Owning and operating a business is no easy task, especially when the cash flow is on the low. While determination, talent and skill can and do make a difference, they are alone not enough to running the business at its best – as a business owner, you need to keep your finances running as well.
One of the best ways to keep yourself from getting shorthanded in the financial department is to invest in other areas. Here are some tips that can help you get started:
Invest in Penny Stocks
Basically, a penny stock is a common stock that can be bought from the market for less than one dollar. While it isn’t the most stable form of investment, it is a worthwhile one – especially for new investors – due to the extremely low amount that is required to invest. If you are new to investing, investing in penny stocks can help you nurture your skills as a beginner investor until you get used to it. Once you are accustomed, you can either experiment with more penny stocks or practice with other, more heavier types of investments.
Make Sure that your Investments Line-up with your Business Goals
To make the best from investments, small business owners must consider how their investments align with the business. As a small business owner, you must keep in mind that the whole goal of investing is to enhance the income earned by your company. You must know that in the event the investment does go south, you will end up losing the money invested, and in some cases may even end up with some kind of liability yourself. Such a situation is difficult to recover from.
While all situations can never be predicted, one can plan well to keep things from going south. For starters, before you make any sort of speculations, you must consolidate your business goals, planning, credit, and financing, and always make sure that the investment you make does not put the core of your business into any kind of dilemma. Additionally, you must always have an informed opinion and never treat investment as anything close to gambling.
Make Investments in Multiple Places
Making investments in multiple places has a very key benefit. Not putting all of your eggs in one investment basket protects you from having to suffer great losses in case any one of your investment ventures fall out. For instance, if a particular stock devalues, you will continue to gain profits from other stocks.
Invest in Mutual Funds
Every investment you make has a certain level of risk and return, and there must be a level of equilibrium between the numbers and overall experience of the investor. If you’re among the small business owners who are only starting out, you are better off making investments with a lower amount of risk. And that’s where mutual fund investments come in.
Large-sized mutual funds have hundreds of stocks that are combined in a single place, with a fund manager who adds money to the fund in order to increase its growth rate. In investments like these, the level of risk is very low, making it a suitable opportunity.
Don’t Use Leverages
While leverages do have a tendency of increasing your profits, they have an equally high chance of diminishing them as well. This makes it much like gambling, which is always bad news for you and your business. In case things do go bad (which happens when you do use leverages), the broker could issue a margin call, which would then need you to invest extra cash to level the deficit even.
Minimize Taxes and Fees
The process of selling and trading in a market often comes with hidden fees and taxes that you must consider, especially as a small business owner. If you don’t track these and keep them under control, these fees will climb up to as much as 30% of all profits, thereby making the whole purpose of increasing cash flow useless. Prior to making investments, you must take a close look at the taxes and fees involved to determine whether the fees are worth for the amount of risks you take.