As a local investor, you summon a unique advantage that 99% of the population can’t touch. Location location location! You actually live in the place where the business operates. Why does that matter? Warren Buffett’s famous line, “Invest in what you know,” sets the stage for this leg-up in local investing.
Knowledge = Power The more you know about an investment, the more potential you have to make an informed decision. Since we’re not here to give investment advice, let’s set the “investing” part of Buffett’s quote aside and focus on what we can help with: the “what you know,” which in this case may have more to do with where you live than what you learned in school.
Here are 4 questions you can ask to find out “what you know” about that local biz:
- How much does the location matter? Spoiler… it might not at all! While it’s easy to think about local businesses as operating locally, some produce products that have very little to do with their hometown. A restaurant or taproom, on the other hand, may live and die by the location’s visibility and foot traffic. This is a quick but important assessment to make.
- How good is the location? This is where proximity makes things really fun. If a business is opening up down the street from you, you can go walk the site! Camp out at a nearby coffee shop and see how much foot traffic there is. Eat at a restaurant nearby. Soak in all the unique perspective you get by just being there.
- What do your friends know? Find out what the buzz is around the business, or start some yourself and get their reactions! Secrets don’t make friends, so see what others in your community know or have questions about. This is exactly why the “Q&A” forum exists on their Vicinity campaign page.
- Who are the people behind the business? The likelihood that you know one of these founders is about 1000X higher than if they were headquartered across the country. Yes, that’s a scientifically proven fact*. *No, it’s not.
If you don’t know the owners directly, though, you might have a mutual connection since you do share a hometown and all.
Once you’ve gotten the lay of the land, you can go a layer deeper. How well is this business positioned in the (your) market? Who is their target and how well are they approaching them? Are they solving a problem you’ve experienced or know people who have? All these questions (and many more) get way easier to answer when they’re doing business on YOUR turf.
When it comes to understanding businesses in your area, you have a distinct point of view that almost no one else in the country can claim. Know it, own it, and use it to build a strong showing in the “what you know” column.