There is an old saying which says “A fool and his money is easily parted”. It happens so easily and so quickly. You hear a persuasive presentation and you think, “Wow, this is a great idea and sounds terrific” and then, before you know it, you’ve pulled out your credit card or cheque book and made a decision to invest money or to lend someone some of your hard earned money without having done any research. Worse still, you may have even borrowed money in the hope of getting a quick return with this tremendous opportunity! The presentation is often punctuated with a call to action and a need for urgent action. Participants are generally told that if they do not become involved immediately, the opportunity will pass them by. While this may well be the case in some situations, it is frequently a sales technique in order to force people into a decision as quickly as possible.
One of my personal mottos is that: “The opportunity of a lifetime comes past at least once a day.” With this as one of my guiding principles, and my abundance mentality, I simply say to myself: “If I am going to miss out on this opportunity, there will be another bigger and better one, just around the corner.” Accordingly, whenever a salesperson tries to impose urgency on my decision making process, I simply respond by saying: “Look, I wouldn’t like to deprive anyone else of this wonderful opportunity. So go right ahead and make it available to anyone else. As far as I’m concerned I will be doing some research before I make a decision.”
It’s been my experience that in almost all cases the salesperson has backed off and tried to re-track in order to keep me as a hot prospect for whatever I was being offered. Essentially what I do through this response is to put the ball back in my court so that I am in control of the decision making process since it is my money that I am being asked to part with.
I often speak at conferences and exhibitions, both locally and internationally, and some of the most commonly asked questions are: “How do I go about doing due diligence on an investment proposal?” and “How do I find a good accountant, solicitor, stockbroker and real estate agent?” and so on.
These questions addressed in detail in the book,
Due Diligence Made Simple. The purpose of this book is to give you a kit bag of tools and a series of questions and techniques that you can apply in carrying out due diligence and researching something thoroughly. Through this book, it is my intention to arm you with the necessary techniques so that you can properly understand and make an informed decision before jumping in to any investment or business proposition.
What is Due Diligence?
Due diligence is basically a fancy word for doing research. I looked up a number of dictionaries and could not find a dictionary definition for the term “due diligence”, however I believe the following best summarises the concept of due diligence:
Due diligence is the process of investigation performed by investors into the details of a potential investment. It requires a detailed and careful examination of the operations and management of a potential investment and verification of the material facts relating to that investment or operation.
By verification, I mean that you need to confirm the reality, or the existence or the truth of statements or claims made by either a promoter or the management of an operation.
Due diligence can and should take many different forms. Some of your due diligence research will be conducted by telephone, over the internet, via fax, by letter and perhaps by personal observation and interviews. Some investments may be located very far from where you live, therefore, you will need to rely on various methods of communication and documentation. Hopefully you will be able to conduct some telephone interviews so that you can not only ascertain the important information, but also hear the tone of the voice of the person giving you the explanations.
If the investment opportunity is located within a reasonable distance of your home, so that you can access it personally and physically, it is a good idea to check out the premises, management and operations of the business that you are planning to invest in. Once you understand the product or service the business produces, you should look for evidence of the company’s products in the marketplace, assess their pricing relative to their competitors and their market presence. You should also speak to resellers or marketers of the company’s products to find out what their experience has been with the company and it’s products, their reliability and the customer acceptance of the company’s products. What problems have they encountered so far? How has the company responded to problems with its products? How has the company responded to marketing issues with its sales force? Do customers like to deal with the company? Who are the major competitors?
When you know the names of the competitors, find some resellers of those products and ask them about the products of the company you are planning to invest in. They will tell you all sorts of interesting information which you may want to check out.
The book,
Due Diligence Made Simple covers many aspects of market research that you may want to undertake. It is written in an easy to understand style and gives you the tools to become an astute investor. Areas covered include:
- How to evaluate an investment proposal or business proposition before you part with your money, so you don’t lose it
- What questions to ask and how to formulate them effectively to draw out the facts
- The seven key words you need to know and use when asking questions
- How salespeople present business opportunities and how you can gain the upper hand in negotiations
- How Financial Advisers operate and why your wealth could be at risk
- How to conduct interviews effectively
- How to find a good professional adviser such as an Accountant, Lawyer, Property Manager and Stockbroker
- How to go offshore safely and
- How to identify Frauds and Scams.
If you want to avoid becoming shark bait then this is a must-read book for you.
About Hans Jakobi
Hans Jakobi is an educator, author and investor. He is the author of six best-selling books including, How To Be Rich & Happy On Your Income which is available at:
www.supersecrets.com and the presenter of the Super Secrets® to Wealth do-it-yourself real estate home study course. Join Hans Jakobi’s FREE Super Secrets® Online Newsletter
© 2002 Hans Jakobi. All rights reserved worldwide
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