5 Scams Small Business Owners Should Avoid

Work at home scams aren’t just for the retired couple looking to supplement their income. Small business owners still in the growing phase of their business or looking for ways to earn extra income can become easy prey too. There are numerous scams that could entice a small business owner. Here are a few to avoid.

Affiliate Scam

Affiliate marketing isn’t a scam. Companies like Amazon.com have done it for years, but there are two problems. First, it takes a lot of time and effort to make money as a legitimate affiliate marketer. Second—the scam part—if you enter into an agreement with a person or company you do not know, there’s no guarantee they’ll pay you the commission. If they ask you to pay any type of fee, it’s almost certainly not legitimate.

Assembling Scam

You have an employee who needs more to do so you search the Internet and come across a “company” that is looking for people to assemble products at home. All you have to do is buy the parts at a discount and sell the assembled product back to the company for a profit.

If you hear from them at all, they’ll tell you that your work was unacceptable and they won’t pay you for the products.

Envelope Stuffing

It’s been around for a long time but still claims a large number of victims. The company doesn’t want to pay its employees to prepare mailings and it doesn’t want to pay a high cost mailing service so it found you. Once again, all you have to do is buy all of the materials at a nominal cost. Instead of getting the supplies you need, you get a how-to book on cheating people you know out of their money too.

Data Entry

And its big brother, medical billing. Companies generate massive amounts of data, making data entry a never-ending task for many. Some companies legitimately hire freelancers to help with the effort, but the scammers require you to pay for the training or supplies first. Legitimate jobs don’t ask for payment up front. Instead, they pay you!

Pyramid Schemes

As evidenced by the Herbalife story playing out in the United States, there’s a fine line between legitimate business practices and a pyramid scheme. These schemes present as an opportunity to sell a product, much like an affiliate program. Soon, you learn that even more important is the acquisition of new sellers. You, then, get a cut of every seller’s profit that you recruit.

Whether it’s illegal or not isn’t always clear-cut but as a small-business owner, you may lose credibility by taking part in these types of ventures. Follow this basic rule: If you’re only selling a product for income, it’s not a pyramid scheme. If you’re recruiting new sales associates, it might be. As a small business owner, it’s best to steer clear.

Finally

The best way to avoid being a victim is to apply a few common sense rules:

  • If they want you to pay them, it’s not a job. Legitimate employers pay YOU.
  • If it has any element of getting rich quickly, it’s likely a scam.
  • If the system is overly complicated, like somebody sending you money, you depositing the check and sending a portion to somebody else, it’s almost always a scam.
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