Continuation from Monday………Quick Note: Be careful of what you read in various trade publications or magazines. A lot of the time authors do a fairly poor job putting that information together. Plus, they might not be as well versed in the topic as they should be or they might be more concerned about hyping up certain products. Instead, once you have identified a product or a service, go to the root of the matter. Various public companies in question. Read and study their annual and quarterly reports. Look at the actual sales numbers to see what is selling very well and what is not. Which product lines are growing and which product lines are dying.
To find this information, apply the following steps:
Step #1: Identify which company sells the product or service in question.
Typically, such information is freely available on the packing itself. Still, if you are unable to find this information, please Google “who makes/offers/manufactures (product name)”
Step #2: Find out if the company in question is a public company.
You can easily do so by going to either to http://finance.yahoo.com/ -OR- https://www.google.com/finance and typing in the name of the company in the search box located at the top.
If nothing comes back, it means that the company you are trying to research is either a private company or it is a subsidiary of a larger corporation. If it is a subsidiary, find out what company owns it and repeat Step #2 for the parent company.
If the company is public, you are in business. You can access their quarterly and annual reports in one of two ways.
- First, search for and visit their website. Typically, they will have an Investor Relations section link readily available on their home page. Visit this section and look for recent presentations and annual reports. This would be your best source of information.
- If you unable to find the Investor Relations section go to http://www.sec.gov/ and type in the company’s name into an upper right hand corner of the website. All public companies are required to file their reports and you will find it there. For company’s annual report, select the most recent 10-K link available.
Complete the process by studying all available information as it pertains to the industry and/or products or services of your choice.
Step #3: If the company in question is not a public company.
We have to start with the presumption that we will not be able to gather as much insider information as we would have if it was a public company. Yet, it is not all bad news and there are a number of ways around the problem. Here is what you can do.
- Find a competitor or a company within the same industry that is a public company. Study their financial reports instead.
- Read consumer review and feedback on various portals such as Amazon.com in order to ascertain both the popularity of the product and its future potential.
- Visit a retailer carrying the product/service and talk to a salesperson. Ascertain their point of view and ask what their existing customers are saying about the product.
- Call the company and pretend to be a large buyer. Determine if they have ready to ship inventory or if the demand for the product is so high that you will have to wait. Try to gather as much insider information as possible. While this step is somewhat unethical it will allow you to confirm the information gathered from other sources.
- Seek out trade publications and other media that have recently reported on the company.
After doing all of the above you should come fairly close to having a complete analysis of the company and its products. While you won’t have the exact sales numbers (as you would if you were researching a public company), this information should supply you with enough data to complete your analysis.
EXERCISE #4:
- Pick a product or a service you are interested in.
- Indentify the company who manufactures the product or offers the service.
- Follow the steps above to research and analyze the company/product/service in question.
- Come up with at least 5 “brilliant or crazy” business ideas based on your research.
To Be Continued Tomorrow…..(Why Am I Seeing This On A Financial Site?)
