have now made twenty investments in small companies or start-ups. The aspect that the successful enterprises seem to share is that they have management teams with real expertise in the field they are operating in. There are a few golden rules I use when it comes to investing. And these rules have been learnt at great cost as they inevitably arose from analyzing a failure. One of these rules is the use of Industry experts.I have a good network that spans many fields. Before I am about to invest in an area, as a sanity check, I will ask someone with relevant expertise in a field about that business area. This has proved to be a very useful tactic. Example 1 - I was impressed by a business which was in the area of film production. The management team was very strong and had been at the sharp end of production for a number of years. The business seemed to be worth backing. As I knew nothing of the business area, I asked a good friend of mine who is an expert in this field to give me his opinion; it was revealing. He was able to show me why this model simply could not return a profit. Needless to say, I declined to invest. This ten-minute conversation saved me a lot of money and it is worth getting this sanity check. Example 2 - I was about to make an investment in a company that supplies vegetarian condoms to the NHS and other sexual health products. I was impressed with the management team and the business plan. Sadly, I did not have any expertise in this particular area, nor did any of my friends (we live a sheltered life!) As part of my research, I then went to a sexual health clinic as a ‘patient’ to understand how I would be offered the company products. This was a fantastic way to spend 30 minutes. Not only did I understand the business model straight away, but I was also able to come up with some small suggestions on how the business could increase its presence. I did invest in the business which is listed on PLUS. www.sexualhealthgroup.com and I are very happy with my decision to invest. (note: THIS IS NOT AN INVITATION TO INVEST IN THIS BUSINESS) Example 3 - As a final illustration, I invested in a café chain, (Amano) a couple of years ago. The USP of the business was that it was open all day and had a different offering and setting throughout the day. Not having the expertise in this area, my due diligence included a wonderful day and a half of sitting in the café reading books all day to see this offering first hand and to see it on a Saturday. I was convinced by the end of this that it was a good investment to make – time will tell if I am right but I am very happy so far. So my point to investors is to always seek out expertise and if you do not have access to it – do your own fieldwork Field work as I have demonstrated above is great fun!!!
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aboutFrom business planning to business management, success in the world of business takes time, though, and consideration. A business information blog is a place where all three elements are combined to give anyone interested an outlet for sharing and discussing their views, as well as providing and receiving knowledge on the best practices for business success. Archives
December 2020
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