Why it is important for an investor to exercise caution
According to data research Data Insight, the online trading market in Russia grew by 48% in 2023, and the marketplace market by 92%. Along with the high demand, the number of sellers is also growing.
Among the sellers, there are those for whom selling goods is not their main source of income. Such entrepreneurs are focused on selling training on how to earn money on marketplaces, and not on developing their own business. For them, it is just a screen.
Infogypsy sellers can promise huge profits with minimal costs and release courses with loud names like: “A million on the marketplace in a month.” The price for them reaches tens of thousands of rubles. At the same time, sellers do not have large sales: they hide or inflate profit figures or show someone else’s with the help of dubious screenshots that they receive from their “students.”
When investors come across unscrupulous sellers, they refuse to invest in the entire industry. They think that this is a market where an entrepreneur “shoots” and fades away. However, there are many entrepreneurs on the market who are growing steadily and qualitatively, and it is worth investing in such people.
When deciding to invest, it is important to check the business and ask the seller a number of questions. This will help to assess the reliability and prospects of the company, as well as reduce risks.
On topic. Marketplace seller: who is he, how to become one and how much does he earn
Step 1: Independent verification of the seller’s documents
First of all, the investor should conduct a fundamental analysis of the seller by TIN. This data should be freely available. Look at who is actually the founder of the company, who is the CEO, whether this data has changed, how often, what is the authorized capital.
It is necessary to study the seller’s financial statements separately. They should be open, and the financial documents should show the stability and profitability of the business. It is necessary to check the company by three indicators: revenue, profit, amount of debt. If the company is unprofitable and the statements show that the ends do not meet, it is not worth investing.
Here it is important to understand how the business is run, whether there are any grey schemes. If, according to the papers, the seller has a profit of, say, 100,000 rubles, just to pay less taxes, while he asks the investor for millions for development, the investor has no guarantees of the safety of his money.
It would not be superfluous to check for any court cases that have been initiated against the seller: active or completed. This will allow you to determine his integrity and solvency.
You can check by TIN, OGRN or company name. It is important to see whether the seller participated in court cases at all, how often, how it all ended, what exactly were the claims against him. For example, he was sued for violating the terms of the contract.
It is necessary to check the financial and legal indicators of not only the company itself, but also the founders and the CEO. Are there any writs of execution, restrictions, are any proceedings underway? The credit history and payment discipline of the head of the company are indicative. If he does not pay taxes or fines, it is unlikely that he will pay interest to investors on time.
You can check using government services and paid analysis systems.:
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Resource financial statements (BFO).
- Card index arbitration cases.
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Federal Bailiff Service (FSSP).
- National Bureau credit histories.
- Drug profile: checking the reliability of counterparties according to the main parameters.
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«Spark» — information about Russian companies.
Also, a bill will soon come into effect, according to which marketplaces will begin to transfer data on settlements with sellers to the Federal Tax Service. This will make it possible to identify those who used business fragmentation schemes.
Step 2: Additional request for documents
In a personal communication with the seller, you can request the same documents that you have already checked yourself: from the Taxpayer Identification Number (INN) to financial statements. This is necessary at least to draw conclusions about the honesty of the seller. Unscrupulous people will be wary even at the question of the Taxpayer Identification Number (INN).
It is important that the seller demonstrates transparency in doing business, and a willingness to provide full information about the financial performance and legal status of the company.
An important nuance: “unscrupulous” sellers show screenshots from their account on the marketplace as financial results. But this indicator differs from the accounting reports. The marketplace shows the sales amount without deducting taxes, marketing fees, fees for storage and delivery of goods. If the seller immediately shows the accounting reports, this is a good sign.
Even if a person you know personally comes to you, you shouldn’t rely on trust alone. Check their history: including debts or lawsuits.
In addition to financial indicators, you can request:
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links to stores on marketplaces;
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investment reports;
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information on patented trademarks;
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publications about the company;
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personal pages of company executives.
On topic: How marketplace sellers can optimize tax accounting
Step 3: Communication with the seller
It is definitely worth talking to the seller in person to understand not only his goals and objectives, but also who he is as an entrepreneur and a person, what kind of team he has.
The professionalism, experience and reputation of the team, the personal brand of each team member, their behavior in the public sphere and interaction with others play a major role in business development. The manager must be “transparent” and have a good reputation.
What is worth asking?:
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About long-term prospects. What are the seller’s plans for business development and income increase?
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About the team. Who is on it? What is the professional experience and achievements of the team members? What are their ambitions and goals? Have the team members received good reviews, what reputation in the industry have they earned?
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About investments. Who has already invested money in the seller? In what volumes, on what terms?
Don’t be shy about asking uncomfortable questions. The more details an investor gets, the less risk he will have.
Additional recommendations
You can conduct an additional psychological check of the seller by asking him for a personal guarantee as a guarantor of the safety of the investment capital. This will help assess his confidence in the success of the business and the honesty of his intentions. If he starts to prevaricate, this may be an alarming signal that he is not ready to guarantee his assets.
When interacting with a specific seller for the first time, you should not invest large amounts at once. You can split them into several tranches: for example, not 5 million rubles at once, but transfer 1 million rubles. It is better to lose 1 million rubles than 5 million rubles. Invest in stages, checking the results at each stage.
It is also worth avoiding experiments. Do not invest large sums in projects that are at the experimental stage. Wait for confirmation of their success on small amounts. If at least twice these actions have resulted in good results, then you can try.
Marketplace sellers are currently showing good growth, as is the entire market, and may be interesting for investment. But it is important for an investor to pay close attention to checking the selected seller: its financial indicators, legal aspects, personal characteristics.
The foundation of successful investments is analytics. A detailed check of the business and the owner will help make an informed decision about investing in a transparent company with clear plans for achieving profitability.
Cover photo: Freepik
Source: rb.ru
