Part of a series that begins with the post Start Your Own Business?!

By far, the biggest problem I see befalling those who ecide to start their own business is… the thing they are looking at doing is not really a business. There are thousands upon thousands of legitimate business opportunities and franchises, along with an infinite number of great business ideas.
Unfortunately, there are even more schemes, scams, pyramids, systems, and just plain stupid ideas.
Here’s a few ways to tell the difference…

What’s the Product?
Business works likes this: you give someone something of value (a tangble object or a service), and they give you money (or, perhaps, something else of value).
Every legitimate business has that same model; it is the foundation of our economic system. The object could be sodas or supercomputers, the service could be massages or marketing. Doesn’t matter, really- but someone, somwhere has to be willing to pay for the good or service.
This is the primary problem with most MLMs… Helping someone set up their own business could be a great service, but that business has to do something else. You can not build an endless downline of businesses that never actually sell a product to an end user.
MLMs are not the only ones guilty of this, though… The real estate bubble, the dot-com crash, and the mortgage melt-down were fueled by the notion that there is a way to make money without ever selling something to someone.
So- if you’re looking at a franchise opportunity, make sure you understand what the product is, and what it takes to sell it. If you’ve come up with your own idea for a business, ask yourself-
Is there an actual product or service here?
What is being sold? What is being bought?
Who will be doing the selling? Who will be doing the buying?
“I’ll write a blog” is not a business idea. Neither is, “CEO income from home.”

Is there work involved?
There is no such thing as a free lunch. If you are looking into a franchise, or have come up with a brilliant idea on your own, be aware of any “no work” ideas.
Yes, it may be possible to leverage the work of others (work still being done), or to automate processes (work being done to set up those processes), or to build up a residual “automatic income” (work being done in the initial stages to build up the base), but work will always be done somewhere, by someone, at some point.
The best you can shoot for (and this is really what you should shoot for) is that the work will be fun and meaningful.
Second best is easy and over with quickly.

Could Anyone Do It?
If anyone could do it, then there isn’t much value in it. Remember, society attaches more value to the things fewer people are able to do.

Does it feel right?
Almost everyone I know who has gotten involved with something that turned out to be a bad idea knew pretty early on that it was a bad idea. Why don’t we follow those instincts?
Bonus on this one…
Your gut feeling here doesn’t have to be absolutely, objectively right. (Meaning, you don’t have to be right about it being a bad or good idea, a legit business or a scam), because-
If it feels wrong for you, it doesn’t matter how good an idea it actually is, you won’t be successful.

If you keep those points in mind, you’ll be able to sniff out the real opportunities from the Trojan Horses, which will put you ahead of 90% of so-called “entrepreneurs.”