There’s a lot of mystery surrounding investing in a company, but it’s nowhere near as mysterious as some people think.
It’s not just a case of looking at a business, figuring out whether they have a good product/service or not, and then parting with your cash. There’s a method. While it will always be a gamble, there are some significant things you can look for in a company that will tell you whether it’s a good investment or not. You just have to know where to look for them. Below, we guide you through four things you should be putting under the microscope to look at.
The CEO or Managing Director
What better way to determine whether the ship will sink or swim than by looking at the captain? It’s not a matter of liking or disliking them; it’s about looking at their track record. What companies have their worked at before, and did they succeed or fail? A blip on a record shouldn’t be an instant cause for concern, however. Many of the world’s best CEOs have blips on their record, and in many cases, they weren’t even responsible for their failures. Dig deep, and make up your own mind.
What is the Philosophy?
How does the company you’re considering investing your cash into make its money? Be warned: this isn’t as simple to answer as you might think. For example, Apple doesn’t make all their cash by making electronics. They have a philosophy that aligns with their core duties that help them maximise their return. Before investing, establish what the company’s business model is. If you can understand and agree that it’s an intelligent way to make money, then you’ll have a company you can believe in support with your money.
Are They Respectable?
Never underestimate just how important respect is in the business world. It affects customers, investors, and a company’s ability to hire and keep their staff. Even the world’s biggest businesses can suffer if they have a shocking company culture or have don’t have things like an employer’s health and safety policy guide in place. Just take a look at Uber: their stock value fell when all those revelations about how they treated staff were revealed, and they, on the face of it, were a runaway business success. Make sure you’re looking under the hood to ensure the ins and outs of the organisation are respectable.
Their Growth
You have hard data available to you that’ll tell you whether a company is a good investment opportunity or not. Just take a look at the last few year’s: have their grown in that time. If so (and if it’s a no: do not invest), how much year on year growth have they seen? As well as looking at their past performance, take a look at their market and see how much potential growth they have. If the sky’s the limit, so might be your returns!
There’s no such thing as a guaranteed banker, but by knowing when to look for, you can ensure you don’t make foolish mistakes!
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