5 Steps For Great Due Diligence That Could Make Or Break That Fortune
Due Diligence is a topic I love and could rant about for days on the importance of it when you are building your wealth. Without doing your Due Diligence, you can end up in a big fat hole and lose a lot of money.
When we first start building our wealth, it is easy to get caught up in the excitement of making your first investment, jumping in head over heels before you have done any of the background checks. Lack of Due Diligence is where people end up losing a lot of money, give up and start hating investing but had they done their Due Diligence they would have had the necessary information to make a better decision.
I am aware that due diligence can be very tedious and take the excitement out of an investment, but it could also make you a fortune when done correctly!!!! That is why it makes me so EXCITED to talk to you about it.
Here are 5 Steps you need to do to know if you are investing in a good thing!
1. Does It Meet Your Money Rules:
It must meet your money rules. If it does not meet your money rules, the investment is a no go that simple. If it does meet your money rules move on to the next step
2. Assess The Business Value:
When looking at a potential investment opportunity, you will need to sit down and look if the business adds value to the marketplace. You will need to ask questions like: Does this business solve a problem the marketplace has? Is the problem a difficult problem to solve and do the people this issue addresses in a lot of pain? And lastly, does the opportunity interest you? If all those are a yes, move on to the next step
3. Evaluate The Founders.
Do the leaders have what it takes to make it past Start Up stage. You will need to look at what quantitive skill set they have, the pedigree how many businesses have they made successful and their experience. You will need to look at things like qualitative skills such as are they coachable? Do they have a good temperament and are they open and transparent so you can trust them. If it’s a yes then move on to the next step.
4. Test Compatibility
This stage your now testing the compatibility of the company and its synergy in the marketplace. Does the corporation have a friendly and positive culture? Are they good to work for? Do they have a good relationship with their clients? If the answer is yes, proceed to the last step.
5. Quantify the Risk:
Here is where you evaluate the capital and financial risk. You look at operational requirements/execution risk, what stage of development the product is at and the tech quality. Once all these areas are evaluated to your requirements and if you are happy, GUESS WHAT!?!
You can proceed to put your money into it.
Yes, it may take some time BUT having said that it’s better to have an idea sides of what is going on and taking the time then it is to get over excited about it and lose a lot of money.