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Howard Helfant: Aspects to Consider When Investing in Small Businesses



Howard Helfant has been a venture capital investor for many years. Like many investors, he knows that where to focus attention is a significant consideration. There are thousands of small businesses and startups in the country, but gaining the necessary research on them can prove difficult. 

“What makes one company deserving of interest differs from another business,” he says. “It’s important to understand some of the vital aspects to look out for.”

Some of these aspects are explained.

Profit margins
The margin is the difference between what it takes to produce a good or service and what it sells for on the market. Expressed as a ratio or percentage, margins allow the company to invest in other aspects that help get the product into the market (for example, marketing).
Margins vary by industry, and where gross margins are thin, it means there’s little room for error.

The strength of the brand
Assessing the brand strength is tough, but it’s something the investor has to consider. The question on their minds has to be, “Is there something unique about this brand?”
Customer surveys, third-party data and media presence are good ways to evaluate the strength of the brand. 

Leadership
When you invest in a small business, you are investing in the company’s direction as much as you are in the idea or product offering. Howard Helfant knows there isn’t a standard formula for evaluating leadership, but you should endeavor to spend as much time with leadership and ask questions.

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