The fundamental principles to consider when investing to yield astronomical profit, Oberaifo Udoh – Business Management Consultant and Managing Director, Vines Realty.
The basic motivation for investing is to make money and get a return on investment (ROI). It is often advised that when investing in a business, one should invest like a robot, without emotions or sentiments. While investing is beneficial, it is preferable to invest sensibly. Your investments should be profitable and generate significantly higher returns. As a business consultant and Wealth Management Advisor at Oberaifo Udoh Consults, our consulting services are tailored to guide our clients on how to recognize profitable and safe investment opportunities.
There are three ‘S’ in investment to consider when forecasting profitable investment opportunities. They include:
1. Sellability:
This refers to the ease with which products and services can be sold. To determine the market potential of a firm, you should examine the product’s market size, level of demand, and competition.
2. Sustainability:
This relates to the expected lifespan of the investment. It determines if it is a short-term opportunity or one that can generate consistent profit and cash flow. The margin must be greater than the overhead costs to maintain sustainability, with a focus on cash flow.
3. Scalability:
A strong, scalable investment can raise sales and income while only having a minor impact on costs. This allows a company to expand while providing a decent return on investment. Take the Real Estate sector as an example; People argue that one should buy properties as a hedge against inflation, but when Real Estate investment is made at the wrong time and location, it will not yield its expected returns.
Recognising profitable investment opportunities lies in the corridors of the following:
A solid business plan
A great business plan shows investors that their money is safe and that the company has plans to make money. However, a business plan alone is not enough to persuade investors to invest. No investor will invest without knowing the risks and how the investment will grow and yield returns. While investing, the investment plans will have to answer specific questions: The intended market and its data analytics, Statistics/financial estimates, Sales channels, Marketing strategies and objectives, Appraisal of the competitiveness of the product/service, Projected timeline that investment will yield result, Potential roadblocks and strategies to overcome them. Every good investment opportunity should give clarity to these questions.
A detailed investment plan and organisational structure
An excellent investment opportunity must have a detailed plan for utilising investments. Investors should be able to vote on business decisions if they become partners or shareholders. This entails having a clear investment valuation – a way to back up requests for a specific amount of money. It also means drafting a stockholder's agreement that clearly outlines all investment rights and liabilities.
The credibility of the investment platform
A good investment opportunity has a credible platform that includes a verifiable webpage, registration information, and linkages to regulatory agencies like the Securities and Exchange Commission (SEC). It is also expedient that every good investment opportunity should have an online presence and portfolio where information and activities can be tracked and accounted for.
Ability to solve problems
Every investment is meant to meet certain needs. One of the sustainable investments one can make is providing solutions to the problem of the rising population. Providing solutions to people’s basic needs is a lifetime investment that can never stop yielding returns as long as people exist. It must also have targeted people with a sustainable plan.
Future purchasing power
Every good investment plan answers the basic needs of man, so it is necessary to consider who likes the solution the investment provides now and who does not; this is the key. Investing is a popularity contest, and buying something at its pinnacle of popularity to solve the present needs of a man is the riskiest thing you can do. Creating an investment that provides futuristic solutions to the needs of the rising population when no one likes it is the safest and most possibly profitable option. With time, its popularity and price will only increase.
Conclusively, investment is at the core of global finance, and how money gets into our little spaces is something that constantly draws our attention. But unfortunately, our eagerness to jump on those seemingly juicy prospects based on assumptions often leads to failed business expeditions.
This article teaches us the technicalities of factoring in a winning business venture.