The opportunity to make money online is undeniable. Statistics Canada's The Daily reported on April 24, 2008, a double-digit increase in online sales in 2007, the sixth consecutive increase in as many years. At the time, consumers were buying online in record numbers.
Wholesalers, retailers and other e-commerce professionals are still thriving, despite the economic crisis. The U.S. Department of Commerce reported August 17, 2009, that although second quarter 2009 online retail sales are down 4.4% over the same period in 2008, quarterly online sales increased 2.2% over the first quarter of 2009. Total retail sales are still down 10.8% and e-commerce is recovering faster than offline sales.
How to Determine Whether an Opportunity is a Legitimate Internet Business
Online business owners face fraud and online scams throughout the life of their business, from research and development, to processing daily financial transactions. Which online business opportunities offer the best rewards and least risk?
E-commerce entrepreneurs must thoroughly research each opportunity, whether launching a new business, entering a partnership, or buying an established business.
Perform background checks on existing business opportunities by contacting their local Better Business Bureau, reviewing provided financial information and business plans, visiting consumer complaint services, and monitoring company news, at a minimum.
Common Traits of the Best Online Business Opportunities
Business planning is a critical first step in evaluating the potential of an online business. A good business plan allows the entrepreneur to anticipate problem issues, forecast sales, and estimate a return on investment. For more information on online business planning, see How to Write an Online Business Plan.
For established business opportunities, look for:
- A positive reputation among customers and other franchisees, distributors and agents.
- Open, forthcoming information on the financial and legal obligations of both parties.
- A clear, sensible fee structure; if upfront fees are required to buy into the opportunity, what is the return?
- Information on the founders or business owners, to ensure they are legitimate businesspeople.
- Avoid "opportunities" such as work at home typing jobs, which usually sell useless, publicly available information and leave the entrepreneur with nothing to show for their investment.
When starting a new online business:
- Determine the amount of financing needed to launch and operate the business for at least six months.
- Have plans for growth and an exit strategy.
- Research and carefully choose each company involved in providing web hosting, payment processing, shipping, and other B2B services.
Protect a Legitimate Internet Business from Online Scam Artists and Fraudulent Credit Purchases
Customer trust and safety is an important issue for all online businesses. Ensure website and payment processing security by using a properly integrated shopping cart and payment gateway.
Additional measures, such as customer address verification, can help reduce fraudulent purchases and protect the e-commerce entrepreneur. For more information on secure payment processing, see Internet Payment Gateways.
Join the Conversation