One of the most successful investors, Warren Buffet, preferred to invest in business, not in stocks. With our Business Mastery Workshop coming up, and our weekly live stream questions being geared towards investment, this blog will hopefully give you some insight into which businesses are worth your investment.
Investment comes in many forms, whether it’s your time or your money. Now, sometimes it’s good to invest your resources into a company because of the good they do, like how WealthBuilders partnered wit Project C.U.R.E last year. But, if you’re looking to make a sound financial decision, you’ll need to consider these questions.
Is This Business Worth Your Investment?
What do their financials look like?
Obviously, this is one of the first things you should consider. You don’t want to invest in a company whose stocks or profits are down significantly unless you’re interested in turning it around. You also want to be careful of companies that are growing too fast to catch up. It’s good to invest in a company with high earnings, but it’s better to invest in a company with stable earnings.
Who are their competitors and how do they compare?
You always want to be looking for where this business fits into the market. I tell my business students to find a blue ocean, one that isn’t saturated where you can provide a unique value proposition. When you’re investing in a business, you want to look for the same thing. Every company will have competitors, but if they have a unique stake in the market, they might be a good investment.
What is the longevity?
New businesses crop up all the time, and some are even “over night successes”. Don’t just invest in a business if it’s hot right now, you need to asses whether the company can maintain the profit and market share. A good indication of this is leadership. Do they have goals and plans after their 15 minutes of fame are over, or are they just riding the wave?
If you’re investing in a smaller business, look at their plans for growth. Do they know how to scale their operation? Is what they’re offering something that can last in ever-changing markets? These are important questions to consider.
Go in Person
This is the same thing I encourage real estate investors to do. If you want to know if you should invest in a business, visit their offices. This will give you a feel for their pace and their workplace environment. Are the employees scrambling all over the place? That would raise a red flag for me, insinuating a lack of preparedness and organization. How are the employees treated? A company can have the best product or service and financial record, but if all their employees quit or go on strike, your investment goes down the drain. Personally, for me, I also just like to see employees treated decently. How people treat other people is a good indication of how they will treat you.
Did you invest in a business that went either really well or really poorly? Let me know in the comments below! I teach for an hour every week, completely free, on topics ranging from investments to personal growth. You just have to register here. As I mentioned before, we’re also hosting a workshop all about Business Mastery, so if you enjoyed this post, I encourage you to click here to learn more and purchase a ticket.