How do you know when it's time to leave a job you entered with great hopes?
As a small business owner, you’re looking for investment opportunities—and you should be. By investing in new areas, you can grow and ensure profitability.
However, sometimes the business sector you invest in with great hopes might turn out to be a disappointment.
How do you know if the sector you’re investing in will bring you profits?
Should you stay in a sector you've invested in and continue your investment, or should you exit? How can you find the answers to these questions?
Before entering a new sector, here are some key points you should pay attention to in your investment analysis:
- Clearly define the target audience for the sector you wish to invest in.
- Make sure the target audience you identified is large enough, based on the assumption that only 40% of the total target audience will actually seek your services. Ensure the size of your target audience is sufficiently broad.
- Conduct a structured market research to identify what problems your target audience is seeking solutions for.
- Turn these solutions into products and strategically market them.
- Ensure your solutions have differentiating features compared to your competitors.
- Based on all of this, calculate the potential return and speed of your investment using the most realistic assumptions available.
- If your analysis shows that your investment will generate positive cash flow within 12-18 months, proceed with the investment. If not, reconsider and give yourself the option to not invest.
Let's say you’ve made your investment with the best information, resources, and wisdom available. However, things aren’t going as planned.
Even if everything looks good or at least acceptable based on the 7-step analysis shared above, once you invest, there will be unforeseen challenges that you hadn’t anticipated—obstacles that arise outside your area of influence. For example, you might invest in a franchise for a brand. On paper, everything in your 7-step investment analysis looks favorable, but once the investment is underway, you may experience disagreements with the master franchise or fail to get the necessary commercial support from the brand owner. Despite the brand having a significant target audience and products that are backed by market research, the lack of support from the franchisor could negatively affect your sales and disappoint you in ways you hadn’t imagined.
In situations like this, where external factors you couldn't have foreseen during your investment analysis impact your results, you should reassess the investment's return rate and speed using the new information available to you.
If your investment’s return rate has decreased and/or the speed has slowed down, instead of thinking, “let's wait a little longer, maybe it’ll improve,” you need to make a clear decision on whether to continue or exit. If your analysis is negative, if you see that you won't reach your targeted cash flow, or if your timeline for positive cash flow has extended beyond a year, your next step should be to exit the business sector before wasting more cash or increasing your risk of losing money.
To make investment analyses or to decide whether to exit a business sector you’ve invested in but are struggling to earn profits from, contact us for professional and healthy investment analysis support.
The way to walk away from your business with your pockets full lies in the right and quick decisions you make today.
We are working for your success, ensuring that you leave your business healthy and profitable.
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