We have all heard the old phrase “it takes money to make money”. Well, have you ever wondered how you actually make that initial money so you can start really making the money? Most likely, it isn’t going to come from a regular savings account that grows slowly. Rather, it’s more likely to come from your 9-5 job. People with real money often get there from smart investing choices. It is often recommended to have numerous income streams in addition to your career job. These can be small from just selling items on Gumtree, all the way to making large investments in businesses or start up companies.
Knowing the game of investing can be tricky, but when done right can be incredibly lucrative. If you are looking to take your wealth to another level and are interested in investing in a business but don’t know where to start, then you are in the right place. Read on for 6 top tips on how to invest in business.
- Decide Whose Business
The first big decision will be whether you are going to invest in your own business, or someone else’s. There is however a middle ground which is buying a franchise. This option allows you to be in business for yourself, but not by yourself. Buying and owning a franchise can be a very smart investment as all the hard work is done for you and you merely need to implement and grow the business, with the option to open more franchises once you understand the sector.
- Have the Money Ready
If you are serious about investing, then be sure you have access to your capital so that when the perfect franchise, start up company or million dollar idea crosses your path you are ready to jump in head first. If a startup is looking for investors and they have a winning concept, you don’t want to miss out on being one of the principal investors because your money is tied up rather than liquid.
- Be Patient
Aside from lottery winners, very few people become a millionaire overnight. Investing in a business is understanding that you are in it for the long game. Often businesses will take five or more years to break even, then begin making a profit. So sit back and enjoy the ride!
- Understand the Exit Strategy
Every business, no matter what size, needs to have a clear exit strategy. When you decide to invest in a small business, get to know how, when and to who they foresee welling their business to. Are there competitors that may want to buy the business down the road or is the plan to go public? When a business is seeking investors they should have a very clear cut plan on how they will return the investors money with significant profit.
- Invest in What You Know
You don’t need to be an expert, that is the business owner’s job, but it is well worth having basic knowledge of the sector you with to invest in. Even if it is something you don’t know about, make the time to do significant research so you can ask educated questions and be in the know about growth trends and salability of the business down the road.
- Take a Breath
When startups are looking for investors their main objective is to woo you with their idea. If you have money to burn and are anxious to invest, the startup owner will be able to tell! Beware of getting too excited without doing your homework. Even if an idea seems like a perfect, flawless plan – be sure to take a breath and do some research before investing.
Once you get to the point in your financial life where you can invest in other businesses – or your own business – you should take a step back and feel proud. Many people work in their career jobs and aim to save a percentage that enables them to travel and buy small luxuries occasionally. Once you have the funds to invest you can really start building your wealth. Using the tips above you should have a good idea of where to start. Have fun with it and enjoy watching your money grow and grow and grow!