Every good entrepreneur shares a few traits with a riverboat gambler. The fact of the matter is, making sound investments is as much a scientific practice as it is an exercise in intuition. However, there’s a difference between taking a calculated risk and just plain being irresponsible with your money. There are certain things that simply aren’t worth putting your financial stability on the line for, and given the changing landscape of business risk, entrepreneurs should be aware of every factor that affects a business’s viability. With that in mind, here are four red flags that should immediately disqualify a business from further investment:
SEO Malpractice
Businesses that skyrocket overnight and continue to hold staying power for months and years later are a rarity. After all, the majority of financial successes are the result of years of incremental growth, as opposed to the luck associated with one big score. So it’s natural that investors should be wary of companies that quickly start to gain traction –– especially online. One way a business could increase its online presence quickly is through SEO malpractice. Manipulating the system might provide momentary gains, but depending on the level of transgression, it could also bring forth substantial penalties from Google and other search engines. Avoid businesses that use shady methods to boost their domain authority like the plague.
Faulty Ecommerce Transactions
Broken web pages –– in particular ones associated with ecommerce transactions –– should give any investor pause when examining the sustainability of a new company. That’s because defective web pages involving online transactions will likely cause multiple issues. Not only will busted pages and links make it more difficult to complete sales online, but faulty ecommerce pages may also be indicative of bigger issues behind the scenes. It doesn’t really matter if a business is selling micro blood collection tubes or stuffed teddy bears –– broken web pages are the sign of a slipshod operation.
Fads and Trends
Can you make money riding the wave of an investment fad like bitcoin or some other cryptocurrency? Yes. Is it likely? No. Financial fads are labeled thus precisely because they’re fleeting in nature. And the truth is, unless you were lucky enough to get in before the boom occured, you’re unlikely to turn a profit investing in this type of business.
Stagnation
In business, you’re either growing or you’re dying. So be very cautious when considering investing in companies that haven’t seen growth in the past few years –– even if they haven’t experienced outright decline either. Though it may be a harsh valuation, companies that can’t grow are one bad break away from slipping into the red. Remember, market potential is almost as important as previous production when considering investment options. And a company without the ability to grow is one with a dark future.
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