May 7, 2010Home Business Expose
Home Business Expose
The Dollar Stretcher
by Gary Foreman
Dear Dollar Stretcher,
What can you tell me about a deal of making money on the internet just byhaving your own website and giving free items away for shipping. Thereseems to be a guarantee to get your money back if you are not satisfied orcan't make money on it.
I don't mean to ruin Peggy's dream, but this offer looks like a scam. Butit's better to be disappointed now rather than disappointed and poorerlater. Let's look a little closer at what's being proposed.
Peggy will need a website. That's not terribly expensive, but it does costmoney. Unless Peggy knows hypertext coding she'll need to hire someone tocreate the pages for her or, more likely, use templates that the companyhas set up. Using templates is fine, but it will mean that her site won'tbe able to include anything unique to attract visitors.
Keeping even a very small website online will cost Peggy $10 or more eachmonth. And she'll probably need to authorize a monthly charge to her creditcard.
Once Peggy has a website she'll need to get people to visit it. Having freestuff won't be enough. Just for fun we put "free" into one of the largesearch sites. It returned over 183 million sites! Even paying foradvertising isn't likely to separate Peggy from the competition.Realistically she's going to struggle to attract visitors to her site.
But suppose that she does get people to visit. And they do agree to payshipping and handling for the 'free' stuff. How much can the company reallyafford to pay Peggy to give away merchandise?
If the offers are good they don't need her. Word-of-mouth will bring peopleto the company website without her help.
More likely, the offers aren't really that good. A few years back marketersstarted offering all kinds of items for free on the internet. The catch wasthat many of them had shipping and handling charges that were more than theitem cost locally.
So maybe Peggy doesn't do so well and decides to get her money back. A'money-back guarantee' is only as good as the company offering it. Millionsof people have tried to get their money back only to find out that theguarantee was no better than the original offer.
We'd hope that the company would stop charging her credit card if Peggyasked them to. But it's not unusual for charges to continue for months evenafter a 'stop' notice has been sent.
Why am I so sure that this offer is a scam? There are a couple of reasons.First, the company doesn't appear to want any talents or skills that Peggyhas. Only her checkbook. If it's a job that 'anyone can do' then it won'tpay very well. And, you won't have to invest your money to get the job.
Second, the business plan that Peggy is supposed to execute doesn't makesense. How is she going to compete with everyone else to get visitors toher free stuff page? What makes her offer unique and worthwhile?
Finally, the company's business plan does make perfect sense. Buy oneserver and connect it to the internet. Set up hundreds of people like Peggywith websites. Charge them each month for web hosting services. Even ifPeggy doesn't make a dime the company will make plenty.
Peggy can check out the proposal by doing a little homework. First, findout how much the website will cost to set up and maintain. Ask about anyother start-up expenses that she'll be asked to cover.
Then look at the free items that are being offered along with the SHcharges. How do they compare to shopping at your local discount center?
Will people want them?
Then find out how much she'd make on each free item that's 'given away'. Dothe math to figure out how many items will need to be given away each monthto cover her expenses.
Finally, how many visitors would she need to the website to give awayenough items to be profitable? And what will it cost her to attract thatmany people each month?
Only if Peggy can work through all of this and determine that the businesslooks reasonable should she go forward with it. Many home businesses arestarted on a shoestring. But it's going to be hard getting to profitabilitywhen you have an initial investment and an ongoing monthly expense.
is a former Certified Financial Planner who currently editsThe Dollar Stretcher website You'll find hundreds ofarticles to help stretch you day and your dollar.Copyright 2002, The Dollar Stretcher Inc. All rights reserved.
Posted by Staff at 1:30 AM