What Makes A Business Worth Investing In?
By Craig Rowe
cdrinteractive[at]gmail.com
Advertisements:
You have always been interested in investing in a business, however
you always hold back because you are scared of making a bad choice
and losing your investment. However, there are some ways to evaluate
businesses to reduce the risk you are taking when you invest. Of
course, risk is never eliminated, but when you properly evaluate
what makes a business worth investing in then you will more than
likely have your answer whether the company will be a success or
failure before you invest your dollars. The following tips will
help you make the right investment.
Investment Tip #1 Management
When deciding whether a business is worth investing in or not you
need to evaluate the management because a business really is only
as successful as its management. Because of this you want to evaluate
if the management is knowledgeable, rational, and able to make the
right choices to make the company money and prevent it from losing
money. Of course, this is an easy question although the answer is
a little more difficult.
Investment Tip #2 Business Plan
A business plan that is well laid out and shows positives, negatives,
and how the company and management will handle problems within the
business is very important. A good business plan shows that management
knows where the company is, where it wants to go, and what it needs
to do to get there. Be sure you take a look at a company’s business
plan before you invest.
Investment Tip #3 Return on Investment
The ROE, or return on investment, is also crucial when you are considering
making an investment in a company. Of course, the ratio of equity
to debt can be confusing, but if you evaluate the ROE and other
economic factors you should be able to tell if the company is bringing
money in or losing it.
Investment Tip #4 Room for Growth
Making sure the business has room for growth in its market is also
important. A company that has little competition is preferable,
but a company with a moderate amount of competition and a plan to
be number one is ok as well. Just do your research.
When you are interested in investing in a company you need to take
your time and evaluate the company, look over financial statements,
talk to management and have all of your questions answered to your
satisfaction. After all, it is your money and you aren’t going to
give your money to just any company. So, be sure and confident in
the company and have that backed up with proof and you will decrease
your risk investing in a company.
About the Author: SearchArticles.Net includes thousands
of articles including tips and information on business, finance
and investing. For more business, finance and investing articles,
visit http://www.searcharticles.net/business-finance.cfm
Source: www.isnare.com
Published - November 2005
|
