Before investing your savings into a business venture, Marc Leder believes it pays to conduct due diligence and to take the necessary steps to make sure that the business which you plan to invest money into is a viable business, which is likely to provide you with a decent return on your investment.
How to invest in a business:
Decide whether you can commit to launching and operating your own business
The first critical decision you’ll have to make is whether to launch your very own business or whether to invest in an existing business. If you don’t have the necessary capital and time to invest into a new business, you may be better off investing in a business which has already launched. As your only responsibility will be to inject money into your chosen business.
However, if you’re willing to invest a lot of time, money and energy into your own business, you may be able to set up a business which will earn you passive income for the rest of your life.
Try to figure out your initial operating costs of investing in a business
If you choose to launch your own startup business, one of your very first goals should be to work out your initial operating costs. Costs which you may need to factor in include the cost of purchase or renting a storefront and paying manufacturers to create your first batch of products.
If you choose to invest a private company, you will still incur investment related costs such as paying an investment company to purchase stocks on your behalf.
If you choose to found your own company, decide how you plan to fund your business
While it’s highly likely that you’ll invest a great deal of your savings into your startup, you may require a great deal more capital, in order to get your business off the ground. So you may have to consider taking out a business loan or opting to sell a small portion of your business, in exchange for much-needed capital.
Make sure that the business you choose to invest in has a sound, calculated business plan
Whether you need to decide whether or not to turn your plans for a business into a reality or you’re looking to sink cash into someone else’s business, make sure that the business in question has a sound business plan, which shows you exactly how the business will make a profit within the first six months of operation.
Never make the mistake of sinking your savings into a business, which doesn’t have a well thought out business plan as chances are high that you’ll lose all of your initial investment!
Consider meeting with a financial advisor
It’s well worth meeting with a financial advisor, you’ll be able to look over your investment plans, to tell you whether or not they are viable.
Before you invest your money into a business venture which you’re excited about, simply refer back to this handy guide in order to decide whether or not you should go through with your investment.