Should you build a business in trading, manufacturing or a consumer brand
First, let’s assume that capital is not a constraint, and you have the skills to build any.
It’s best to divide these business models based on longevity and time required to build a successful business.
👉🏼 Most profitable trading opportunities are found when you spot an arbitrage... a place produces something for cheaper, and it sells for more elsewhere... so you buy in bulk as a middleman, and sell with maximum rotation of your working capital...
A capital market cycle is of 7 years, and most of these opportunities today, should not be expected to last more than half a capital market cycle i.e. 3.5 years
You can expect a bigger fish to enter with more money and control over the supply chain in 4-5 years and eat away your margin.
👉🏼 For Manufacturing Businesses, you should consider 1 Market Cycle of 7-8 years as your timeline...
Recover your capital invested in less than 4 years... i.e. a sub 4 year payback period...
And milk as much profit as you can in the 4 years after because manufacturing from China can really beat us at price at an unimaginable rate after that.
The idea is to max out built capacity in your factories, and get an ROI of 25-30% p.a. over this cycle.
👉🏼 For Consumer Brands, the timeline is almost 2 cycles, so no less than 15 years...
Look at the massive FMCG companies of the country... most of them are over 30 years old.
Building a consumer brand is a 15 year game at the very minimum and takes a lot of time and money to build to capture both mind share and pocket share.
👉🏼 And this is what I advise most of my family business clients who have the money to enter multiple businesses...
Trading for the Short Term (3-4 years)
Manufacturing for the Medium Term (5-8 years)
Consumer Brand for the Long Term (12+ years)
-------------------------------------------------------------------------------------------------------------------------
Click here to subscribe to my YouTube channel: [ Ссылка ]
-------------------------------------------------------------------------------------------------------------------------
Like, Share, Subscribe for more!
Follow me on my other social media handles for all updates, events and live sessions-
Instagram: [ Ссылка ]...
LinkedIn: [ Ссылка ]...
Website: [ Ссылка ]
-------------------------------------------------------------------------------------------------------------------------
A Chartered Accountant with about 10 years of experience in areas of Tax Advisory, Startup Consulting, Fundraising, Audits, Deal Advisory, Business Modelling and contract CFO services.
Winner of the ISB Young Leader Award 2017 and the Best All Rounder, PGP Class of '17, Sarthak has also been published about in the leading financial newspapers such as The Financial Express as possibly the youngest Indian to have completed the courses of CA, CS and CMA along with a graduate degree in Financial & Investment Analysis from University of Delhi, all by the age of 23 years.
