Wednesday, July 26, 2006

Question list & Investment Return

This is the list of questions in my mind:

  1. What's the composition of the revenue: sit-in, take-away / breakfast, lunch / coffee (drinks), lunch-box?
  2. Regarding the composition
  3. What's the allocation of food cost?
  4. From the seller's viewpoint, what's the demographic composition of the clients?
For sure a reform is necessary... why?

'cos I have been thinking about the idea of it. It's fun to have a shop ourselves but it could be a irrational investment decision. But what if the return could only be 2% p.a.?

So why don't I simply buy a stock with 6% dividends p.a.?
The reason is, we'd develop the business and make it more profitable. Actually based on the current info I have the return is already pretty high (with double-digit return).

However, if its that profitable, why does the seller want to sell it? Obviously its because of the 2 reasons we have mentioned earlier within our own discussion: its too tough to operate it and its way different from what was imagined by the seller.

Then, if the return is that good, why others don't rush in? Well, I'd say, doing business is to exchange the willingness of taking risk with money. No one could guarantee the return except ourselves. If we work hard and intelligently, we'd guarantee the return. Its the preparation for our future cash inflow - $$ flowing in when you are sleeping.

I could see no reason to step back as an investment.

Actually what'd make us step back is that we can't solve the problems we have mentioned early. Yet, the ability of identifying the problems is already a v good start.

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