I said NO to a business opportunity today.
Initially, it looked like a great win-win: I could buy into a new Multi-Level Marketing (MLM) Company and participate in what the owner calls revenue sharing and help out my clients at the same time.
The idea is that creating an online presence for your business requires the services of a number of different organizations and individuals to make it happen: copy writers, web designers, graphic designers, coaches, consultants, etc, etc. This company saw that most business owners are overwhelmed with this process and often buy things that never actually accomplish what they need it to do – and they over pay for it as well. They figured they could bring all of those services under one roof and then create a MLM as their sales force. The distributors who buy into their program get to help out their fellow business owners AND make a few bucks at the same time.
If this sounds so good, why did I say no?
During the initial phone conversation, it sounded good. What I liked about it was that Marge (not her real name) had based her business on one of the same frustrations that I based mine on: that business owners are overwhelmed with the process of creating an online presence and need support beyond basic how-to. I also liked that her target market and mine were nearly identical.
Even though my initial reaction was positive, I didn’t immediately say yes.
I have a policy of thinking about business opportunities for at least 24 hours before saying yes.
When it comes to business decisions that involve business strategy or implementation of that strategy, I have a policy to wait 24 hours before saying yes or no. Like many such policies, this one is the result of getting burned by decisions that in hindsight were wrong for my business.
This policy made it easy for me to tell Marge that I needed time to think about her offer. It also made it difficult for her to argue with me and try to further sell me on her opportunity. And it gave me an opportunity to have several more interactions with Marge before making a commitment to join her organization.
Those interactions taught me a lot about Marge and her organization.
The Criteria I Used to Evaluate this Business Opportunity
Financial. To participate in Marge’s organization, there is a $397 buy-in, plus a monthly fee. She said if I signed up before my friend did, she would come in below me and I’d get credit for the purchase she was considering. In other words, if I pulled the trigger today, my $397 would allow me to earn a commission of $1500. That’s a net profit of $1103 for doing nothing. Short term, this sounds great: money in my pocket right out of the starting gate. But what about long term? I could use my participation in the organization to reach more people with my work, and continue to earn commissions as well.
Philosophy. My business is based on the idea that successful businesses utilize the right resource at the right time. You don’t need a fancy website with tons of bells and whistles; you need a website that serves the needs of your customer – that’s it. Marge charges $6000 for a business website, making my commission more than what most of my clients pay for their websites.
Trust. My initial conversation with Marge was enjoyable, but there was something about it that didn’t feel right. I didn’t think she was “out to take advantage of me” but I still didn’t trust her. On the phone she said, “take as much time as you need” to make your decision, but she followed up immediately with an email that said, in essence, “so, what’s your decision?” This incongruity between what she said and her actions is subtle and some would probably say its not a big deal, but it was enough for me to be cautious. It’s important to be able to trust your strategic partners to do what they say they are going to do; promote you when they say they will, pay you what they owe you, that kind of thing. How people handle one aspect of their business is how they handle all of it, so I do pay attention to the little things.
Curiosity. When I brought up my concerns to Marge, she reacted with “well, if you feel that way…” and dismissed them as me being negative. What I was looking for from her was curiosity, a simple, “well, tell me more about why you feel that way.” My concerns are valid and she could learn a lot about how to improve her company, or simply learn how to better position her company, by listening to what I had to say. Instead, she simply dismissed me.
Research. Although Marge told me she had spent a great deal of time researching this business before launching it, the way she answered my questions makes me doubt the thoroughness of that research. For instance, when I brought up the need for a contract, she didn’t have one to send me, but had to go to her lawyer to have one drawn up although she already had other products under development. A good strategic partner will have done their research and will have trustworthy advisors to help them in areas where they are not experts.
For this business opportunity, only the financial criteria were met, which is why I said no. You can make a bad business decision by saying yes to an opportunity that doesn’t make sense financially, and you can make a bad business decision by pursing a business opportunity based on good financials only. Make sure you consider other criteria in your decision-making process so that your final decision is the right one for your business.