CandleFocus

Kicking The Tires

Candlefocus Editor
Kicking the tires is a phrase commonly used in the financial and business world to describe a minimal amount of research before making an investment decision. The phrase takes its roots from car buying, referring to someone who inspects a car before purchasing by looking under the hood to assess the engine and other vital components, as well as circling around the car to thoroughly inspect its outside appearance. Likewise, kicking the tires of an investment can give the potential investor a brief overview of the new venture, and make an educated guess whether this may be a successful investment or not.

Although the concept of kicking the tires has its advantages, such as not consuming too much time and energy to conduct research and make decisions, it can also be a double-edged sword. The information obtained may only be superficial and leave out key strategic and financial triggers that influence the success or failure of the venture in the long run. This can be dangerous if the investor is not aware of the pitfalls of relying solely on instinct and trust in the spark of excitement.

Kicking the tires can be a viable approach to investment decisions, especially when one is familiar with the risk level and deal terms, and have a thorough understanding of the basics such as market condition, industry trends, and the venture's business model. It is also wise to confirm upfront whether the venture satisfies a clear value criterion which is of interest to the investor. A successful investor should then proceed with conducting further research, truly kick the tires, and evaluate the venture's potential for performance, its risks, and its competition.

In conclusion, kicking the tires is an effective and efficient way for investors to make quick decisions without jumping the gun. However, it should be approached with caution, as a thorough and in-depth research should always be conducted prior to making any investment decisions. An investor who understands the potential of their investment and the associated risks should be able to step back and analyze their venture’s long term prospects, or at the least kick the tires to ensure they get a good deal on their investment.

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