A sub-category of e-commerce, but one big enough to consider on its own, eBay can serve as a location for your online store, and allow you to tap into its huge marketplace.
- Lower cost, lower risk than starting an independent e-commerce site as there are a great many tools to help eBay sellers get their businesses off the ground (e.g. PayPal to accept payment, a ready-made marketplace, online store templates, market research tools).
- Avoid having to build website traffic from scratch - eBay has a huge following worldwide, so you tap into a vast existing customer base.
- As with a brick-and-mortar store, shipping, inventory management, and credit card processing can all become headaches if you don’t do them right, particularly if you are a one-person show.
- Even with the guaranteed traffic that eBay offers, you will still face stiff competition from existing sellers who have already staked their claim and built up a strong feedback rating & customer base.
When you choose a franchise business model, you use someone else’s proven business concept as your entrepreneurial roadmap. Typically you pay an upfront fee, as well as a portion of revenues over time, to the franchisor.
- Lower risk than opening an independent brick-and-mortar business, because franchising provides you with a streamlined process to start your business, as well as support for marketing, business plan samples and estimates, assistance with real estate issues, and staff training.
- Provides you with a recognized, established brand to attract customers more quickly.
- To illustrate the lower risk inherent in a franchise, success rates for franchises are higher than non-franchise businesses.
- You’ve got to be able to pay the upfront franchise fees.
- Franchise guidelines can be strict and limit your ability to get creative with your business.
- Your financial upside is somewhat limited because you must pay your franchisor a cut of your profits.
Licensing your Product
If you’re working a day job and don’t want to start a business, you can still take advantage of your great product idea by licensing the product to another company that has the entire infrastructure in place to properly manufacture, market and sell the product .
- Lower risk because you can work on your product part-time.
- Lower cost because your main expense is production of a prototype and testing the product to make it attractive to potential licensees (rather than the cost involved in setting up an entire business to make, market and sell the product).
- Freedom to move on to the next big business idea - if you do successfully license your product idea, you could receive royalties long after you’ve stopped working on the product!
- Finding the right licensee takes tenacity and determination, and can take a long time – don’t quit your day job!
- Unless your product gets sold in a significant enough volume by the company to which you license it, the amount of royalties you receive can be low or non-existent.
- It’s extremely difficult to get through the door of big companies to start a negotiation. That’s partly why less than 3% of all patented ideas actually make it to market through licensing agreements.
Multi-level marketing (MLM) is a marketing and distribution structure. People at the top sell to those below them, who in turn sell to those below them. The higher up you are in this structure, the more money you can make. The challenge with MLM businesses is that people at the top are frequently the winners. The vast majority of people at the bottom end up spending money and time to get involved and end up losing whatever they put in.
If you're determined to choose a business with an MLM model, be sure to check with at least a handful of other people who've entered at your level (who you identify on your own, separate from people the MLM promoter refers you to), and see what they have to say. Find out their perspectives on how - and if it’s possible - to be successful.
- Typically, limited startup costs (a membership or initial inventory commitment).
- Viable home-based business.
- You are provided pre-packaged tools, products and sales techniques.
- Most people lose money in MLM activities, because they can’t sell the product as effectively as they thought they could.
- Credibility can become an issue, especially if you start treating friends like they’re customers.