I published a video the other day about trying to save entrepreneurs from themselves.
A commenter made the valid point that you should take the time to stake out the business you may be thinking about taking it on, if staking it out is possible. For example, a retail business.
This reminded me of when I started in business first in the 1980s and my involvement in the retail game.
Back then, if you knew your stuff you could make a good estimate of the turnover of a newsagents or convenience store. You would look closely at certain data such as the number of Brennans bread boards that were delivered to the shop, the pile of Irish Independents and Irish Times in the shop for sale each day, how much milk was delivered on a daily basis, and so on.
But you needed to know how to interpret the data and get under the hood of the business.
Because I bought a shop in Blackrock, Co. Dublin one time and if I was basing my valuation on the number of Irish Times the shop sold I would have overvalued the business by a large margin. Blackrock is an Irish Times area.
You coud not give an Irish Times away in Coolock, Darndale, Finglas and certain other areas.
So, the bare numbers were not enough. You needed to understand and interpret the data.
This same principle applies to assessing any business and has wider applications.