The world of investing can seem intimidating-especially if you’re just starting out. But you don’t need to be an expert or a financial analyst to make smart investment decisions. In this blog, we’ll walk through five straightforward, practical ways to evaluate a company’s potential-no finance degree required.
1. UNDERSTAND THE BUSINESS MODEL
Start with a simple question:
What does this company do, and how does it make money?
If you can’t explain the business in one sentence, you might not be ready to invest in it just yet. Try to find out:
For example, if it’s an online course provider, understand the target audience, pricing model, and whether it has a competitive edge. These basics already give you a strong foundation.
What does this company do, and how does it make money?
If you can’t explain the business in one sentence, you might not be ready to invest in it just yet. Try to find out:
- What products or services does the company offer?
- Who are its main customers?
- How does it generate revenue (pricing, volume, subscriptions, advertising, etc.)?
For example, if it’s an online course provider, understand the target audience, pricing model, and whether it has a competitive edge. These basics already give you a strong foundation.
2. LOOK FOR SIGNS OF GROWTH
Is the company growing? You don’t need to dive into detailed reports to find out. Just check:
Tip: Use tools like Google News, social media, and review platforms like Trustpilot to get the bigger picture.
- Has revenue and customer count increased in recent years?
- Is the company expanding-new markets, products, or countries?
- What are people and the media saying about it?
Tip: Use tools like Google News, social media, and review platforms like Trustpilot to get the bigger picture.
3. EVALUATE COMPETITIVE ADVANTAGES
What makes this company stand out?
Strong companies have something that’s hard to copy, such as:
Ask yourself: Can competitors easily replace their product? If not, that’s a good sign.
Strong companies have something that’s hard to copy, such as:
- A powerful brand (like Apple)
- Technological superiority
- Economies of scale (like Amazon’s pricing)
- A loyal customer base
Ask yourself: Can competitors easily replace their product? If not, that’s a good sign.
4. KNOW THE PEOPLE IN CHARGE
Great leaders build great companies. Research who’s running the business:
LinkedIn, company websites, and interviews can help you get a sense of their background and vision.
- Who are the CEO and founders?
- What’s their track record?
- Do they inspire trust?
LinkedIn, company websites, and interviews can help you get a sense of their background and vision.
5. UNDERSTAND KEY FINANCIALS (WITHOUT BEING A FINANCE PRO)
Numbers don’t have to be scary. A few key metrics can give you a decent idea of a company’s financial health:
If reports are too complex, try platforms like Yahoo Finance or Simply Wall St for simplified overviews.
- Revenue – Is it growing year over year?
- Net profit – Are they not just making money, but managing costs well?
- Debt levels – Are they managing their liabilities wisely?
If reports are too complex, try platforms like Yahoo Finance or Simply Wall St for simplified overviews.
CONCLUSION
Investing isn’t just about numbers. It’s a mix of logic, trust, and good information. The more you understand a company’s mission, growth, advantages, and leadership, the more confident you’ll feel making sound investment choices.
HOW TO INVEST?
Open a free brokerage account with Unibank Invest and start investing. The Unibank Invest app provides access to the world’s largest stock exchanges, enabling you to purchase international investment instruments, such as stocks, bonds, and ETFs.
To open a brokerage account, fill out the online application or call +374 43 004 382.