that buy the rights to sell XYZ Corp.’s products but not the right to use XYZ’s trade name.

A distributor may sell to any number of dealers.  A dealer usually sells directly to retailers or consumers.

In buying a small business opportunity, there is rarely any continuing relationship between the seller and the buyer after the sale is made.

If you want to have freedom in running your small business, then the business opportunity route is the one you might want to take.  You will not have to follow the strict specifications and programs that you must follow with a franchise operation.

You should request a Uniform Franchise Offering Circular (UFOC) from any major franchise and you will immediately understand the difference between running a franchise and simply buying a small business opportunity!

For an extensive look at franchising a book with complete information about that form of small business operation is The E-Myth Revisited by Michael E. Gerber.

In a small business opportunity situation one usually has to buy set of equipment and/or materials.  By doing this you are legally allowed to operate your small business under any name and in any way you choose.  Small business opportunities do not involve on-going royalties in the majority of cases and a buyer of a small business opportunity does not have to buy trademark rights.

Now the downsides of small business opportunities:

While the lack of a long-term commitment on the part of the buyer is a good thing on the one hand,  this is also a small business opportunities chief disadvantage.  There is no continuing relationship so beware of con artists.  Con artists will promise you instant success, give you inflated sales projections, etc.  Then they will take your money and run!

There has been increased regulation of this industry and the regulation has reduced the likelihood of the buyer getting ripped off.

Caution!  As with any business venture you need to conduct thorough due diligence before you invest any of your money.

Caveat Emptor!  Let the buyer beware!