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Due Diligence and How to Evaluate a Business or Money Making Opprotunity...ONE [Archive] - SOWPub Small Business Forums

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GordonJ
November 1, 2011, 11:53 AM
This may take a few posts. I want to share some tips and hints on two things...

How to Evaluate a Business or Money-Making Opportunity (Sub titled, How to Create a Product for an Existing Market) And

Due Diligence.

Due diligence is a term that gets tossed around a lot. Rather than give you a long winded Wiki definition, I'll give you mine:

Investigate...ask questions.

So here is what happened as I developed The Boz's Headlight Cleaning Manual.

I arrived in El Paso around noon on Friday, Oct. 7. The Boz drove to Carlsbad and got me settled into the guest house on his ranch.

Saturday morning we did some chores, which included wiping out a black widow spider master nest and killing a rattlesnake...Hello New Mexico. Then in the afternoon we went to town and I OBSERVED Boz at work at and started my notebook.

I ask a lot of questions, if you've ever spoken to me on the phone, you can give an AMEN to that, can't you?

When we came back in the evening, I began my online Due Diligence regarding the headlight cleaning business. I investigated.

First stop...Google.

I used the search terms; headlight cleaning, headlamp restoration and as many variations of those I could think of. I was looking for a Biz-Op, someselling me How to Make Money Cleaning Headlights sort of thing.

Here are a few of the sites I found.

http://www.myheadlight.com/business-opportunity/ He sells bulk kits, 10 at a time, and claims you could make between 200 and 300 dollars for about 3 hours work.

So, I quiz the Boz.

What do you think about offering kits? Or a complete Business in a Tool Box type thing?

He doesn't want to get bogged down with the shipping, handling, storage, buying crap, he just wanted to have a manual to sell because he wants to build a boat, sell his ranch and move to Alabama. OK then. That narrows down what I need to do.

But after visiting the site linked above, I continued my Due Diligence and visited:

http://www.pro-vu.com/make_money_restoring_headlights.html Pro-Vu will sell you a start-up kit for 100 bux. Hmmm. I see the typical supplier routine...you have to buy your additional supplies from this person.

This is a common tactic for licensed or distributorship opportunities, get them in at a low cost and make them dependent on you for supplies.

NOTE this. If you are investigating money-making ops, ask yourself the question, How do I get future supplies? IF you have to rely on a 3rd party, you've put yourself at their mercy for YOUR business. I shy away from these "franchise" type...even though they aren't a franchise, they often operate like one by becoming your supplier and ask for piece of the action. NO sez Gordon...NO!

So, then I thought about what franchises might be out there, my google search added franchise to the string:

http://drheadlightfranchise.com/thefranchiseinvestment.php

For 25 thousand bux, 10 in cash, I could buy a franchise and pay these guys a royalty.

What this teaches me is: DANG BOY, there is an opportunity to make some cash cleaning headlights.

So, who else is offering a headlight cleaning business?

http://crystalclearheadlights.net/franchise-opportunities.html

And I found 5 companies offering a FRANCHISE and several more offering kits and supplies so you could start your own business.

MY conclusion from this initial research was: YES, this is a viable business opportunity and it is heating up. It is part of the 13 billion dollar a year Auto Care aftermarket. There are franchises, biz-ops and another KEY

TV infomercials selling a product.

Walmart with auto centers now offer a quick headlight cleaning for 40 dollars in these parts, higher in the Northeast.

Then I called MY local detail shops, in Summit County Ohio and in Palm Beach County. The quotes I got were between 85 and 200 dollars so the first thing I did was to tell the Boz to RAISE YOUR PRICES. He was getting 20 bux for a car.

Now he gets 30 dollars with more sales and less resistance. It goes to perceived value. TV ads help with this.

OK. Then I watched all the videos on youtube about this. And I quizzed Boz about his method vs. those.

He told me he tried some of those, he tested everything on the planet to see if it worked...the crap on TV does nothing, must be a placebo effect for those testimonials...Boz has cleaned many a lens of a headlight AFTER they tried to clean it themselves with one of those As Seen On TV Products.

Now let me summarize my initial steps, to determine the viability of the idea before I go to the next post.

ASK questions, seek answers on Google.

Determine if a market exists for the service. Who is doing it? What do they charge?

Is someone already selling the OPPORTUNITY? GREAT if they are, it reinforces the need and gives you the opportunity to carve out a share of the niche.

From the product development standpoint, brainstorm and figure what you want to do, what you don't want...can't do, etc.

In this case, it is MY opinion the Boz is leaving a lot of money on the table, but he wants to build a boat and pretend he's Walter Cronkite sailing around the seas...ok.

If somone else does it, I'd suggest a KIT, ready to be mailed out, everything fits into an average size tool kit...perhaps with training, one day...and support in the form of a private forum...and marketing materials.

Easily a 1995.00 product with a lot of profit built in.

OK then, I'll move to the next post. The important thing is for you to reach your own conclusions, and not take anyone's word for anything...

Gordon Jay Alexander


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