Why Should Investors Invest In Your Business

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Should You Start A Business Or Invest In The Stock Market

1. Why should you invest?

We all dream of having a comfortable life where we can provide for our loved ones, treat ourselves occasionally, and have financial security. But achieving our dreams often requires having enough resources, pushing us to work harder and find ways to earn more.

Being employed is the first thing that comes to mind when we say we need a steady source of income. But sometimes, our regular paycheck is enough to support our ever-growing needs. We then think of ways to budget our limited income, or for the entrepreneurial, to earn more by offering products or services for profit.

Our income for being employed or for being an entrepreneur is called an active income because we earn by exerting effort to work. But did you know you can earn passive income by letting your money work for you? This is called passive income.

Now you consider two options: either start a business or invest in stocks. Starting a business allows you to earn active income, while investing in the stock market allows you to earn passive income.

Before you decide, here are some things you should think about:

Consider the risks involved

Asking the question, Should I start a business or invest in the stock market? is like choosing between caramel and vanilla. There is no correct answer because it all boils down to preferences, personal skills, level of knowledge, and resources.

Consider the amount of time you have to spend

Consider your level of knowledge and skills

Why Should You Consider Investing

Investors invest with the goal of seeing a return on their investment. In business, investors put money into growing businesses so they can make money. You should invest your money if you wish to improve your fortune. You can invest your money in things that have the ability to generate high rates of return. You will miss out on chances to increase your financial value if you dont invest. The possibility of losing your money in investments exists, of course, but if you invest correctly, your chances of making money are better than if you never do.

These are some points on which you should think about investing your money:

  • Money Growth: You may increase the value of your money by investing it. The majority of investment options, including stocks, certificates of deposit, and bonds, provide long-term returns on your capital. This return enables your funds to grow and generate wealth over time.
  • Retirement Savings: You really do need to start a retirement savings plan while you are still working. Put your retirement funds into a diverse investment portfolio that includes things like real estate, companies, foreign direct investment, technology investment, and education investment. When you reach retirement age, you can then live off the income generated by these investments.

Therefore, the abovementioned points give us brief information on why we should be considering investing our money.

Looking for an investment company to start your investment journey?

The Top 10 Traits That Attract Investors To Your Startup

Sep 12, 2022 | Startups

Startup investors are looking for the next great opportunity, an innovative company with a potential for high profits. Do you think your startup has this potential? If youre looking to secure funding for your business, you need to understand what attracts startup investors.

Based on our work in assisting companies with their finance and fundraising efforts, weve compiled the top 10 things investors desire in their next opportunity.

The Top 10 Traits that Attract Investors to Your Startup1. A market they know and understand2. Powerful leadership team6. Demonstrations of consumer interest7. A clear, detailed marketing plan8. Transparency9. Realistic and reasonable startup costs10. Long-term vision and planIn a hurry? No problem!

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Highlight Your Past Successes And Achievements

Another way to convince investors to invest in your business is to highlight your past successes and achievements.

If you have a track record of success, this will show potential investors that you are a safe bet. Include information about any awards or recognition that your business has received and any notable milestones you have achieved.

Here is how you can highlight your past successes and achievements:

  • Include information about any awards or recognition that your business has received
  • Mention any notable milestones that you have achieved
  • Talk about how your business has helped others achieve their goals
  • You can also use customer testimonials and case studies to show your businesss impact.

Branch Into Other Sectors

Not Investing in Your Business is a Money Mindset Problem

The more you invest in your growth, the more you can expand and respond to changes. For instance, you can add more branches or invest in operations closer to the customer or farther from the customer . If you own a retail operation, you might expand into warehousing or, as a warehouse business, you might invest in physical stores. For instance, grocery retailers often own their own distribution centers and may even own a transportation company. You can expand your online operations or develop a brick-and-mortar business. For instance, Amazon started building both stations for customers to pick up or return purchases, as well as a few physical stores.

You can even enjoy the process of creating a new product or business and building it into something much more successful. For instance, Apple invested a massive amount to develop the technology for their first iPhone. Over time, this investment paid off handsomely, making them the leader in smartphones.

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Understand Where To Make Savings And Where To Invest

Make money work in your business.

Finance might not be the flashy, enjoyable side of running business, but its what underpins everything you do. Without the systems and processes in place to properly manage the money in your business, you cant make key decisions on investment or long term strategy or even the simple stuff like day to day running costs.

Maybe your business is growing and you need to get things more organised by going digital or you might already have the systems in place and need advice on investing for future growth. Whatever you need, getting external, expert advice will put you on the right financial track. See how expert advisers could be funded through a grant from the North East Business Support Fund

OPERATIONS

Not Understanding The Industry

Not understanding your industry will discourage investors. You should conduct thorough market research to understand the target customers, competitors, regulations, and other vital information. You should have relevant experience or a team with expertise and qualifications in this sector. Investors will not invest in your business if you dont have actual numbers about your niche market.

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Show The Users Benefit

Its easy even for experts to overlook this basic notion. At an MIT Enterprise Forum session an entrepreneur spent the bulk of his 20-minute presentation period extolling the virtues of his companys productan instrument to control certain aspects of the production process in the textile industry. He concluded with some financial projections looking five years down the road.

The first panelist to react to the business plana partner in a venture capital firmwas completely negative about the companys prospects for obtaining investment funds because, he stated, its market was in a depressed industry.

Another panelist asked, How long does it take your product to pay for itself in decreased production costs? The presenter immediately responded, Six months. The second panelist replied, Thats the most important thing youve said tonight.

The venture capitalist quickly reversed his original opinion. He said he would back a company in almost any industry if it could prove such an important user benefitand emphasize it in its sales approach. After all, if it paid back the customers cost in six months, the product would after that time essentially print money.

The venture capitalist knew that instruments, machinery, and services that pay for themselves in less than one year are mandatory purchases for many potential customers. If this payback period is less than two years, it is a probable purchase beyond three years, they do not back the product.

Reduced Pressure To Repay

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As an investment isnt classed as a loan, an investor usually wont restrict you to the rules of a loan. This means that youre not usually held to tight deadlines and upfront repayments, with interest added on top. As a result, this can take the pressure off you having to make set repayments, allowing you to focus on your business instead.

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A Passion For Solving Customer Problems

The difference between a numbers-only business robot and someone with a passion is that the passionate entrepreneur wont give up even when everything seems to be going wrong. Where others call it quits, a passionate team keeps fighting, launching new products, trying new , and coming up with new ideas. Thats the kind of commitment and determination investors are looking for.

All things being equal, a passionate entrepreneur is more likely to stick it out through the inevitable difficulties that come with starting a business and eventually push it to success. For that reason, investors want to know that your business isnt just your job its something you feel you were born to do.

Have A Clear Vision And Strategy For Your Business

One of the things that investors will be looking for is a clear vision and strategy for your business. They want to see that you have a well-thought-out plan for how you are going to achieve your goals.

Your investor pitch should include a detailed overview of your business, your target market, competitive landscape, and growth plans.

It is also essential to show that you clearly understand the financials. This means articulating your expected revenues and margins and your burn rate and runway.

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What Do Investors Look For Before Investing

As mentioned earlier, different investors have different criteria for what they look for in an investment.

However, there are some general things that all investors will consider before investing. These include the business idea, the team behind the business, the market opportunity, the financial projections, and the exit strategy.

Clean And Clear Intellectual Property Position

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  • If applicable, you have taken the necessary steps to protect ownership and to enable access to any intellectual property that is critical to the operation and success of the business.

With these resources and information about the business in hand, you are now ready to approach prospective investors about your new business opportunity.

Thinking of raising money? Weve created a free online course to help you get investment-ready. Check out Introduction to Investment Readiness and learn useful tips, tactics and strategies to prepare for your seed fundraising round.

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Equity Investments In Small Businesses

When you make an equity investment in a small business, you are buying an ownership stake, or a “piece of the pie.” Equity investors provide capital, almost always in the form of cash, in exchange for a percentage of the profits .

The business can use this invested cash for a variety of actionscapital expenditures needed for expansion, cash for running daily operations, reducing debt, or hiring new employees.

In some cases, the percentage of the business the investor receives is proportional to the total capital they provide. For example, if you invest $100,000 in cash and other investors put in $900,000, you might expect 10% of any profits or losses because you provided 1/10th of the equity.

In other cases, the percentage of ownership and dividends can differ. Consider the investment partnerships Warren Buffett ran in his 20s and 30s.

He had limited partners contribute nearly all of the capital for his partnerships, but profits were split 75/25 to limited partners, in proportion to their overall share of the capital, despite having put up very little of his own money. The limited partners were fine with this arrangement because Buffett was providing the expertise.

Opportunities In Global Markets

The United States is renowned for innovative goods and services, high standards of quality, customer service, and sound business practices giving U.S. exports a unique competitive edge. U.S.-based businesses are connected with 20 additional countries through free trade agreements, providing enhanced access to over 790 million consumers. And the United States does not put up barriers: according to the World Bank, no other country has more rapid export procedures.

Global companies recognize the value offered by the United States as an export platform. The U.S. affiliates of foreign companies alone export US$370 billion worth of goods more than a quarter of all U.S. goods exports.

The United States is consistently ranked among the best internationally for its overall competitiveness and ease of doing business. Backed by a regulatory environment that is particularly conducive to starting and operating a business, U.S. business culture encourages free enterprise and competition. As a stable democracy with a transparent and predictable legal system, all companies regardless of national origin compete on an even playing field.

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Voluntary Disclosures Program Not To Be Taken Lightly

Our new Tax Alert highlights how past amendments by the Canada Revenue Agency to the Voluntary Disclosures Program , along with recent court decisions, demonstrate the VDP should be used with extra caution. For those seeking immunity from interest and penalties, it is clearer than ever the VDP has become more restrictive, signaling the CRAs heightened desire to combat tax evasion.

A Market For Your Product Or Service

Episode 2: Why Should I Invest?

Your job is to convince investors that not only is there a big enough market for your product, but that your place in that market is a sure thing. You also need to make sure your requested investment capital makes sense. If youre asking for $100,000 in investment for a 10% share in the business, for instance, you need to show that theres sufficient market size for you to become a million-dollar company.

To do this, first lay out data proving that theres a large market opportunity and customer base. Then, explain in detail how you have an unprecedented advantage, how your business model makes you unique, and what problem youre solving that your competitors arent. If youre an early-stage founder seeking venture capital and lack past performance metrics, its even more crucial to get this right.

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Three Reasons Why You Need Investors

Posted On: October 19, 2011

If you want to be an entrepreneur, there may be one skill above all others that you need to have or need to learn: Sales. Even if youre the best at what you do other people dont know that and thats where your ability as a salesperson goes to work. The late Steve Jobs was arguably the best at what he did but he also possessed the art of pitching a product and bringing people on board.

An entrepreneur not only has to sell to his/her customers but also to investors and that, according to business coaches, is one of the most feared tasks reported by future or current entrepreneurs. Although some attempt to fund their own startup, for more capital intensive businesses, that is often not possible. Even if you are able to fund your business on your own, there are some reasons why that may not be the best idea.

Diversify

An entrepreneur quickly becomes an investor regardless of their investing experience and part of investing is diversification. You cannot commit 100% of your retirement savings to the opening of your business and you cant use all of the equity in your home either. By spreading the potential liability out to other investors, you dont have to put your entire financial net worth at risk.

Not Just Money

Negotiators

Bottom Line

How Is Your Cash Flow

Spending money you dont have isnt always off-limits, which is why things like small business loans and investors exist. But in any case, you should always know how much cash you have available, how and when youre planning to spend it, and where you might run into issues. Even if you have a small business idea with a frugal mindset, it doesn’t mean your business always has to run on minimal investment. If you are looking for investment or funding to grow your business, check this guide on how to get a business loan.

Whether youre using a business loan calculator, planning out how youll spend a loan, or how youll spend your monthly operating expenses budget, getting a handle on your cash flow is something you need to do before you make any big investment decisions. That way, you wont end up without enough money to cover your next inventory order because you took a big swing and overspent on a Facebook ad campaign.

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Know What You’re In For

Look for ways to keep the amount of equity or percentages as low as possible when negotiating with an investor. For instance, ask for a smaller amount of money initially, rather than a sum you feel youll need over a few years. This allows you to give away a smaller slice of your business in exchange for the capital, leaving you with more as owner of the company.

Forget about being too aggressive in your negotiations, however. Bear in mind that if the company falls flat, then the investor gets nothing. A business investor will not shell out the dollars unless they’re being compensated for the risk they are taking.

How To Convince Investors To Invest In Your Business

Why should one invest in Mutual Funds?

In this guide, we will share some top tips on how to convince investors to invest in your business.

Investors are always looking for new opportunities to invest in. But with so many businesses vying for their attention, it can be not easy to stand out. If youre hoping to attract investors to your business, youll need to make a strong case for why they should invest in you.

Here are a few tips on how to convince investors to invest in your business:

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