Every small business needs a way to earn some extra cash for the cash register. When small businesses start up, there is always a learning curve and the money doesn’t start accumulating until a few years later. Even then, it may still be a few years before everything is settled financially.
In the meantime, small businesses can make a few investments to generate passive income as they grow. 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 in something that will wear you down. The market is volatile. It goes up one day and comes down the next, 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’re willing to go without for a while (because some investments are long-term), put your money into that investment and see what you can possibly get out of that choice. But, in what is it a good thing to invest? 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 earn money from, while forex is about investing in currencies. You can place your money in US Dollars, Australian Dollars, Indian Rupees or British Pounds. The growth of these currencies 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 equal all over the world. More and more people are finding it safer to trade, buy and sell cryptocurrencies, making them huge sources of money. Learn how to invest in Ethereum, Dogecoin or Bitcoin.
Stocks and shares
‘Old Faithful’ are stocks and shares. Your small business can take some of its income and put it into day-to-day businesses. As these businesses grow and their shares are worth more money, the more money you can reinvest in your small business. The dividends you earn on these investments can be used to give money back to investors or be hidden away to maintain your business and keep it afloat.
Any advisor can easily tell you what is worth investing, how much to invest and how long it takes to earn money from this choice.
Money market funds
The least risky investment your business 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 safe investments but do not produce high profits.
These funds primarily focus on cash, cash equivalents and commercial paper. These are great investments to start with until you can raise enough funds from your business to invest a little higher with a little more risk.
Property is a great investment for your small business because it can produce a huge return in a short period of time. The best way to use property to your advantage is to own the building and the land where your business is located. When looking for investors and start-up funds for your business, the best thing to do is to look for an opportunity to purchase the building where you want to locate.
When you own the property, you can use it for other purposes, such as renting it out for storage, renting other space to other businesses, and having the ability to borrow the property if needed. Real estate is still one of the smartest investments you can have.
There are other types of investments your business should consider when you start 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. Establishing things like incentive programs for a job well done or programs to keep productivity high is smart. Gym memberships, extra PTOs, 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 wellbeing and life outside of work. When your team feels seen, they will be loyal and keep going 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 business somewhere in Europe, you can reach people from America to Australia to Africa. The more you can grow your social media, website, and e-commerce sites, the better you will perform in the global marketplace.
Make sure you pay big bucks for a marketing team that has the know-how to use these arenas to your advantage and grow your audience as big as possible. Once you have your accounts set up, you can go as far as you want and your growth will be rapid.
There are several other investments your business 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 companies that are not part of your own industry, as this is tantamount to helping the competition. Also, always invest your money in retirement funds for you and your team, as this is one of the biggest incentives to ensure a business is doing well.
When you’re smart with your money, you’ll see a greater return for your risks and the financial choices you’ve made. Invest today and build a stable foundation for your future.