Business Investment Tips

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By Eliah Sekirin, eHow Contributor

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Remember that high returns usually come with high risks.

Business investments refer to commitments of funds to businesses either in an active or passive capacity. An active capacity involves investing in businesses while getting some degree of control over them, engaging in their day-to-day operations and devising their long-term strategy. Passive investments, on the contrary, do not entail any operational involvements of investors in the business.

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1. Mind the Risks

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Returns on investments are usually commensurate with risks. That is why most high-return investment opportunities also entail a significant degree of risk. Always think about different scenarios and possible things that might go wrong.

Don't Understand--Don't Invest

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If you do not understand how a business makes money, do not put your funds in it. Murky business models often hide high risks, and may be based on a weak foundation. Educate yourself about the business and the industry you want to invest in before you commit any money to it.

Identify Competitive Advantages

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Every business should have a competitive advantage--a distinctive feature that it has and the competitors lack. Whether it is star managers, hardworking employees, cheap input costs, patented technology, innovative products or any other sources of a competitive advantage, make sure it is long-lasting and is not easily replicated by competitors.

Buy When There Is Blood in the Streets

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The famous Rothschild banking family is credited with saying, "The time to buy is when there's blood in the streets." The meaning of this quote is simple--invest when assets are cheap, usually during periods of crises. After life is back to normal, your investments will rise in value.

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Mian Muhammad Mansha

I have had many lucky breaks. Lady Luck has always been on my side. New projects just crop up before I stop doing the old ones" (Mian Muhammad Mansha)

Mian Muhammad Mansha a name signifying continuous struggle, hard work and a faith so very firm in his Allah that nothing on the face of this earth ever stopped him from attaining the goodies that life had in store for him and he did attain the giddy heights of glory, for sure. A father of three sons, Mian Muhammad Mansha stands out the richest man of Pakistan with a fortune worth $ 2.5 billion. He is also the biggest single exporter in Pakistan. He hails from Chiniot, Punjab. Chiniotis are one of the leading industrialists of Pakistan. Mian Mohammad Mansha is the Chairman of Nishat Group - the biggest industrial and financial conglomerate of Pakistan. This group was founded in 1948 by Mansha's father Mian Mohammad and his three brothers. It was named after Nishat Haroon, the 3 year old grandson of Mian Mohammad Yaqub. Nishat Haroon was born to Mian Farooq who was married to the daughter of Mian Fazal Rehman of United Textile Mills, Multan. Windmills of God work in strange ways. In 1948 when Mansha's father Mian Mohammad Yahya and his three brothers incorporated a partnership concern, it was called Nishat Corporation after Nishat Haroon, the three year old grandson of Mian Mohammad Yaqub, eldest of the four brothers. The child who gave his name to the group has disappeared in thin air and Mian Mohammad Mansha, Chairman Nishat Group is today on top of Pakistan's corporate world, boastfully accustomed to buying his casual outfit from Harbe Frog on Bond Street, shoes inevitably from Gucci, cardigans and overcoats from Burberrys. Nishat Group had several industrial units in East Pakistan, which they lost in 1970. This group now owns Muslim Commercial Bank, five cement factories and numerous other industries. Nishat currently comprises of 21 companies including 13 listed companies with manufacturing assets of nearly 27 billion and three of Mansha's close relatives, Saigols, Jehangir Elahi and S M Saleem of United Bank among the top 45 industrial families in Pakistan. Mian Mansha has catapulted to the top of Pakistan's richest families from the 15th position in 1970 and 6th in 1990 because of combination of factors like his marriage to Naz, daughter of Yusuf Saigol. Like several other Chinioti businessmen, Mian Yahya had a leather business in Calcutta (India) before moving to Pakistan in 1947 and it was perhaps in Calcutta that he developed friendship with Yusuf Saigol that led to the marriage of Mansha and Naz Saigol sometimes around 1970. The general perception is that MCB was privatized to Mian Mansha and his associates because of his friendship with Nawaz Sharif. However, Mian Mansha feels that, investing in the shares of Muslim Commercial Bank (MCB) has been one of his biggest business slip ups. The privatization of MCB remains a mystery, till to date. Nawaz Sharif came into power on November 6, 1990, invited bids for the privatization of Muslim Commercial Bank (MCB) on December 15, 1990 and announced its privatization to successful bidder: Messrs Abdullah and others on January 9, 1991. The stories from the past suggest that five bids were received for Muslim Commercail Bank with Tawakkals and Adamjee, being the highest and second highest bidders. Adamjee who formed a joint venture with Yunus Brothers, perhaps the biggest Export Houses in Pakistan, had incorporated Muslim Commercial Bank in 1949. As previous owner, they had the first right of purchase but, third lowest bid by Messers Abdullah and others, a consortium comprising of 12 leading industrialists, mostly from Punjab and headed by Mian Mohammad Mansha, was asked to match the highest bid and declared winner. The consortium which called itself the National Group comprised the following leading industrial groups and families:

1 Mohammad Abdullah 2 S.M.Muneer 3 S.S.Saleem Mian Mohammad Mansha 5 Haji Bashir Ahmad 6 Tariq Rafi 7 Mohammad Naseem 8 Mohammad Arshad 9 Sheikh Mukhtar Ahmad 10 Saqib Elahi 11 Bashir Jan Mohammad 12 Khawaja M. Javed 4

Saphire Din Universal Leather and Footwear Nishat Sitara Sadiqsons (United) Shafi Tanneries Arshad Textiles Ibrahim Be Be Jan Pakistan (Pvt) Ltd. F and B Bulk Storage (Pvt) Ltd. Chakwal

At the press Conference called to announce the sale of MCB to the National Group, the then Finance Minister Sartaj Aziz said that two highest bids were rejected because the bidders had failed to disclose the source of their income. A press release distributed at the press conference contained genuine logical reasons in it. Those being that the committee which scrutinized the five bids was guided by four major considerations namely 1) corporate and financial record of bidders, 2) capability of managing the bank on sound professional basis, 3) dispersal of share-holding to avoid concentration of ownership and control and 4) price offered on " as is where is" basis, without any condition. Nevertheless, for nearly 30 months while Nawaz Sharif was in power, Bhutto and her party leaders ceaselessly attacked the privatization process, particularly privatization of MCB to Mian Mansha and his associates, as an act of favoritism and part of a game plan. Farooq Leghari, Finance Minister in the caretaker govt. of Prime Minister Moeen Qureshi, declared on the floor of the Senate on May 18, 1993 that MCB was privatized as part of a grand design to grab some of the most profitable units slated for privatization. However, these political plays and scandals did not weaken Mian Manshas resolve to work harder, day in and day out. Mansha was the only son of Mian Mohammad Yahya and his fathers death in 1968 forced him to give up studies in UK to return home since several of his cousins, Abdul Aziz, Aftab Iqbal and Mian Mohammad Farooq were already entrenched in the family business. In 1970, Nishat comprised 6 units in West Pakistan, namely Nishat Corporation, Nishat Sarhad Textile, Nishat Textile Mills, Faisalabad, Nishat Chemical Industries and Nishat Agencies, Kotri and Karimi Industries, Nowshera.

The units in East Pakistan included Nishat Jute Mills, Qadaria Textile Mills, Tangail Cotton Mills and Chemical Industries of Pakistan. The business in East Pakistan was headed by Aftab Iqbal, one of several cousins of Mian Mansha whose whereabouts are not known today. It is popular saying among the present day residents of Chiniot that the goddess of wealth is in love with the Chiniotis. But Mansha is perhaps being loved by both the goddess of love and lady luck since he has narrowly escaped the misfortunes that were the lot of the bulk of Pakistani Industrialists in 1970. When divisions of Nishat group assets took place in 1969, Mansha bargained for Nishat Mills at Faisalabad for which he had to pay additional amounts to his uncles but this saved him from losses in East Pakistan that became the lot of his uncles. Karimi Industries (Nowshera) of Nishat group was nationalized and its nationalization is cited to argue that Bhutto's nationalization was an act of victimizing the opponents because it was too small to be nationalized. But loss suffered in Karimi Industries also came to lot of his uncles. Mansha's rise started in 1991 when within six weeks of coming into power Nawaz Sharif sold MCB to National group of 12 leading industrial families headed by him. The formation of National group itself was big strategic stroke of Mian Mansha against future reprisal by any government since it would instantly alienate 12 leading industrial families of Pakistan. According to group profile, Nishat comprised of five companies with assets worth Rs 2,480 millions in 1990 with plans for four new companies. Listed companies included Nishat Mills, Omer Fabrics and Raza Textiles while the only unlisted company was General Stitching Company. Mansha once said in an interview that "for long-term investments, he had his eyes set on the food processing industry" but the privatization by Nawaz Sharif opened new doors for him and his dream to venture into food processing industry has not materialized to date. Instead, Mansha, his relatives and business associates emerged as the biggest beneficiary of the privatization under taken by Nawaz Sharif, ending up with five cement factories and a bank. Mian Mansha has definitely come a long way and of course, Nishats still growing.

As the proverb goes to have money is good, to have control of money is still better and in order to have better control over the money choose a right investment plan. This article will give some investment tips that will be beneficial for all young investors. 1. Keep the investment plans simple: When you are new to the field of investment then it would be advisable for you to keep the investment plan simple. Try to focus on the relevant points that would help you to understand the plan better. Prediction by a novice can lead to some unpleasant surprises while investing. In order to enhance the rate of success in investments pick a correct economic channel that would offer security on a long term basis. 2. Invest when the market is going through a doldrums: The best time for investment is when the financial market is going through an unstable situation. It would be the right time to buy share in the Bear Market and sell in the Bull Market. But there are many young people who would invest at the time of boom and sell it, at the time of recession. Due to lack of investment knowledge they are forced to take wrong decision in the finance market which leads to monetary loss. Due to unavoidable circumstances you might have entrapped yourself in the labyrinth of debt. If you are going through a financial doldrum, remember before investing go for a debt settlement program. 3. Invest in superior companies: As it is said that a fertile ground can produce abundant fruit season after season. Similarly the reputed companies usually do well year after year. You can plant the seed in these fertile fields (superior companies) as these would be the perfect place to invest your money. As these companies are acknowledged for their honesty and ethics in the market, you can afford to invest with full faith. The profit would be the evidence for the following investment. Even if you do not reap the returns after investing, I can assure you that you wont run at a loss as these companies wont cheat you. 4. Past performance can pave the path for future result: The past performance of the company you are investing in would help you to judge the future result. Flourishing companies would find new ventures in the field of investments that would help the investors to reap a good profit. Give credence to the companies who are planning to expand in new lines of business. But you too need to be aware of the fact that past performance should not be the parameter to judge a company while investing. 5. The way of fool is right in his eyes but a wise man listen to counsel: As a young investor making hasty decision can end up in poverty. A financial counselor can guide you through the roller coaster ride of investment. They can anticipate the market changes faster than a non professional. Before investment try to talk regarding the investment plan you want to venture with your counselor. The professional investors would do an extensive research about your financial status and give you an investment plan that would suit you best. 6. Be composed: Boom and recession is part and parcel with the investment market. If the market is going through a tough time and at this present scenario you have invested a huge amount keep your calm. Study the graph of the market but if you notice no changes with the company then you patience would pay off. Being hostile can take a toll on your investment. 7. Quality is more important than the price: Future should be your prime focus for investment. You should focus the attention to the companies that have bright future prospect. The companies that can increase the value of the share over time would be ideal for investment. If you have enrolled for a long time investment then you can afford to be luxurious as the company would be reliable. 8. Invest your money where there is value:

There is a great difference between a good company and good investment is the price that you pay. There are many good companies but very few among them have a strikingly priced. When you look for stocks getting a high quality company is half the job done the other half is to invest on a rightly priced investment. 9. Keep your future safe: The future keeps on unfolding itself at every step as no one can escape the unpredictability of the time. In order to protect yourself from the unavoidable circumstances invest in those stocks that you find safe that wont run you at loss. It is advisable to be on the safer side as it always does not mature properly according to your plan plan. Margin of safety is really crucial and it is not an accident if you fail to earn the profit. 10. Invest in what you know: There are many investors who try to experiment in the process of investment. Dont rely on someone elses advice. Before investing the money do a bit of research work. Do not go with the trend rather consult a proper financial coach. If you have the proper temperament then you will achieve success in investing. If you have fair knowledge about the market then there is less chance of losing your heard earned cash. And a good investment would secure your future and pave the path towards success