There will be consequences where the entrepreneur does not take his time in selecting a good business opportunity. He may come up with a brilliant idea but unless this good idea is effected through a worthy investment, it will remain a good idea. Some of the effects of not having a well structured plan include;
1. Lack of will power
If the entrepreneur is not convinced that his idea will sell, then no one will make the idea sell. He is the inventor who can make the business opportunity take off into a strong business
2. Mismanagement
A sponsor of a business opportunity under a franchiser/franchisee arrangement may make huge losses if he doesn’t do a thorough ground work into the people he is entrusting his investments to
3. Lack of financial support.
A business opportunity without a business plan is bound t fail for lack of financial support. The entrepreneur will convince banks and other lenders of funds to support his business if he has a well prepared business plan. Otherwise, he stands to miss out on all the finances from, investors.
4. Exclusivity clauses.
The entrepreneur may be restricted to selling only the manufacturer’s merchandise. If this is the case and he deviates for any reason whatsoever, he runs the risk of the licensor canceling the agreement. If he does buy from other sources, it will be very hard to hide. Most parent companies will require books to be opened for examination at pre-designated periods of time.
Any irregularities will be spotted at these times. Most smart buyers of business opportunities will negotiate the point in the agreement stipulating sources of supply in case product quality is inconsistent.
5. Parent-company bankruptcy.
Another pitfall is the possibility of the parent company overextending itself and going bankrupt.
While this is not as serious in a business opportunity as it would be in a franchise, the entrepreneur still runs the risk of losing the business because his property contracts may have been financed through the parent company.
The entrepreneur should carefully investigate any business opportunity he is considering. He should get a list of operators from the parent company and call them. He should have a lawyer look over any agreement drafted by the parent company and make sure he receives a disclosure statement. He should then carefully evaluate the licensor. He should not be hurried to sign the deal. The idea is to ensure a responsible company backs the business opportunity
