If you are planning on making an investment, this special report will help you make a better decision by asking you 7 key questions before you take the next step.

1. 7 QUESTIONS EVERY INVESTOR MUST
ASK BEFORE INVESTING

2.
7 Questions Every Investor Must Ask Before Investing
Didyoujustgetyourselfintoabadbusinessdeal?
Wastheresomethingyoucouldhavedonetohelpavoidit?
Doyouknowwhatquestionstoaskbeforemakingthatdeal?
When you are planning on investing in a business, the last
thing you want to focus on is whether or not it will fail. But
BUSINESS SURVIVAL RATE
reality dictates that you do need to take this possibility into
account. According to Industry Canada, about 96% of small
businesses (1–99 employees) that enter the marketplace
survive for one full year, 85% survive for three years and 70%
survive for five years.
(Key Small Business Statistics, January 2009)
As an investor in a new or existing business, you’re probably
asking yourself - how can I reduce this risk? At DK Wong, we
believe that by asking the seven basic questions that follow,
you can greatly reduce the chances of making a poor
investment decision.
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3.
How Did You Hear About the Investment?
On average, most investment opportunities are referred by a
friend, business associate or an acquaintance. Depending on
the source, the level of reliability varies. Some people will have
the specific details, while others offering advice that is very
general and sketchy at best. Far too often we see people rely
on a person’s word alone when being sold a deal.
While a person’s word and reputation are valuable, like buying
a house or a car, you need specifics to know if the investment
opportunity is right for you. No matter who is making the
recommendation to you or how much you trust them, you need
to do your homework or what our investment industry calls
“due diligence”
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4.
What do You Know About this Business or Industry?
Are you able to help grow this business?
You need to think about whether your past experience is
relevant to the investment opportunity at hand.
You also need to consider whether you will you be a passive or
an active investor. This will dictate the extent to which you
need to have expertise in the industry you plan to invest in.
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5.
How Well is the Business Operating Under its Current Management
Team?
Part of doing your homework involves getting into the details
of business operations…
 Did you interview the management team and key
employees?
 Do you see any areas of weakness in operations?
 What will they do with the money raised?
You need to have addressed the above questions before you
can even think of moving forward.
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6.
What do the Financial Statements Tell You?
You must have a clear picture of where the business’ finances
lie…
 Is the business profitable, breaking even or losing
money?
 Did you do a cash flow analysis?
 Is the projected return high enough for you to take on
this risk?
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7.
Are You Willing to Invest More Money into the Business?
Often times, a business will require more than one round of
funding to achieve its objectives.
Will you be able to step up if needed to keep the business
going?
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8.
What Type of Funding is Being Offered?
Funding will fall under either equity funding or debt funding.
You may also see a combination of the two.
Whatever type it is, you need to be comfortable with it.
You also need to carefully scrutinize the valuation. Is it
reasonable?
Does it justify the investment?
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9.
Do You have the Deal in Writing?
Over the years, we have come across a number of situations where
investors have invested into deals with little or no agreements in
place. Similar to when couples start dating, the excitement and
euphoria of the deal may distract an investor from putting the
details into writing, as the courting process is full of the promise of
a trusting relationship being forged.
You’re not thinking about a breakup – you’re thinking about the
(seemingly very promising) future. A handshake, while a nice
symbolic gesture, is in no way a legally binding guarantee of your
rights. If things go well – great! However, if the business gets into
trouble, having nothing in writing ends up wreaking havoc and
straining the relationship between both parties, regardless of how
rosy the picture and the relationship seemed at first.
Another deterrent for putting a deal in writing is the legal costs to
hire lawyers; both sides usually want to keep costs down. But these
really are non-negotiable costs. You have to protect yourself. For
the monies spent drafting a proper deal, it keeps both parties on a
level playing field - specifying everyone’s understanding and
responsibilities. This is especially crucial when things do not work
out. You just never know what could happen.
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10.
Call to Action
If you have a project or deal you are looking to invest in and
you are unsure if it is right for you, DK Wong is here to help.
We believe investors need to ask these questions and know all
the risks involved before making an investment into any
business or venture. Let our broad industry experience and
screening process help you determine whether or not a
particular investment is suitable for you, potentially saving you
a lot of time, money and certainly headaches.
Contact us at investors@dkwongassociates.com to find out
more about our services for investors.
The informa on contained in this report is for general informa on purposes only. The informa on is provided by
DK Wong Associates Inc. and while we endeavour to keep the informa on up to date and correct, we make no
representa ons or warran es of any kind, express or implied, about the completeness, accuracy, reliability,
suitability or availability with respect to the informa on, products, services, or related graphics contained in the
report on the website for any purpose. Any reliance you place on such informa on is therefore strictly at your
own risk.
Through this report you are able to link to other websites which are not under the control of DK Wong Associ‐
ates Inc. We have no control over the nature, content and availability of those sites. The inclusion of any links
does not necessarily imply a recommenda on or endorsement of the views expressed within them.
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