You may search in Tykr and not find what you’re looking for. Your next response may be one of the following questions:
- “I don’t see some ticker symbols in Tykr.”
- “I don’t see some companies in Tykr.”
- “I don’t see stocks from my country in Tykr.”
Tykr has about 40,000 stocks which gives investors plenty of opportunities to make money.
However, some investors still want to invest in stocks from their own country.
The next question you should ask is…
“Do I want to invest in small businesses or make money?”
In most cases, you can’t have both.
If you want to invest in companies that only exist in your country, that’s fine. Keep in mind, that you may not be able to build your wealth with this strategy. If you want to build wealth, you should focus more globally scalable companies.
- Global (large business) = Scaleable
- Local (small business) = Not scalable
Here are some questions you should ask to help determine if a company is scalable.
- What is their market share?
- How fast can they scale revenue?
- How well can they optimize profits?
What is their market share?
If your country has a lot of Overpriced stocks, please keep in mind it’s not an error within Tykr, the issue is with each business. This is where you should take a step back to understand who the business serves. In other words, you should try to understand the market share.
Large companies like Apple, Microsoft, and Nike, can serve customers all over the globe. They can do this because of the technical infrastructure, resources, channel partner distributors, and more. For example, Microsoft, although headquartered in the US, has 175 office locations around the globe in countries including Canada, the UK, Germany, France, Italy, Spain, Sweden, Switzerland, Belgium, Netherlands, and more. Microsoft is a global company with a global market share. They have manufacturing facilities and supply chain processes in place to serve customers all over the globe.
On the other hand, local businesses that primarily only serve customers within their own country, don’t have the technical infrastructure, resources, and channel partner distributors to capture more market share. They have limitations on how much market they can capture which means they have limitations on how fast they can grow.
How fast can they scale revenue?
A large global company not only has the sales, marketing, and advertising running at full speed on the front end, but they also have the infrastructure on the back end to support the sales. In other words, as a company sells more products or services, they need the infrastructure and resources to support the demand. A global company is built to scale revenue.
On the other hand, a local business does not have the infrastructure. As more products and services are sold, the business will have limitations to support the demand which can cause limitations with revenue growth. I’ve worked with many SMBs and in most cases, increasing revenue is a pain point because it requires more overhead in the form of employees, inventory, and office space. In most cases, SMBs (Small and mid-sized businesses) will only grow to a certain revenue and sustain at that level because of the headaches that come from growing beyond that level.
On the subject of scaling revenue, it is very difficult for SMBs to transition to large global businesses. Most small business owners and startup founders typically can’t make the transition. This is why you see a lot of large global companies run by CEOs who have not founded the company. There is both an art and a science to scaling revenue on a global scale and most business people fail at this.
How well can they optimize profits?
Optimizing profits relates to a company’s ability to optimize free cash, reduce liabilities and debt, and increase assets and equity.
There may be a lot of small business owners and startup founders who can get a business off the ground, but as revenues increase, do they have the ability to optimize profits? In most cases, they do not. As businesses grow, the challenges grow exponentially and only the best CEO’s (and the people they bring into the fold) have the ability to optimize profits.
If a local business is overpriced in Tykr, take a look at the financial statements to see how well the business is optimized. In most cases, the financial statements will reveal the truth.
Here is an example of how this looks when you compare a small local business to a globally scalable business.
Mike’s Tractor Company Inc (This is a made-up company)
- They are a private company
- They manufacture and sell tractors for the farm industry
- They are located in the US
- They only sell to customers in the US
- They have 1,000 employees
- They have 3 months of cash on hand to pay employees (In the event they run out of revenue)
- Their revenues have remained flat the last 5 years
- Their net income has remained flat the last 5 years
Deere & Company (DE)
- They are a public company
- They manufacture and sell tractors for the farm industry
- They are located in the US, Armenia, Albania, Greece, Hungary, Estonia, Finland, Iceland, Norway, and more
- Their customers are all over the world
- They have 69,000 employees
- They have $4.2B of Free Cash on hand to spend on R&D, marketing, advertising, and more employees
- Their revenue has increased year over year since 1985
- Their net income has increased year over year since 1985
Here are the red flags with Mike’s Tractor Company Inc
- They only serve customers in the US which means they have limited market share
- They are an SMB which means they most likely can’t scale revenue like Deere & Company
- Their revenues have remained flat the last 5 years
- Their net income has remained flat the last 5 years
Now if you’re an investor who wants to grow your wealth and you have the option to either invest in Mike’s Tractor Company or Deere & Company, which are you going to choose?
We hope you’ll turn your attention to a large global scalable company like Deere & Company.
There are a lot of investors who want to invest in businesses from their country and build wealth at the same time but unfortunately in most cases, that strategy won’t work because a lot of countries don’t have global scalable companies.
Supporting local businesses is something you can do for fun but you need to ask the question, will supporting local businesses build your wealth?
In some cases, yes, but in most cases, no.
Most of the businesses I invest in may be headquartered in the US but they have offices all over the globe, which means they can increase market share, scale revenues, and optimize profits.
If you’re looking to build your wealth, look for global companies, not local companies. If your broker only allows you to buy local companies, we advise finding a broker that allows you to invest in global companies. Please visit the brokers page to see recommendations.