Investment

Top 3 investing tips for first-time business owners

December 3, 2018

We’re now near the end of the fiscal year and companies are beginning to allocate funds and plan their budgets for 2019. This is no different for new business owners who are beginning to look at where to invest for their own businesses. With a new fiscal year comes a fresh year of opportunity for new business owners to bring their ambitions to light.

You’re generating revenue and making money, but what you do with your profits will make the difference in the long run. Here are some investment tips for first time business owners to ensure they’re allocating money into programs and initiatives that will provide them with ROI and ultimately help to drive their business.

Thoroughly research the best investment options for your business

The most important thing for any small business to do before investing money in stocks is to thoroughly research their options. Exercise caution and don’t jump in too quickly. Make sure you have vetted the market and have a solid understanding of how investments are made. It is mandatory for public companies to provide financial and other important information to potential investors. Analyzing that information can help to determine whether it’s best to buy, sell or hold a particular stock.

Align your investments with your business goals.

There are many investment opportunities to consider for your business before making any kind of commitment. Before jumping into the investment game, the end of the year is the best time to take stock of your business goals. Review your current business plan, debt load and financing. If you closed out the year with surplus profits, you’re at an opportune time to consider investing. If not, it doesn’t make sense to take money that’s needed for another part of your business to solely multiply your holdings. There’s always the risk your investment will turn sour and not go as planned. So properly outline and vet each investing opportunity with your business’s best interest in mind. Investing should be a way to enhance income, not supplement it.

Diversify your investments

If you’re a small business owner looking to begin or expand your investment portfolio, stick to the the age-old proverb that still holds true – “don’t put all of your eggs in one basket.” Diversifying your investments is one of the most important strategies of successful investing.

When small business owners see surplus profits rolling in, many of them tend to put all of their money back into their own business. While investing in your business is good, it’s also good to invest money into things outside of your own business to reap some additional profit. Markets always change and business sectors go out of favor, so concentrating your funds into one asset increases your level of risk. If you solely invest funds back into your company and something were to happen to your business, you may put your company in financial jeopardy. The same can be said if you only invest in one stock and it devalues. By diversifying your investment portfolio, you reduce your overall risk as an investor and ultimately help preserve your business interests.

As you look toward expanding your growth and revenue in 2019, when making your first investments remember to rigorously research the right investment options for you business.  Keeping your investments aligned with your business goals, and diversifying your investments are several best practices for any small business owner looking to make smart investments. With a well-measured, diversified approach to investing, you can set your company up for increased revenue and success going into 2019.

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