Many people have wrong concept about business. These people think that it's a completely risk instead of a job. We should avoid these noises because businesses is the only way to make you financially free.
We can see different successful business men, they struggled in their lives, work hard and become financially free. We should take inspiration from these people. Selection of business is quite difficult task. Today, I will share with you some rules to select business.
To start a new business is time taking and extreme effort is needed so buying a business is good decision. If you spend your time and effort there is no guarantee your business will be successful. The recent example of buying existing business is "Elon Musk buy the Twitter because he knows running the existing business is easy instead of a new start up. If you decide to invest in stocks select the company which is existing in market from years.
Most of people think that they have to invest in complicated business to get a good profit like Artificial intelligence and IOT. According to me simple business earn biggest profit instead of complicated ones. For example Eicher motors this business is completely simple, they sell bullet bikes the other example is Jockey company they sell garments.
You can search on these companies they have pretty good returns as compared to other companies. A famous quote os Warren Buffet is "Change is the enemy of the investor". Invest in that business which is demanded high. First study the area which product is mostly sell in your area. Then invest in it. The company which have high rate of change they don't have any guarantees. Trends changed day by day. Select the stable business.
A great saying of Warren Buffet is "fearful when others are greedy and greedy when others are fearful". When people investing in greediness then you should be careful and when people selling their shares in the fear of losses then you should be greedy and buy that shares in cheap prices.
Recently in Covid market was extremely dropped if you invested in market at that time you would be get high profit now. You should concentrate on the company's evaluation. When companies are in disaster we can buy a valuable company at cheap prices. People sell their share dua to market crash with fear this will help us to buy that shares at very low price.
Only buy those business which is fundamentally strong according to you. Always remember, the returns of your investment and business is completely dependent on that how much discount you get on buying shares not on selling shares.
Example 1: Suppose you buy a stock at the cost of 10,000 and after one years the price goes to 15,000 so you will sell that stock and get profit of 5,000.
Likewise,Example 2: if you buy a suit in 15,000 in Islamabad and same suit price in Faisalabad is 10,000 then you would buy the suit from Faisalabad. You can get idea from this, those products which are cheaper in other cities you can buy these products from other cities and sell it to your city.
This is called arbitrage. It has two types:
a) Arbitrage in time
b) Arbitrage in place
First example is called arbitrage in time because the stock price vary according to time. The second example is arbitrage in place because the price varied according to different cities.
Invest in those businesses which has strong MOAT. Moat means ate around the Fort. This ate protect your fort from your enemy. Moat in business tern may have different type like brand image, patent or distribution network.
You should know the important factor of your business which you are investing in. Which aspect is strong about your business which will defeat your competitors. For example when we go to shop to buy a bottle of water we always say "Nestle" this is called brand image. Invest in that business which have strong fundamental factor.
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