Quamie LancelloMr. FeinbergEconomics 30 november 2017Business Investment In a person’s lifetime, the chances are they will receive many chances to invest in a business, but how do you know which ones are a good choice to invest in? Some of the things investors normally look at when choosing candidates to invest in are the operating costs of the business, the potential profits of the business, and the way the business responds to supply and demand changes. These components help investors to determine whether a business is a risky investment or a potentially profitable investment. By viewing all these components in my interview, I concluded that investing in Mr. Arius’s business 3SixtyDesign would be a good idea.
One thing an investor has to ask about is operating costs. Operational costs are the routine costs of running a business. While these vary based upon the type of business, many basic types of operational costs exist that a business must consider when budgeting. Some of these operational costs are fixed, meaning that each cost is identical from month to month, such as rent. However, other operational costs are variable and may go up or down from month to month, such as utilities.
I think this business had a good operating cost since it was able to maintain itself with the profits made, and not go into dept.There are 6 different supply shifters that can make goods increase, decrease, or stop the supply chain. For example, a supply shifter that can affect the supply chain is nature. Nature can create conditions that make it impossible to create and transport goods, for example hurricanes. Another example of a supply shifter is war . Wars and other armed conflicts can cut off a country’s access to the materials it needs to function. They create uncertainty about the future availability of commodities, and the risk associated with reduced supply can have a significant impact on prices and demand.
Technology is also a supply shifter. The most prominent and sought-after effect of technological advancement is the ability to increase production. This effectively lowers the equilibrium price point, unless demand for the product increases, or shifts outward left to right, to meet the increased production levels at the current price point. The main supply shifter of this company is the season. The company’s demand rises during the spring since people want nice houses during the summer.
Nature also takes part, since this is a architecture company, if a natural disaster hits people would need to fix their houses. Profit is a financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs and taxes needed to sustain the activity. Any profit that is gained goes to the business’s owners, who may or may not decide to spend it on the business. The Net profit of this business was 287,000 in the first year, and raised to 900,000 by the third year. This significant increase proves that this is a good business to invest in.
The business I choose to invest in has risks, however, this business also has many rewards. The risks of investing in this business still do not outweigh the rewards, however, some of the risks are having to use small scale advertising like social media . Another is not having enough workers to take on all projects, leaving gaps too big to cover.
Another risk was low demand during the winter seasons and also compete with other larger architecture and construction firms. On the other hand, the business was still able to keep most of the supply shifters in check. It was also able to handle all the operating costs and still make revenue, and the demand was good because the pricing was lower than competitors. I would invest in this business, although the business still lacks the ability to handle other criteria. It does have the ability to take on operating costs and still be able to make revenue, handle the majority of supply shifters, and be able to handle a valuable section of demand.