How Small Business Owners Can Invest

If you are running a business, then you probably know a thing or two about investments already. However, unless you own an accounting firm or a financial consultancy of some sort, chances are that there’s always more to learn. Stay with us as we share a few intelligent tips on how small business owners can invest and make the most of their money.

Reinvestments: Growing Beyond the Startup Phase

Where should a small business owner invest the most? Ideally, it should be in their own business, because without regular reinvestments, it would be quite impossible to grow beyond the initial size. 

The idea is to reinvest a large section of the profits at the end of every financial year, in ways that either directly or indirectly, can potentially boost the company’s productivity and sales for the next. The steps will differ in accordance with the specifics, but the chief idea will remain the same.

Forex: Better and Bigger than Any Other Financial Market

To give readers an idea regarding how big the foreign exchange market is, the comparison below should be useful:

  • In April 2016, $5.1 trillion per day was estimated to be the global FX average
  • The New York Stock Exchange averaged $38.5 billion per day in May 2017
  • NASDAQ managed to see an average of roughly $85 billion per day in May 2017

These are some of the best figures for each that were made public. As should be evident by now, the difference between forex and any other stock market is astronomical (1,000 billion = 1 trillion)!

Bigger is also better for small businesses in this case, because of the amazing maneuverability and liquidity that forex investors enjoy. Of course, someone new to FX will need proper guidance to get started, but when it comes to choosing a broker, you can get good advice from Jack Morgan over at Financeeo. You can start as small as you want to, but combined with the broker’s advice and your own growing experience, you can raise the stakes later on when you are ready.

Stocks: Learn to Manage Risks

Stocks are riskier, which is why risk management takes priority here. Go through the pointers below to manipulate the risks of stock exchange intelligently, and use them in your favor:

  • Assess the risks of an investment in each company and not just the sector
  • To begin with, buy low-value stocks only
  • Spread your total investment across multiple sectors
  • Learn how one industry’s loss can be the other’s gain
  • Stay updated with developments in the global market and with global news
  • Learn to relate seemingly unrelated developments to predict stock fluctuations

Do keep in mind that it doesn’t matter how small a business is, or how dedicated you are to your entrepreneurial goals, there needs to be a clear separation between business investments and personal investments.

Where you draw that line is up to you, but the line needs to be there all the same. Grow and invest in your business, but don’t forget to secure your own financial security in the rush, as well as that of your family.

Photo by Got Credit

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.