Questions you should ask before investing in a company

The major part of smart investing is doing your homework and extensive research, before turning over any money. While research alone can't promise you a successful investment, investors who take the time to clearly figure out how and where they want to invest, have a far great chance of being successful, and most importantly making money. Experts have put together lists that can help prospective investors determine what is important to them, and help them choose the right investments, for their situation. It is important to keep in mind that every investor's situation is different, and you must find investments that fit your specific needs. These questions are only meant to serve as a guide. You should need further information then consulting a financial professional is advised. Here are questions you should ask before investing in a company-

• Does the company have products or services that have sufficient market potential?Can they make a sizeable increase in sales for at least several years?-First and foremost you want to find a business, that has the staying power, for long-term growth.
• Does the management of the company,have a determination to continue to develop products or processes that will still further increase total sales potential? When will the growth potential of currently attractive product lines have largely been exploited?-This is important to determine because if the product or service line dries up, you are virtually left with no investment.
• How effective are the company's research and development efforts in relation to its size?-You should determine if the company has the ability to develop further products within its own structure. If the research and development arm is to small for the size of the company, this does not indicate well, for long-term growth.
• Does the company have an above-average sales organization?-Sales drives profits, without an able sales organization, the company will soon falter and then fail.
• Does the company have a worthwhile profit margin? What is the company doing to maintain or improve profit margins? Does the company have a short-range or long-range outlook in regard to profits?-It is important for investors not to confuse sales and profits. Even with astronomical sales, if profits are low, investors will soon find themselves with nothing to show, for their money.
• Does the company have outstanding labor and personnel relations?-Companies that treat their employees fairly, have lower turnover and increased profitability.
• Does the company have outstanding executive relations? Does the company have depth to its management?-Companies are far more then just their ideas or products. Investors should understand that they are literally investing in the people behind the products and ideas. Weak or inexperienced management can quickly drive a promising company, out of business.
• How good are the company's cost analysis and accounting controls?-This can be harder, for an in experienced investor to determine, however, poor accounting controls are a red flag that the business is not financially healthy.
• Are there other aspects of the business somewhat peculiar to the industry involved that will give the investor important clues as to how the company will be in relation to its competition?-It is important for investors to realize that every business has competition. It is crucial to understand how your chosen investment company relates to the competition.
• In the foreseeable future, will the growth of the company require sufficient financing so that the large number of shares then outstanding will largely cancel existing shareholders' benefit from this anticipated growth?-This is another factor that should be considered for long term growth. Initial investment can be quickly diluted if the need for additional capital becomes overwhelming.