Personality, character, education and work experience must all be considered, but financial considerations are of the utmost importance during the pre-evaluation process.

Financial considerations involve two distinct areas: the investment required to start up the business, and the money the business produces as a function of both income for the owner and a return on the original investment.

Start-up capital can be obtained from any number of sources, including the following: your own current assets; loans (secured from existing collateral, personal loans or business loans); and assuming liabilities such as building and equipment leases, etc.

Your initial investment includes not only the dollars you are putting up but also the time, talent and effort you are investing. Normally, all of these aspects are in balance, and hence the lack of one would require a greater amount of one or more of the others to offset it.

For the purposes of this article, low-cost business opportunities are considered to be those that require a small initial cash investment. Therefore, to maximize the potential return on the opportunity, the owner must have an excess of one or all of the other three criteria mentioned above.

Before discussing low-cost business opportunities, the following areas of cost of any business should be taken into consideration when the potential owner is putting his or her business plan together:

1. Licensing or franchise fees.
2. Leasehold improvements and fixture costs.
3. Cost of inventory.
4. Management or professional fees, i.e., attorney, CPA, consulting services, etc.
5. Cost of equipment.
6. Working capital to cover expenses, including rent, utilities, payroll, etc., until the business reaches a positive cash flow situation.
7. Living expenses until the owner can take a draw or salary out of the business.

So how do you reduce the cash investment? Start by looking at investing in a licensing opportunity as opposed to a franchise. In most cases, there will be an immediate savings due to the elimination of the initial fee charged by most franchises.

BE WARY

However, be aware that no one offers a business opportunity, franchised or non-franchised, without having the potential to make some money on the deal. What looks like a no-fee business opportunity may end up costing more money due to payments of licensing fees or management fees, or the required purchase of expensive equipment.

In fact, the franchise route may sometimes represent the cheaper means of entry into a particular business. Franchisors most often make their profits from ongoing royalties paid by successful franchisees. The initial franchise fee is used to cover training and start-up costs.

Another area of heavy cost can be the requirement of expensive leasehold improvements and/or high rent. Most landlords require a minimum up-front payment of the first month's rent and a security deposit equal to another month's rent. One way to avoid those costs is to focus on home-based business opportunities. There are many such opportunities available in the area of business-to-business services.

These services can generally be operated from a home office or a small outside office. Either approach avoids expensive leasehold improvements and/or high rents, but often requires extra talent on the part of the potential business owner in the area of direct selling.

Business opportunities like these rely heavily on the salesmanship ability of the owner. Unlike in retailing, where your customers come to you, you must be prepared to go out and sell your product or service.

What if you do not feel qualified and talented in the area of sales and would prefer a business where the customers come to you? Then you should focus your search on a retail type of business.

Most such businesses generally require an up-front financial investment of $100,000 or more. By no stretch of the imagination could we call this low-cost! So what opportunities may exist in the category of retail at a lower cost?

Well, another major cost of most retail businesses is inventory expense. If you can minimize inventory, you can greatly reduce your overall investment.

One way to do that is through a retail license or franchise that allows you to sell merchandise on consignment. There are also business opportunities and franchises available that specialize in second-hand goods.

Professional fees, another cost of getting into business, can often be negotiated. Many attorneys, accountants, consultants and other business professionals are willing to accept a maximum figure on their fee per project.

WORKING CAPITAL

Working capital is a crucial element that too many would-be entrepreneurs overlook when putting together their business plan. Careful thought must always be given to the cost of purchasing the business, but equally careful thought must be given to how you are going to pay your operating expenses until the business becomes self-supporting.

The final area of cost is living expenses. You should plan to have a cash reserve equal to at least three months worth of living expenses and as much as a year, depending on the business, to be able to support yourself and your family until the business can start doing that. During that time you should focus on maintaining a strict family budget and avoiding all unnecessary expenses.

The eventual return on your investment is as important as the amount to be invested. Nobody goes into business to lose money, and there is no value to an investment in a business (even an investment of as little as $1,000), if there is not a good chance that you will achieve your long-term objectives.

After all the money, time, talent and effort you will surely put into your business, if you don't see a return on that investment, it has not been a wise decision.

There is a business opportunity out there for anyone who is truly committed to taking control of his or her own destiny. The cost of starting a new business can range from a couple hundred dollars up to millions, but there are certainly many good low-cost businesses available.

The important thing for the entrepreneur is to make the commitment to invest whatever you have. If you don't have much money, then you have to invest something else. So choose your business investment wisely -- based not just on the cost of the business, but on your own needs and abilities.