Suppose you have to evaluate microfinance ventures. One of the proposals is for opening a hairdresser’s shop in Guatemala City.

The proposal argues that there must be significant demand for hairdressing and other cosmetic services because the city has lots of such shops already and several new ones open each month. It predicts that the demand for such services will continue to increase, given the increasing number of convenience stores in Guatemala that sell hair coloring dyes and hair straightening solutions. What are the risks involved in this proposal? Would you advise investing in this venture?