What Is Investment To You? Find Out If You/Your Small Business Are Making Costly Investment Mistakes

Not taking time to ask yourself a vital question like; what is investment, could be a very costly mistake that no one ever want to make. Many small businesses struggle with their investments because the managers in charge or the business owners confuse all sorts of financial commitments to be investment. Committing your hard earned money is not a rocket science, it is as simple as understanding the basic rudiments of investing and living by it. In this article are simple golden rules that when followed will ensure that you are not just wasting your money but actually investing them in a worthwhile venture.

I will start by providing a non-technical meaning of what an investment is before going further into exploring other condiments that makes an outstanding investment.

WHAT IS THE MEANING OF INVESTMENT?

In a simple everyday language, investment is a calculated and well articulated move that we make in order to grow our money, Simple!!! For you to grow your money, it has to still remain alive. After all, dead items do not grow. This simple definition of investment will now smoothly translate our discussion into exploring those characteristics that must be possessed by any form of investment.

SIX (6) FEATURES AND QUALITIES OF GOOD INVESTMENTS

The aim of this section of the article is to allow you ask vital questions about your investment strategy. If you find your investing strategy wanting in any of these points discussed below, it then could mean that you are taking an investment risk that could be very costly.

1. SAFETY: For the money that you commit to any venture to qualify as an investment, the safety of the capital must be assured. You cannot make any sensible investment economic wise if your initial capital is not safe. You need to be sure that you are not throwing away your cash.

2. ABILITY TO GROW: After you must have guaranteed the safety of your proposed investment, the next thing that you must look out for is the presence of potential growth. The rate of this growth must be greater than the prevailing and possibly foreseeable inflation rate.

3. TRANSFERABLE: A lot of people might find it difficult agreeing on this point but, think of it. How can you divest from the financial commitment involved in investment if there is no way you can transfer your stake in the venture? Is a simple fact, there must be a way of transferring ownership; else, that is not a potential investment.

4. CAN RUN ON AUTO PILOT: Real investments do not necessarily need your presence to meet other characteristics of quality investment. So, be sure that what you are about committing your money to will not require you to constantly be there.

5. EXISTENCE OF AN EXIT ROUTE: Yes, you must clearly see the exit route before you enter. Do not worry if you lack the skill to do this, you investment adviser will surely be vast in this.

6. NOT BASED ON LUCK OR INTUITION: As obvious as this point may be, people still overlook it at their detriment. Investment is too important to be based on mere luck or guesswork.

My experience over the years as both an accountant, investment analyst, and an auditor has shown me that any investment that a business makes based on the key principles identified above goes on to flourish and multiply. It does not matter whether you make these investments as a small business or as an already established business.

And the good news is that everyone can follow these simple investment golden rules as stated in this article and still get the same result.

If however you are too busy to do your due diligence before committing your money to investment, I would suggest that you contact an accountant who has experience in investment analysis or any other professional investment adviser or a qualified financial planner. Your business is too precious to be allowed to die at an early stage.

Angel Investors and Franchises

If you are looking to open up a small business then a franchise may be the best route for you as these businesses carry very little risk. Additionally, if you need outside financing from an angel investor then you may be in luck. Due to the very difficult economic climate, angel investors are always looking to provide small businesses with investment capital provided that the business carries only a moderate amount of risk. Established franchises are typically the most secure small business investments that an entrepreneur or an angel investor can make. This is primarily due to the fact that the business will have instant brand name visibility. Additionally, your franchising company will provide you with a substantial amount of additional support in regards to marketing, accounting procedures, as well as potential future financing should it be required. However, franchises typically come at a much higher cost than starting a similar business from scratch. This is due to the fact that most franchising companies demand a very large up front fee in order to do business in their name.

One of the other issues that you should be aware about regarding franchises is that both you and your angel investor will have very little say as it pertains to the day to day operations of the business. There are very definitive rules, as outlined within the uniform franchise offering circular, that tell you exactly how your specific business needs to operate. As such, you may face a double edged sword when you are looking to establish a franchise with the assistance of an angel investor. First, you are going to need to comply with all of the rules and regulations set forth by the franchising company. Second, your angel investor is going to want to have a certain level of control as it pertains to how you specifically operate the business in regards to generating a strong return on an investment. As such, you should carefully consider whether or not it is in your best interest, as well of that of an angel investor, to make as substantial capital investment into a franchised business.

In closing, franchised businesses can provide you and a private funding source with long term economic stability as well as capital appreciation due to the low risk nature of these businesses. However, all of the issues described above need to be clearly discussed and examined before you make the decision to buy into a prepackaged business.

Why Would You Need Investment Guidance?

With the current world economic status, money is a lot harder to earn than it was before. If you have earned a significant amount out of hard work, you definitely would have to keep it safe or invest it in a secure business that would make it grow bigger over time. If you have earned a significant amount out of luck, so much more that you should keep it or invest it in a good business because there may be no other lucky day as such for you.

An investment is putting a significant amount of money in a business or property in the hope of getting a bigger profit from it. The profit that you would be getting over time greatly depends on the kind of investment you decide to put your money into. If you decide to invest in a wrong business there may also be a chance that you would lose your money. To make sure you do not end up broke it would be a good idea if you get reliable investment guidance from a reputable wealth management company especially if it is the first time you have to handle a huge amount.

You would need investment guidance especially when you are making a decision about what business to invest on and how much money you should invest. Someone who is experienced in guiding people about making these types of decision can easily tell whether you are thinking of the right business or not. They also have the capability to give you a rough estimate of how much money you will be getting from it as a profit. They also know how much money you can afford to risk in a totally new investment and they can recommend ways on how to guarantee that your investment will be safe and secured.

Most often, when you are managing an investment, you only get to see how things are going based on your own perspective. You do not know how others see it which is why there could also be instances when you would not know what went wrong or what caused you to lose your investment. To see things in a lot clearer and less biased way, you would need investment guidance. An experienced professional in guiding investors would be able to tell you how your investment is going and will be able to tell when you should back out or expand in it.

You would need investment guidance to save you and your money from bankruptcy. You need it to guarantee yourself that the money you have either worked so hard for or luckily had won will be safe and secured. You need it in order to make sure that you make your money grow instead of just spending it on things that do not earn. You would definitely would not want to end up begging on the streets just because you failed to manage your wealth well enough to keep it or even make it grow.