Running your own business is not for the fainthearted, but it can be incredibly rewarding when things go well. Of course, succeeding in business requires hard work, dedication and the ability to plan strategically for the future. Whether it is marketing a new product, upgrading your IT infrastructure or looking into office management, there are always lots of things to do.
One key thing to make time for is thinking about how to use your company's spare profits. For many business owners, the path that they choose to take is investing. The great thing here is that there are lots of different markets to put your money into, depending on what you feel most comfortable doing. From investing in stocks to dealing in currency or getting involved with peer-to-peer loans, there is a feasible investment type for all businesses out there.
Before you invest your money though, you need to take a step back. Simply risking your business's profits without preparing first is foolhardy. Instead, you need to spend some time making sure that you are ready to invest with confidence. Very often, it is as handy to know what not to do! Here are some of the classic mistakes that many businesses make when investing.
Not getting to grips with the basics
As noted above, the temptation is to start investing money in a rush to make some more. The problem here is that you are in effect gambling with no rationale for what you are doing, rather than properly investing. To invest more sensibly, you should first research the various markets you could invest in and then choose one that you feel most comfortable with. Once you have done this, you need to read and find out more about the market you have chosen.
Once you feel that you understand how it works and how to invest in it properly, you can begin putting money into it. AskTraders has a guide that it has updated for 2019, which is great for new investors. It not only covers all you need to know to get going but is also easy to read and understand. Reading material like this is essential to succeed as an investor.
Investing all your money
Another common trap that many businesses fall into when investing is putting all the money they have spare into it. This can really come back to bite you if you have a sudden emergency that you need quick cash to sort out. Let's say, for example, a key piece of machinery breaks down and you need some of the spare cash in your business account to repair it. If you have tied it all up in investments, then it could be tricky and costly to access. To make things easier, always leave a decent amount in your business account and then invest the rest.
Trying to time the market
When starting to invest, it is tempting to try to time your entry into the market to take advantage of an upturn in it. It is then tempting also to take your money out of the market when it takes any kind of dip. The problem here is that timing the market is nigh on impossible and can see you miss out on profits in the long term. You should instead focus on whether the asset you are looking to invest in is a solid proposition overall and being offered at a sensible price. If you do this, then it will be a good investment regardless of what the market is doing on a single day.
Acting like a trader rather than an investor
This may sound strange as most people think that traders and investors are the same. While they both put money into the financial markets, they in fact have a totally different approach. For most businesses, acting like an investor is better. This would see you invest money for the long term and not be making lots of trades every day. Why is this better for many businesses? Firstly, it is a lot less time-consuming, so you can get on with running your own company. Secondly, investing for the long term cuts down on broker fees and allows you to rise out of any market bumps - this should see you make a profit in the long term.
Investing is a smart choice for business
If you are a business owner, then you know how key it is to protect your cashflow. A key part of this is having a few different revenue streams open to keep the money flowing in. Investing is a great example of this - when done right, it can help you through any lean periods in your core business, until things pick up again. If you need a few tips on getting started, then the above should help.
