If you’ve never thought about investing some of the capital from your small business, these small business investment strategies are worth taking a look at
If you’ve never thought about investing some of the capital from your small business, these small business investment strategies are worth taking a look at. As a small business owner, you will no doubt be always looking at ways to grow your enterprise. You might be thinking about curating new marketing strategies or even working on some new products and services. But, what you may not have given any consideration to are investments.
You might not think it, but investing isn’t just something that individuals do. Many organizations from SMEs to international corporations invest some of their capital for various reasons. The obvious one, of course, is to make that money grow. But, they also do so to lower their tax liabilities!
If you’ve never thought about investing some of the capital from your small business, it’s something you should start thinking about. Here are some brilliant investment strategies for you to consider for your company:
Property
Perhaps one of the oldest known investment strategies for a business of any size to increase its net worth is by investing in property. It doesn’t have to diversify into property management; it can simply buy the premises that it is located in!
Sure, property prices go up and down all the time as economic factors influence values. But, the value of your premises will go up over time and is a good long-term investment idea. Also, it gives you the security of knowing that your business won’t have to look for a new base because the owner wants to sell your building, for example.
Stocks
Investing some of your firm’s money in other companies might seem like an alien concept to you at first. However, it can become both a lucrative and wise strategic decision to make! Believe it or not, businesses invest in other companies all the time. It’s not uncommon for firms to own a percentage of others by purchasing stocks or “shares” in them.
Let’s say that you run a small manufacturing business. You might wish to invest in startups or established firms that are also your clients who you feel have tremendous growth potential. It’s a mutually beneficial idea because of two reasons. First, the value of your stocks will grow and, second, your clients will have extra capital to enable them to expand and make more money!
Before you buy any company stocks, it’s important to do plenty of prior research beforehand. You want to find out everything about the company including how it’s run and who runs it. fortunateinvestor.com will give you some pointers on the subject, including how to invest in startups.
Mutual and exchange-traded funds
On the other hand, if you’d prefer for someone else to manage investments for you, it might be wiser to stick with mutual or exchange-traded funds instead. In a nutshell, a hedge fund manager or financial institution will offer you the opportunity to invest in a fund to suit your requirements.
Assuming the HFM or FI has a good track record, you can be sure that your investments will grow over a long period. The advantage of such an approach is that you can rely on an industry expert to make wise investment decisions with your money. Plus, you can decide on the level of risk versus growth that you are happy with.
Lending to other businesses
As with property, another of the oldest investment strategies is by lending money to other firms. Thanks to the Internet, it’s possible to pool your cash with other companies via a peer-to-peer lending organization like lendingclub.com. When that money gets lent out, you will receive a percentage of the interest generated plus, of course, your original investment.
Of course, it’s a long-term investment strategy, and so you shouldn’t expect to grow your money exponentially in just a matter of weeks! You could also decide to lend money to other companies in your niche, perhaps in exchange for a stock dividend rather than interest.
Saving
Although technically not an investment in the conventional sense as say buying company stocks, saving money is a relatively risk-free way to grow any spare capital. Many small businesses put aside extra cash and lock it away in long-term savings accounts for a return of a fixed interest rate.
The only downside to savings accounts is that, nowadays, they seldom pay high amounts of interest to savers. Having said that, saving some of your cash can be a good strategy for many reasons.
For instance, you could put the money in a tax-free savings account to keep your liability down. You may also want to establish a “rainy day” fund if you need to pay for expensive assets or emergency costs.
Stocks
Investing some of your firm’s money in other companies might seem like an alien concept to you at first. However, it can become both a lucrative and wise strategic decision to make! Believe it or not, businesses invest in other companies all the time. It’s not uncommon for firms to own a percentage of others by purchasing stocks or “shares” in them.
Let’s say that you run a small manufacturing business. You might wish to invest in startups or established firms that are also your clients who you feel have tremendous growth potential. It’s a mutually beneficial idea because of two reasons. First, the value of your stocks will grow and, second, your clients will have extra capital to enable them to expand and make more money!
Before you buy any company stocks, it’s important to do plenty of prior research beforehand. You want to find out everything about the company including how it’s run and who runs it. fortunateinvestor.com will give you some pointers on the subject, including how to invest in startups.
Mutual and exchange-traded funds
On the other hand, if you’d prefer for someone else to manage investments for you, it might be wiser to stick with mutual or exchange-traded funds instead. In a nutshell, a hedge fund manager or financial institution will offer you the opportunity to invest in a fund to suit your requirements.
Assuming the HFM or FI has a good track record, you can be sure that your investments will grow over a long period. The advantage of such an approach is that you can rely on an industry expert to make wise investment decisions with your money. Plus, you can decide on the level of risk versus growth that you are happy with.
Lending to other businesses
As with property, another of the oldest ways to invest is by lending money to other firms. Thanks to the Internet, it’s possible to pool your cash with other companies via a peer-to-peer lending organization like lendingclub.com. When that money gets lent out, you will receive a percentage of the interest generated plus, of course, your original investment.
Of course, it’s a long-term investment strategy, and so you shouldn’t expect to grow your money exponentially in just a matter of weeks! You could also decide to lend money to other companies in your niche, perhaps in exchange for a stock dividend rather than interest.
Saving
Although technically not an investment in the conventional sense as say buying company stocks, saving money is a relatively risk-free way to grow any spare capital. Many small businesses put aside extra cash and lock it away in long-term savings accounts for a return of a fixed interest rate.
The only downside to savings accounts is that, nowadays, they seldom pay high amounts of interest to savers. Having said that, saving some of your cash can be a good strategy for many reasons.
For instance, you could put the money in a tax-free savings account to keep your liability down. You may also want to establish a “rainy day” fund if you need to pay for expensive assets or emergency costs.
Well, I hope these investment strategies has given you some sufficient food for thought. Thanks for checking it out!
