Every small business needs a way to make a little extra cash for the coffers. When starting a small business there is always a learning curve and the money doesn’t really start rolling in until a few years later. Even then, it may take a few more years before everything is settled financially.
Meanwhile, small businesses can make a few investments to generate some passive income as they build. Here’s how to invest and what to invest your money in.
Calculate your risk
You don’t want to take all your money and invest it in something that will drain you. The market is volatile. One day it’s up, the next it’s down, and when it comes down, it can take everything with it. Sit down with your financial advisor and figure out how much you’re willing to risk without losing the business.
Once you know what you are willing to go without for a while (as some investments are long-term), then put your money into that investment and see what you can gain from that choice. But what is good to invest in? Let’s see.
Many people think that forex and stocks are the same thing, when in reality they are not. Stocks are shares of companies that you can make money from, while forex is all about investing in currencies. You can place your money in US Dollar, Australian Dollar, Indian Rupee or British Pound. How these currencies grow in the market directly affects your investment.
In modern times, you can also invest in cryptocurrencies. These currencies are the hottest investments right now because they are unregulated and the same everywhere in the world. More and more people are finding it safer to trade, buy and sell in cryptocurrencies, making them huge money makers. Learn how to invest in Ethereum, Dogecoin or Bitcoin.
Shares and shares
The “old faithful” is stocks and shares. Your small business can take some of its revenue and put it into everyday companies. As these companies grow and their stock is worth more money, the more money you can put back into your small business. The dividends you earn from these investments can be used to return money to investors or stashed away to support your company and keep it afloat.
Any advisor can easily tell you what is worth investing in, how much to invest and how long it should take to make money from that choice.
Money market funds
The lowest risk investment your company can make is a money market fund. These types of funds are great for paying investors while making money for yourself. Money market funds are mutual funds that focus on low-risk securities and investments that are safe but not high-yielding.
These funds mainly focus on cash, cash equivalents and commercial paper. These are great investments to start with until you build up enough funds from your business to invest a little more with a little more risk.
Real estate is a great investment for your small business because it can generate huge returns in a short period of time. The best way to use ownership to your advantage is to own the building and land your business is on. When looking for investors and seed money for your business, the best thing you can do is look for an opportunity where you can buy the building you want to set up shop in.
When you own the property, you can use it for other purposes, such as renting it out for storage, renting out other spaces to other businesses, and being able to borrow the property if needed. Real estate is always one of the smartest investments you can have.
There are other types of investments that your company should consider as you begin to see profits. These are investments in people and products. These investments are what keep you going once you start seeing a profit.
Invest in your team
Your team is your backbone and without it you are nothing. Investing in your team is the smartest thing you can do. Creating things like incentive programs for a job well done or programs to maintain a high level of productivity is smart. Gym memberships, extra PTO, bonuses and discounts for local businesses are all great ideas.
Incentive programs go hand in hand with reminding your staff that you care about their well-being and their life outside of work. When your team feels noticed, they will be loyal and continue to go above and beyond.
Online marketing is one of the smartest investments you can make. Social media connects the whole world and even if you are a small company somewhere in Europe, you can reach people from America to Australia and Africa. The more you can build your social media, website and e-commerce sites, the better you will perform in the global market.
Make sure you’re paying good money for a marketing team that has the know-how to use these arenas to your advantage and grow your audience as big as they can. Once you set up your accounts, you can go as far as you want and your growth will be fast.
There are several other investments that your company can sink into that will benefit you in the long run. The biggest tip is to always be smart and only play with the money you know you have. Always invest in businesses that are not in your own industry as this is tantamount to helping the competition. Also, always invest your money in retirement funds for yourself and your team, as this is one of the biggest incentives to make sure a company does well.
When you’re smart with your money, you’ll see greater returns for the risks you take and the financial choices you make. Invest today and build a solid foundation for your future.