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By James Martell
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.
Books
* "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.
Online Resources
* 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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