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How to find great businesses to invest in

Wednesday, 3 February 2016

It can be very risky investing your hard earned cash in a business but there are ways you can reduce the risk and increase the chance of finding the next big thing.

The very nature of investing means that you must be prepared to lose as well as gain money. However, carefully considering the qualities of a business and using your previous experience of the market sector can help you make an informed decision which should increase your chance of success.

Stick to what you know 
If you have a particular area of expertise you are more likely to be successful if you play to your strengths and invest in businesses within that area or similar. Your experience will allow you to make more informed, firm decisions and you may struggle to keep up in a new industry sector. Most importantly you have to remember that on your own you will not be able to keep track of everything going on across multiple industry sectors and therefore it is better to narrow your focus. You should analyse the target market of the business and evaluate whether it is big enough for the business to grow to a point where you will be able to receive a return for your investment.

The competitive edge
Finding out if a business has a unique selling point or a quality which will give them a competitive edge can really help your investment decision. For example, a patent protected product can put a business in a strong position and could indicate that the business has potential to grow.

There are many risks to investing in a business and you will want to protect your investment with a legal agreement. The specialist team at Rollingsons are experienced with negotiating the terms of investments and can ensure your investment is properly protected through business ownership. We do not give generic investment advice, but instead give legal advice on the rights and responsibilities or investors and investees. For more information or to arrange an initial consultation, please contact us on 0207 7611 4848.

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