When looking to invest in a business, whether in its shares on in its debt instruments, it is extremely important to do a thorough analysis of the company’s fundamentals to ensure that it runs on a solid foundation and has a bright future ahead. Only then can the safety of your investment be guaranteed together with the prospect of profits. And below, we take a brief look at four fundamental things to check for when considering a company for investment.

The Business Model

The success of any venture is largely dependent on its business model. An ideal business model will guarantee that the company generates profits by incurring the least cost. The model has to work in all market conditions, whether it be during an economic boom, a market contraction, or even depression. Investment firms like Arthur Penn Pennant Park often do a thorough research into the history of the company to see whether the business model has been successful in generating profits during the various market conditions in the past years or not.

The Leadership

The next important thing to look at is the leadership of the business. Is the leader a very capable person who can motivate all employees and has earned their respect? Are they intuitive and knowledgeable enough to grab on to a market opportunity when they see one? A good leader can easily double the profits of a company. Check their history to see how many businesses they have started or managed. If all the ventures they managed ended up shutting down without making any profits, then that is definitely a red flag.

Market Position

Another important fundamental to look into is the market position of the company. Check the number of competitors in the market and see where the company is positioned in terms of market share. Pennant Park recommends avoiding companies that are at the bottom in terms of market share even though they have been in the business for several years. Instead, focus on companies that have quickly increased their market share within a short period of time. And this brings us to the last fundamental factor you should check in a company – its prospects for growth and expansion.

Growth Prospects

You need to analyze this in two ways, Firstly, look at how well a company can increase its market share, together with the cost and time required for such a growth. If it is projected that the business can capture a larger part of the market quickly using minimal capital, then that is definitely a business that you should consider investing in. The second analysis should focus on how well the business can expand into new markets. For example, a company might be selling perfumes. Can they diversify into soap, shampoo, and other beauty products? This is also an important point that needs to be considered since the ability to diversify into new markets will position the company for greater growth in the future, thereby guaranteeing better returns for your investment.

It can be nerve wrecking to consider starting a new business, especially when you have to leave your job behind, and if you’re supporting a family it can be an even more difficult choice.

Still, without risks there are no rewards, or so they say.

Ask yourself these questions to make sure you’ve considered all parts of the laborious process that registering a new business can be:

Do you have the capital to see it through?

One thing is to consider the price of a company incorporation, but te other is to make sure that continued costs of operation will not hinder the success in the long run. In other words, you need to make sure you have enough money stashed away for a rainy day,  week or even month.

How much of a risk are you willing to take?

If you have children depending on you to feed them, perhaps you should not spend your life savings on that great idea your friends and you got last night. But without any risks at all, little is ever gained. Find out where the balance between risk and reward makes the most sense to you and your surroundings.

How much time will it take to make profits?

It’s not always that turning the “Open” sign will automatically lead to profits. Sometimes you need to build up a reputation, a brand an a userbase. This can take years, even when you are working 50 hours a week on it, so make sure to have room in your business plan for quick profits too. For an example, if you are building a new website, then it will take some time for visitors to find it once you go live, and you have to expect some months if not longer before you see any sales.

Is it worth taking a loan for?

There might come a time where you might need more money than you have to actualize your idea. Consider it wisely before going into debt, but once again: risk to reward.

What business type would it be?

Depending on your country there are hundreds of different types. Let us take how Singapore company incorporation works. There are private limited companies which means you as a private individual do not share the liabilities the company does. So if the company goes bankrupt nobody can come after your house for instance.

How much do you need for utilities and food?

Many people are worried that they will have to cut back on luxury items, but calculate how much money you need for surviving, and take it from there.

Is it difficult getting work if you fail?

A very important part of this is to never burn any bridges. You want to make sure you can go back to work if you fail your business, so it is not advised to break contract rules for instance.

Do you have previous experience?

Finally, do you have any experience in this field? And do you have experience with starting, growing and maintaining a business? If not you might need help sooner rather than later. Consider a consultation with someone you know that has his or her own business, an hour or two with an entrepreneur that is willing to share can be worth 2 years of school!

So risk it, or don’t – just make sure to register your company and follow your dream!

A One Person Company offers sole owners many benefits that are not readily available to sole proprietors. These include the concept of limited liability, the ability to raise larger debts at competitive rates from banks and so on. But at the same time, there are certain drawbacks to OPCs that may make it unsuitable for certain people. Five such drawbacks are discussed below.

Incorporation Limitations

A curious downside of starting a One Person Company is that once you register an OPC, then you are restricted from incorporating any more OPCs. In contrast, you are free to start any number of private limited companies and LLPs. The exact reason as to why such a restriction has been imposed is not clear, but it does not change the fact that such a limitation affects a person’s ability to start multiple ventures with 100% ownership. This means that your personal house, your foundation for your livelihood is under a certain amount of pressure, as you could potentially be liable for damages and have to sell your home in order to pay for your company’s failure.

Natural Individuals

Only a natural born Indian citizen, who is currently living in the country can incorporate a One Person Company. As such, foreign nationals cannot start OPCs in India. Plus, a company cannot incorporate an OPC since a company is not considered a ‘person’ when it comes to OPCs. As such, if you own a private limited company and wish to start an OPC in the name of the company to use it as a subsidiary or some other purpose, you will be unable to do so under current laws.

External Commercial Borrowing (ECB) Restrictions

One big drawback of an OPC is that they are not recognized by the External Commercial Borrowing and Trade Credits. What this means is that OPCs cannot seek funds from foreign lenders. So, if you are planning to obtain some funds for your venture from outside India, an OPC is not the ideal business structure for you.  But if you are not concerned with foreign funds, then you can go ahead and do a One Person Company registration.


An OPC is taxed at the same rate as other private companies, which means a flat 30% charge on total income. However, sole proprietors are only charged at the tax rate applicable to individuals. As such, if you are going to be the only owner of the business, then operating the business as a sole proprietorship is the most advantageous option for you from the perspective of taxation.


A One Person Company only has one shareholder, owning 100% of the business. As such, the concept of an ESOP does not exist within the context of an OPC. So, in case you plan on giving your employees a share of your business in the future, then an OPC is not suitable for you.

If you are concerned about any of the above limitations of OPCs, then you should look at registering other business structures like an LLP or a private limited company. Plus, remember to trademark your business identity to protect it from infringement.  You can easily register trademark online in India by consulting any good trademark registration service.