A successful investment hinges on three critical factors :

1. How to identify a good business opportunity?

2. Why is the business owner willing to let you share the profits?

3. How to minimize the cost of acquiring this business?

Simply excelling at the first factor can often prevent losses.

-- And here's a personal lesson from the team that ran it --
Two years ago, by chance, the author was invited by the owner of a coffee shop chain in Kaohsiung to invest in his new store, which was located diagonally opposite to a certain coffee shop near Kaohsiung's Zhongzheng 4th Road.

Out of curiosity, we spent a few days observing the area. In the morning, we noticed a steady stream of office workers stopping by for takeout coffee. Afternoons were equally busy with people holding business meetings. It seemed like an ideal location — demand already existed, and the area naturally attracted customers.

We asked the owner just one question: “Consumers will definitely notice your shop, but how do you plan to entice the customers from across the street to walk over and buy your coffee?”

Several days later, he called to discuss the deal again, but his focus remained on cost-saving measures — introducing his carpenter contacts and sharing how he could cut renovation expenses. We then decided not to invest.

Why? While managing costs is important, it's even more critical to ensure the business meets the conditions for profitability. It's better to invest $80,000 in a winning formula than lose $40,000 slowly over time.

Responding to Factor 1 : Identifying a great business opportunity.
A business can be broken down into two components :
(a) What is the business in the eyes of others?
(b) How does the business make money?

Take Warner Village Cinemas as an example. To most, it's a movie theater. But a deeper analysis reveals that its primary revenue stream isn't ticket sales — it's popcorn and beverages.

This insight raises two important questions :
① Why choose popcorn over other snacks?
② Is there a natural connection between watching movies and eating popcorn?

Popcorn's advantages become clear: it's a warm snack that doesn't store well, making it inconvenient to bring from home, and it's inexpensive to produce. This ensures high margins.

However, solving the first problem alone doesn't guarantee success. To truly create a sustainable business, consumers must naturally associate watching movies with eating popcorn.

Was this connection innate? Not at all. Early Western films and TV shows deliberately included scenes of characters enjoying popcorn during movies. Over time, this subliminal messaging ingrained itself into our cultural memory.

The Essence of a Business

Even with these factors aligned, is the business ready for investment? Not quite.
A business's essence lies in how others perceive it. For example, if a customer has a poor experience at a cinema, they are unlikely to return, which means lost opportunities for high-margin popcorn and beverage sales.

This is why businesses must invest in their core experience. These investments create what we often call a “moat”— a competitive advantage that protects the business from threats.

Summarizing the above, is it possible to invest in this business?Not yet.Because you have other movie theaters to choose from such as the Mandarin, the Xutai, and so on!

※ Primary market (new business angel investment), this involves 2&3 two levels, another article to discuss.