How Many People Does Your Investment Deliver Value to?
The more people you touch with your investment dollars, the better! The capital that the Lord has given you to steward has an effect in the world. We spoke Friday about speculating in Financial Companies, but deeper questions that you might ask yourself when looking at any opportunity are… Who will your capital affect? How does it affect them? When your investment serves others, it is a great benefit in their life. The more people that you are benefiting, the better this investment will be at making the world a better place. This tends to both lower the risk and to increase the return of your proposed investment.
If the investment you are considering produces a product or service which really only serves one person, then it is very limited. It is only changing the life of this one person and so the impact on the world is small. It’s also a risky investment because if the person who is being served decides that he no longer likes your product or service, then your investment will go under. Finally, how much profit can you realistically make when you are only serving this one person?
The flip side to this is the business which serves millions and millions of people. When you think of the largest companies in America, you think of companies who are serving the masses. Companies like McDonald’s, Walmart, Exxon/Mobil, etc. These companies do not make a lot of money each time you do business with them, but because they serve so many people so very efficiently, their success is tremendous.
There are a couple ways of looking at this question when applying it to opportunities. If you are considering a private business, it will be easier for you to answer this question because you will see the scope that the business is attempting to achieve.
If you are investing into a large corporation by buying it’s stock, you will need to determine whether you feel that you are simply exchanging money for shares with the person whose stock you have bought. Or whether you view yourself as one of many partners who have brought their capital together to bring goods or services to the masses through this corporation. The way you answer this question will certainly affect the score you are able to give yourself when considering investing in public stock.
So analyze your new opportunity and ask yourself, “How many people will I be creating value for with this investment?” The more who benefit, the better you will score.
This is Part 15 in the series Investment Due Diligence. To use this as a growth tool to better understand your own calling, you might start by reading Part 1, Pt 2, Pt 3, Pt 4, Pt 5, Pt 6, Pt 7, Pt 8, Pt 9, Pt 10 , Pt 11, Pt 12, Pt 13, and Pt 14.