Top 5 Criteria for Choosing a Home Business

With so many opportunities out there, the potential home business entrepreneur can become quickly bewildered. What company? What product? What compensation plan? This article seeks to briefly outline five key considerations when seeking the ideal home business opportunity.

Before we get to that, a word of caution. Every genuine home business will require an investment of both time and money. It may be that only small amounts of both are required, but be wary of any company that offers rewards of thousands per month, with little or no effort on their part. If they really live up to their promise that “we do the selling for you,” why would they need you? If it’s that easy, why not do it themselves and save the commission payments that they will be paying you? Any genuine opportunity will require some investment from you, usually a minimum of a couple of hundred dollars, and 5-10 hours per week. Anything less than that is somewhat suspicious.

With that said, here are the top five criteria to use when assessing a home business opportunity.

First, what is the reputation of the company? How long has it been in existence? Do a Google search and see what comes up. Generally speaking, the longer a company has been in existence, the more reputable. But read the Google results. Are there reports from dissatisfied agents of the company? Are there stories of problems or unpaid commissions? Usually, if a company starts treating its agents badly, word will get out, and it won’t take you too long to discover.

Second, what is the need in the marketplace? Even if the company is wonderful, and reports are glowing, there simply has to be a need for the product. It’s hard to convince people to buy something they don’t think they need. Look for a company that has products that are in high demand. Either people already know that they need it, or they will become easily convinced.

Third, what is the quality of the product? Does it deliver as promised? If you are offering some miracle juice, or health-enhancing product, people are going to want to see an improvement in their condition. If they don’t, not only will you be viewed as a charlatan, but there is little chance of them re-ordering.

Fourth, what is the compensation plan? Does it reward you fairly for the effort you put in? If part of the business requires recruiting others, do you also benefit fairly from their sales? With some companies, their main profit is made from the amount of product you have to purchase to simply become a distributor. Many who fall for this, end up with a garage full of product, and no real end buyers. It’s a forced sale system that ends up benefiting the company, but very few agents. Also, the best compensation plans offer a chance to earn residual income i.e. you sell once, but continue getting paid as the buyer continues to use the product. Theoretically, with the best plans, you should be able to stop selling at some point, and still see residual incomes coming in.

Fifth, is the timing right? Is the company offering a product that is old news, or is the product on the cusp of massively increased sales? For example, the sale of Tazers went up dramatically after 9/11. It would have been a good time to be in the Tazer business, as people’s sense of personal security was threatened.

As a test case, we will now examine one company and see how it fares according to these criteria. Let’s look at PrePaid Legal, Inc.

The company: The company has been in existence for over 34 years and is listed on the New York Stock Exchange (symbol: PPD). Google searches reveal no significant negative information or reports from agents about the company.

The need: According to the American Bar Association, 52% of people currently have a legal situation that they are dealing with. Not all of them will be major – some may involve disputes with a neighbor, questions over a will, a traffic violation, a landlord/tenant issue, a divorce or bankruptcy, but in any case, more than half of the population has some issue like this. Also, the chances of being sued in this increasingly litigious society are ever greater. The other issue, which is a fast growing problem, is identity theft with estimates ranging from 10-25% of people at serious risk from, or already in, an identity theft situation. PrePaid Legal has products which address both these situations, so clearly there is a need.

The product: PrePaid Legal offers two main services. PrePaid Legal Plans, and Identity Theft protection plans. The PrePaid Legal plans cost from $16-$26 per month (depending on your state and needs) and the ID Shield costs $12.95 per month (or $9.95 if combined with a legal plan). Features of the legal plan include unlimited phone consultation with an attorney over legal matters; a letter or phone call for each individual legal issue; contract review; will preparation; defense for motor vehicle violations such as speeding or parking tickets; trial defense coverage (with some limitations); and IRS audit representation. If some legal costs arise which are not covered by the plan, the membership in PrePaid Legal allows the client an automatic 25% discount on those fees. The ID Shield monitors your credit report and other factors to make sure no one tries to gain credit or a loan unless it is proven to be you. A unique feature offered is ID Restoration where if your identity is stolen, the company will work to restore it (a process that usually takes an individual 600 hours and $1200 to put right.) This ID restoration is included in the coverage.

Compensation: PrePaid Legal offers a competitive compensation/commission structure, and the opportunity to advance to higher levels through either volume of sales or recruiting other ‘Associates’ on whose sales you would also earn commission. Speaking from personal experience, I have been with the company about 3 weeks, and have already earned over $1000 in commission, giving no more than 1-2 hours per day to the business. I have also recruited three Associates whose sales are also earning commission for me. The company pays Advance Commissions on your first 10 plans sold each month ($75-150 per plan sold, depending on the plan and your level) and from the 11th plan onwards, compensation is in the form of residual monthly commissions. For example, let us say that the sale of your 10th plan earned you $120 in commission. That would be paid to you up front. But the identical plan you sell as your 11th plan, would instead earn you $10 per month for the next year, with renewal commissions to follow after the first year. Let’s say, for example, that a person retains a plan for 5 years. You would earn approximately $600 in residual commissions from just this one sale. Such a compensation plan rewards both in the short- and long-term. Start-up costs to become an Associate are generally less than $200, and this amount is quickly recovered.

Timing: Currently less than 2% of households in the USA are covered by a PrePaid Legal Plan, though they are much more common in Europe. With the increase in people being sued, and identity theft, greater market penetration is just around the corner, and the products and their benefits become more widely known.

This brief case study shows that working with PrePaid Legal satisfies all five criteria, plus it also offers the intangible benefit of marketing a product which genuinely helps people, whether they are in the middle of a legal situation right now, or whether it simply offers peace of mind, as a form of insurance against expensive legal costs.