Three Clever Ways to Invest In a Business
When many people think of investing in a business, they right away think of investing in the stock market. Sure, that’s one way to invest. But if you’re looking for something a little more hands-on when it comes to investing in a business, then I encourage you to consider these three options…
Option 1: Invest In Your Existing Business
If you already have a business, then one good place to put your money is right back into it.
See, here’s the thing…
A lot of business owners pull all the cash out of their business and put it into their personal bank account. But the business doesn’t grow, because they don’t have enough cash to invest in the business. This is especially true if they’re just getting their business off the ground.
So here’s an idea…
Set aside 50% or more of your business profits to reinvest directly back into your business. You can invest in advertising, product creation, content creation, copywriting, or any other number of activities that returns a nice profit on your investment.
Option 2: Buy a Business
You can approach this in multiple ways.
The first approach is to buy a new or struggling business, put a little spit and polish on it, and then flip it for a fast profit.
For example, let’s imagine you find a business with a GREAT product, business model or other concept, yet the business is struggling to make money. You do your market research and see there is a demand for the product. So you purchase the business, market it the right way, and then sell it once you’ve put the business in the black and built its assets (like a mailing list).
The second approach is to buy a business, and then keep it yourself for the long term. Depending on your skills, budget and needs, you can buy a struggling business, a new business, or even a well-established business.
An established, profitable business of course costs more to buy, but it also tends to be a good investment if it has steady, proven profits. A new business is a good investment if you have the skills to grow it. A struggling business is a good investment if it simply lacks good marketing. Naturally, it’s a bad investment if no one wants the product or service. That’s why you need to do your market research and due diligence before you purchase any kind of business.
Option 3: Become an Angel Investor
If you don’t really have any interest in the hands-on aspects of a business, but you’d still like to reap the rewards, then you might consider becoming an angel investor. Typically this means you invest in a start-up business. If you have a lot of money to invest, you might be the sole investor, which saddles you with a lot of risk, but also the potential for reward. Otherwise, you can team up with other angel investors and make investment decisions together.
Either way, the key to making a great decision is to do your homework. Be sure you know as much about the industry, the business model, and the founders before you think of even investing a single penny in the venture. There are no guarantees when it comes to investing, but you can lower your risk by doing your due diligence upfront.
So which one is right for you?
Some investors prefer to focus on just one of the options above, while others prefer to do two or even three options. What you ultimately decide depends on your own risk tolerance, how much money you have to invest, and your skills.
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