Business Network

After reading a number of investment books including Rich Dad’s Guide to investing, I concluded that it is important to deal with all investments that if I’m going to buy the company. What I mean by that?

For example, if I were to buy shares of a company, then I would be one of many shareholders who own the company. Yes, I suppose that only a very small part of society. But that does not give me the excuse that I should treat my investment decision lightly because I very small investor. I have to deal with any investment decision as if I’m going to buy the company. If I’m not interested in buying the company, so why should be interested in the money invested in this company at all?

If I’m going to invest as if I’m going to buy the company, this type of business should I invest?
Before I could answer that question, I think I must first think like a business owner. When I think like a business owner, then you will understand the advantages and disadvantages of different types of businesses. So I’ll be able to identify and manage risks. This will help me better decide on investments.

As a business owner, I want to make sure my business profitable. So the first thing I would do to get out of the business is that I am interested to invest profitably. If it is not possible, then I do not want to invest.

The second concern is that now I can continue to be profitable in the long term.
To resolve this problem, I’ll need to consider several factors.

Firstly, the company has a competitive advantage over others in the same area? If the answer is yes, then follow the opportunities to make money long term is increased. Otherwise, follow the opportunities to make money long term is reductive.

Second, there is a barrier to entry for a particular sector? If the answer is yes, then there is a risk that little or no copycat businesses that come into play and steal profits. If the answer is no, chances are high of another imitator firms entering the market at stake and eat.

Thirdly, the need to recreate their own business often? If the answer is yes, then there exists a risk that it will expire competitive advantage if it does not. This is not the competitive advantage of companies permanently and easily lost. This means he could not continue to make profit when competitive advantage is lost.

Finally, the company must spend a lot of money to reinvent itself? If the answer is yes, then it would not be good business to invest in because there are a lot of waste. For example, will need to do business continues to spend money to buy new vehicles. The also need enough money to spend on maintenance and repair of transport vehicles. In other words, much of the profits used for self catering. And little left to build a cash reserve.