Quamie Lancello Mr. Feinberg Economics 30 november 2017 Business Investment
The chances of a person investing in a company in their lifetime are high. But, how do they know which companies to choose? Investors look at several factors when deciding which businesses to invest in. These include the operating costs and potential profits. They also consider how the business reacts with changes in demand and supply. These components can help investors decide whether a company is worth their time and if it is a good investment. After reviewing these components during my interview, it was clear that I would recommend investing in 3SixtyDesign. The regular running costs of a business are called operational cost. These costs can vary depending upon the business. Some operational costs, like rent, are fixed. They are the same each month. However, other operational costs, such as rent, can change from month to month and are therefore considered fixed. The profits it made allowed the business to continue operating without any dept.
Six different supply shifting factors can change the way goods are supplied. Nature, for example, is a supply-shifter that can impact the supply chain. Nature can create conditions which make it difficult to transport goods and create them. War is another example. Wars and other armed disputes can reduce the country’s access of the necessary materials. They raise uncertainty about the future availability and can impact prices and demand. Technology can also shift supply. Technology makes production easier. It is now cheaper to produce goods, which makes the supply more affordable. Season is the key supply driver for this company. The spring sees a rise in demand because people are looking for nice houses during summer. It is also influenced by nature, as this company is an architecture company. If a natural catastrophe strikes, customers would have to rebuild their homes. It is also affected by the product’s price.
Some products are cheaper than others, but in other cases they seem to have more demand. People want the product more because of their price. The expectations that a company has about a product can also help determine the demand. If a company is confident that their product will succeed, they will expect high sales. I chose a business that had high expectations of their products in particular seasons. This allowed them to be able to anticipate shifts in demand.
Profit is the net amount of money that a business generates from its activities. All profits are distributed to the business owners, who can then decide whether to spend the money on the business. This business made a net profit of 287,000 the first year. It grew to 900,000. The third year saw a significant increase in its net profit. This shows that this business is worth investing in.
Although the risks of investing in a business are real, there are many opportunities for rewards. Although the rewards of this investment are not greater than the risks, there are some risks associated with using small-scale advertising such as social media. Another risk is that not enough workers are available to handle all the projects. Low demand in winter and competition with larger construction and architecture firms is another risk. However, the business was able keep most supply shifters under control. It was also capable of handling all operating costs while still making revenue. Additionally, the demand for the product was low, which made it more attractive to customers. Despite the fact that the business is still not able to meet other criteria, I would consider investing in it. It is capable of taking on operating costs without losing revenue.
