Saving for Change

The Real Cost to “Be Your Own Boss”
by Emily Appel

Work at home! Be your own boss! Earn $5,000 a month!

Every day, you’re probably bombarded with offers like this – get rich quick schemes and loopholes in the system that claim to earn you big bucks. Most of them you easily recognize as too good to be true, but some may catch you off guard. When you’re out of a job, you’d give almost anything a try to get a few bucks in your pocket. But fraudulent offers won’t just NOT help you make money; they’ll actually leave you poorer in the process.

How do you evaluate opportunities that are offered to you? Simply put, it takes work – work to investigate, and then work to fulfill the promise. As any successful small business owner can tell you, it is possible to ‘be your own boss’ but it takes guts, sweat, and smarts to get your business to succeed. Anything less, and it could be a scam.

According to the Federal Trade Commission, there are signs that can warn you if an advertised business opportunity may be a scam:

• What type of business opportunity is being advertised? Fraud is most often associated with vending machine, display rack, pay phone, medical billing, work-at-home, and some Internet-related business opportunities.
• Where is the opportunity being advertised? Promotions for fraudulent business opportunities often appear in the classified pages of daily and weekly newspapers and magazines, and online. They also may be marketed in television infomercials and commercials.
• What are the ads offering you? Ads that offer large pay (say, $160,000 a year) in a short period (weeks or months) for little effort, or that trumpet an ideal work situation–the ability to set your own hours, be your own boss, and work from home—could be warning signs of something that’s too good to be true.

The good news is that there are powerful laws protecting your rights as a consumer. If the business opportunity costs more than $500, the FTC Franchise Rule requires business opportunity promoters to give you information – in writing – about what previous purchasers are earning (and if that represents what they’re all earning, most are earning, or only 1 or 2 are earning). If the investment to get in is less than $500, you can still ask the promoter for this information, and a reputable firm would be able to provide it. In addition, a trustworthy promoter should give you the contact information of some of these previous purchasers, for you to talk to about their experience with the promoter and in the business. This is all part of the research – the work – that you should put in before making any investment.

If you’ve already bought into a business opportunity and it’s turned out to be less than what it promised to be, there are agencies within the District government to help you and prevent others from falling into the same trap. These agencies are the DC Department of Consumer and Regulatory Affairs (202-442-4400) and the Office of the Attorney General (202-442-9828).

If you have a great idea and think you have what it takes to start your own business, there are places that offer help to get you get started. One of them is the Howard University Center for Urban Progress Business Development Division, located at the Reeves Center at 2000 14th St NW, Suite 330 North (to set up an appointment call 202-671-2828). There, you can meet one-on-one with an experienced business counselor to develop your business idea, write a business plan, and get connected to free legal or accounting help that you may need. The Business Development Division also works with existing businesses looking to expand or improve operations.

Don’t forget to get your taxes done for free!

The DC Earned Income Tax Credit (DC EITC) Campaign offers free tax preparation services at various sites around the city. Staffed by trained and IRS-certified volunteers, these sites can file your tax return electronically, meaning you’ll get your refund fast! Visit www.dceitc.org to find a site near you or call 202-419-1442 for more information about the Campaign.

This regular financial column is presented by Capital Area Asset Builders, www.caab.org, a nonprofit organization that helps people of all incomes to improve their financial management skills, increase their savings, and build wealth. Send your questions or ideas for future topics to saving@caab.org.