A business opportunity (or bizopp) involves sale or lease of any product, service, equipment, etc. that will enable the purchaser-licensee to begin a business. The licensor or seller of a business opportunity usually declares that it will secure or assist the buyer in finding a suitable location or provide the product to the purchaser-licensee. This is different from the sale of an independent business, in which there is no continued relationship required by the seller.
The use of a toll-free telephone number makes it difficult for customers to immediately identify the company's geographical location. Moreover, a company can own several telephone numbers. In the event of consumer complaints, this thwarts investigators from recognizing the connection between biz-ops listings in various newspapers.
A common type of business opportunity involves a company that sells bulk vending machines and promises to secure suitable locations for the machines. The purchaser is counting on the company to find locations where sales will be high enough to enable him to recoup his expenses and make a profit. Because of the many cases of fraudulent biz-ops in which companies have not followed through on their promises, or in which profits were much less than what the company led the investor to believe, governments closely regulate these operations.
In the United States, the Federal Trade Commission receives complaints and helps coordinate enforcement action against fraudulent business opportunities.
Makeup of a business opportunity
A business opportunity consists of four elements all of which are to be present within the same timeframe (window of opportunity) and most often within the same domain or geographical location, before it can be claimed as a business opportunity. These four elements are:
- A need
- The means to fulfill the need
- A method to apply the means to fulfill the need and;
- A method to benefit
With any one of the elements missing, a business opportunity may be developed, by finding the missing element. A desirable characteristic is for the combination of elements to be unique. The more control an institution (or individual) has over the elements, the better they are positioned to exploit the opportunity and become a niche market leader.
- What We Do, Federal Trade Commission, retrieved 11 July 2014
- Investor Bulletin: Business Opportunity Fraud, State of Connecticut Department of Banking, July 1995.
- Federal Business Opportunities Official federal government procurement opportunities allowing contractors to retrieve services posted by government buyers.
- Office of Women's Business Ownership The Office of Women's Business Ownership (OWBO)
- U.S. Small Business Administration