Why the Stock Market Should Prefer Financial Basics to Exciting Ideas
That craze will not last the day on the stock market though, because the company is in a shambles. Is it a corporation at all, or just a hobby anyway? Incredibly, losses for the year exceed sales revenue! Inventories will last a year and extravagant warehouse leases have no profits for cover. Employees own most of the stock, and they have sportingly kept salaries in the liabilities line of the balance sheet which no auditor has been near. The list is long and scandalous enough to make a best seller.
But this is no fiction. Pet Ecology Brands Inc. is a real company from Texas no less! It plans regular stock market listing and even has PEBI as an impressive acronym. Where could this company be headed with less than $100 thousand in sales more than a decade after it started business, and $3 million in accumulated losses? Can the enterprise turn the corner, and will you back your prediction with supporting investments?
Every stock market success starts small, but not all of them make it big time. How do we spot winners early enough to win handsome profits? Organization seems to matter more than good ideas. You may have a product or a service which customers will love, but you have to position it correctly, price it to turn in margins, and keep your books up to date. Strong financial control systems, convincing and thoroughly documented business plans, and efficient logistics, can make successes out of the most mundane operations. Conversely, the most creative idea without business infrastructure is no more than just that-an idea!
Good luck Pet Ecology: the cats and dogs of America count on you! Investors do as well, and there is plenty of time to achieve financial closure.