Buying a business? Better do your homework
By Dana Dratch • Bankrate.com

The secret to buying a successful business: Know what you're getting into before you and your money part ways.

As a potential business owner, you have to separate the out-and-out scams from the genuine businesses. Then further divide the latter pile into the good and not-so-good opportunities. Finally, of those remaining, which one truly suits your time and talents?

The two big questions going in the door are: Will you love doing it, and why are you paying someone else to get started?

Ask yourself, "Why can't I do this independently?" says Rieva Lesonsky, co-author of "Start Your Own Business" and senior vice president and editorial director at Entrepreneur magazine. "For the money that I am giving this company, am I getting back what I need?"

Starting a business, even part time, is hard work.

"If you're going to give that much of yourself, it needs to be something you enjoy doing," Lesonsky says.

With a good opportunity, you should know exactly what you're getting for your money. Beware of hazy details, vague promises of customer leads or tantalizing allusions to marketing "secrets" that will be given later -- possibly for additional money.

"If you have to give money upfront, the odds of you getting anything of value are pretty slim," says Norman Scarborough, co-author of "Effective Small Business Management" and professor of business and entrepreneurship at Presbyterian College in Clinton, S.C.

Evaluating the opportunities
When it comes to weighing your business opportunity options, "there are descending degrees of danger," Lesonsky says.

Evaluating the opportunities:

• Franchising. With franchising, "It's basically all laid out for you in the UFOC," says Lesonsky. The Uniform Franchise Offering Circular is a public document filed with the Federal Trade Commission for all franchises (not just the large ones) that has a lot of the financial information you'll want to see. The company is required to give you a copy if you're considering buying in, and you can purchase a copy on your own, as well. In addition, with franchises, it's easy to call existing units and talk to the owners, says Lesonsky. While the franchiser will furnish an owners list, it will likely supply names of people who will give glowing recommendations. So try a random sampling, too. • Business opportunities. These are a "little more difficult" to vet than franchises, says Lesonsky. Often the business is run in the owner's name, rather than a franchise name. So it can be tougher to locate owners. Unlike franchises, they are not regulated at the federal level, says Lesonsky. And while some states regulate business opportunities, "laws are enforced very laxly," she says. Some resources that can help: attorney general's office, the offices of consumer affairs (in your state and the business's home state) and the Better Business Bureau (in both your town and the business's home city). And don't forget to let your fingers do some Web walking. Search engines can turn up great information on business opportunities. • Work-at-home offers. "When it comes to work-at-home offers, those are rarely legit," says Lesonsky. Many overpromise and underdeliver, she says. If someone tells you you'll get rich quick, "walk the other way," Lesonsky says. Another tip-off to a rip-off: "When what you see goes against all the other information that's out there," she says. If your local housing market is taking a dip and someone is marketing the same real estate-based idea they were selling when the market was booming, that's not a good sign, Lesonsky says.