This series continues from Part 1 where you can find the first six questions and is adapted from the book “The Investment Checklist” written by Michael Shearn.
The second segment of the comprehensive checklist includes questions on understanding the business from the customer’s perspective.
Remember that these questions serve to enhance an investor’s understanding of a business, but should also be used in conjunction with other frameworks for analysis.
There are eight questions relating to customers but I will focus on the first four in this article, with the next four appearing in a subsequent article.
7. Who is the core customer of the business?
When evaluating a business, it’s important to know the types of customers the business is serving.
Is this a B2C (Business to Customer) or a B2B (Business to Business) model?
B2C customers are generally fickle and less loyal than B2B, barring some exceptions.
It’s also useful to define the demographic of the customer if possible (for B2C)...