Starting a home-based business is difficult. While working from home or over the Internet can seem like a good idea because it’s cheap and easy to get off the ground, very few new home-based businesses live long enough to celebrate their first birthday. Such failures are not usually because of a lack of effort, motivation or even a good idea; the profit margins are slim, the competition fierce and the marketing landscape complex. Unless you’re very experienced at doing this, you’ll probably need some expert help.
To address this fast-growing market, “business coaching” services have popped up around the globe. This niche is different from “career” or “executive” coaching services, another fast-growing industry that especially caters to people trying to reinvent their careers. (Some experts note that the term “business consultant” is a more appropriate descriptor for the services provided by these businesses.) These folks are usually people with an established track record in a particular business, who put that experience to work helping others develop their own businesses. There is a good deal of crossover between the services offered, and no small amount of confusion.
Many of these are solid, relying on time-tested ideas and good advice. But there are also a lot of scams and shams among the thousands of opportunities.
Last week, the Federal Trade Commission announced they’d taken down a complex web of companies that promised big results from its “personalized” business “coaching” services. A Utah-based company called “Guidance” is accused of hiring telemarketers — known as “sales floors” — to pitch its services to hopeful consumers. Once on the hook, hopeful entrepreneurs were charged thousands of dollars to help them start their own businesses.
One tactic was to use a videotaped testimonial to persuade potential customers. “I’ve grossed over $12,000 last month alone,” bragged the salesperson. “Everything gets better all the time. I’ve got a whole stack of orders over here to prove it. Right behind me, this laptop, I bought this to start my online business. Before that I never owned a computer, I never touched a computer.”
If a potential customer seemed interested, the marketers would encourage them to share their personal stories to get details they could use to convince them to invest. Many potential customers reported they shared details such as their financial status and personal hardships, which the seller then used to tailor the pitch. Interested customers were then routed to a “closer” who asked for a credit card number to pay the initial cost of the program at a cost of up to $10,000, and then were pitched additional products.
According to the FTC, most people who signed up didn’t get the promised benefits. “In fact,” noted FTC blogger Lesley Fair, “the FTC says that the overwhelming majority of people who bought the defendants’ business coaching services were never able to establish a business.”
When choosing someone to help start your new business, it’s easy to make the wrong choice and responding to a telemarketing pitch is steeped in risk. Writing in Entrepreneur magazine, Doug and Polly White gave some great advice. “Too many small-business people aren’t willing to ask for help when they need it,” they noted. “Entrepreneurs by nature tend to be independent risk-takers. They started the company and it is their baby. Obviously, they should know how to raise it. However, none of us knows everything about growing and managing a business.”
The Whites listed five things you should look for in a consultant: unimpeachable character, solid experience, creative problem-solving skills, outstanding communication skills and excellent interpersonal skills. To read their excellent and concise article on the topic, visit https://www.entrepreneur.com/article/238710.