OTHER NEWS
If it sounds too good to be true...tips to separate fact from fiction

By Kelly Weaver
Small Business Development Center Regional Director

We've all heard the old axiom, "If it sounds too good to be true, it probably is." Yet, people looking for a quick and easy way to accomplish things are sometimes (mis)led down the proverbial road to riches. When the economy is troubled, it seems more people face circumstances that may push them into these traps. Often, they are the ones who can least afford to be swindled. Here are a few tips to help you separate fact from fiction.

Grant money to start a business
For the most part, forget about it. There are not ongoing programs that routinely offer grants directly to an entrepreneur. Generally, the grants are made to agencies that can help you start a business such as the Small Business Development Center or a local business loan fund. Some programs exist for disabled individuals, displaced workers, or tribal members, but they are very specific and limited in scope. Hype about grants for businesses has been raised due to the Recovery Act programs but, again, there is no merit to it.

Some fees for small business financing program have been temporarily waived, but that is not cash-in-your-pocket grant funds. If you really want to find out for yourself, don't waste your money on the book advertised on TV or paying a grant writer/consultant an upfront fee. Check out these sources for free: The South Dakota Grants Directory is online through the State Library (www.sdstatelibrary.com/grants), the Federal grant information site (www.grants.gov) orlook for the Catalog of Federal Domestic Assistance or Government Assistance Almanac in the reference section of your local library.

As for a woman-owned, veteran-owned or minority-owned business, there are no special grants for these groups wanting to start a business. The biggest benefit for these types of companies is the ability to get preferences when selling to the government. The government has goals and sometimes mandates agencies to buy a certain amount of products or services from small businesses and companies owned by women and minorities. If you have a product or service you could sell to the government, you may want to look further at this opportunity (http://www.ccr.gov).

Easy money and work-from-home schemes
You see them in the classifieds, on TV or in your mailbox: offers for you to make great money by doing relatively little work. How can you distinguish the real opportunities from the scams? One of the best sources of information is the Federal Trade Commission, which enforces trade and franchise laws and has prosecuted many offenders in this arena. Their website (www.ftc.gov) has some great descriptions of the typical scams (see Consumer Protection-Business Informatin-Franchise & Business Opportunities). Fraud is more common in certain sectors such as vending machine and display rack operations, pay phones, medical billing services, envelope stuffing, assembly or craft work, and Internet-related business opportunities.

The following are some steps to take to protect yourself when considering any business opportunity: Get all earnings claims in writing. Interview references provided by the promoter, preferably in person to avoid "shills" — people hired to give favorable testimonials. Study the business opportunity's franchise disclosure document. It includes information about the company, including whether it has faced any lawsuits alleging fraud. Call the attorney general's office, Better Business Bureau, and/or Chamber in the area in which the promoter is based and where you live about a history of unresolved complaints. If the opportunity involves selling products from a well-known company, call that company and find out if the business promoter is affiliated with the company. Consult an attorney, accountant or other business advisor before you put any money down or sign any papers.

Take the time to complete each of these steps. If it's a legitimate business opportunity, it'll still be around when you're ready to decide.

Kelly Weaver is the Regional Director of the Small Business Development Center, which offers free, confidential business consulting to start up and existing businesses. The local SBDC contact information is (605) 367-5757.