What Any Small Business Owner Should Consider

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As of 2019, there are over 30.7 million small businesses in the U.S. These small businesses account for 99.9 percent of all the country’s businesses. And each of these small businesses has one main objective – that is to be successful.

However, the outbreak of the COVID-19 pandemic placed a hamper on this number one small business objective. Countless small businesses have to shut their doors forever as capital is scarce and revenue is low. For those fortunate ones who were able to adapt to the change of tides, every day is a constant struggle to survive.

Nonetheless, 2021 is a promising year with vaccination rollouts. Financial Times reported a significant decrease in COVID-related deaths since the first month of the rollout. As COVID-19 cases continue to decrease, it means people will be back to work and businesses will start to operate normally again.

Considering these, perhaps now is high time for your small business to think about investment opportunities. Even with the vaccines’ promising initial results, we can never be certain if COVID-19 or any other significant event will put the economy in turmoil again.

Investment Opportunities for Your Small Business

#1 Low-cost Stocks

Stocks are the best bet when it comes to investments. However, most of us automatically associate stock investments with high-cost stocks. But that is not necessarily how it should be.

Apart from those big brands in the stock market, which could cost thousands, there are plenty of promising stocks which you can own for a few dollars.

There are also those stocks called penny stocks. Penny stocks are essentially common stocks sold in the market for less than a dollar. Though it is a highly volatile investment, it is worth the gamble for a rookie investor.

Trading penny stocks is an excellent way to learn the stock market and to develop investing skills. Once you are confident enough, you may move on to other stock investments.

The adage not to put all your eggs in one basket significantly applies to stock investment. Try to diversify your portfolio. That way, if one stock devalues, your other stocks might have a chance to profit.

#2 Invest in Your Business

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Though it may sound a little bit implausible since we are talking about investing outside of your small business, investing in your brand is another great opportunity to raise more money. The more your business thrives, the more money it will generate in the future.

The business investment covers everything that adds to the growth and betterment of your business. It could be purchasing new office equipment, upgrading your existing employees’ skill sets, or launching a new product.

Before you jump ahead, keep in mind that the amount you invest in your business should not be taken directly out of your business funds. Only the surplus profits after deducting expenses, taxes, and salaries, could be used for investment. Otherwise, you put your small business in huge financial trouble.

Nonetheless, it is not an absolute rule that you cannot spend money that you do not have to invest in your small business. You can always qualify for a small business loan. In any case, have a plan for how your business could pay off the loan.

#3 Invest in Rental Properties

If you are hesitant to invest in stocks or want to diversify your investment portfolio, you should consider investing in real estate. Renting out real properties can provide your business with an additional stream of income.

With mortgage rates at their lowest in 30 years and with a promising forecast that real estate inventories will increase this year, it is now high time for your business to test the waters of real estate investment.

#4 Consider Mutual Funds

If you do not like the risk involved in monitoring and managing your stocks by yourself, then a mutual fund might be the right call for you.

This investment opportunity involves multiple investors with their money pooled to invest in securities such as bonds, stocks, money market instruments, and other assets. The risk involved in mutual funds is extremely low, making it a safe investment opportunity for your small business.

#5 Save for Retirement

As much as you love running your business, at some point, you have to retire from your career. And when you do, you need a consistent flow of money to cover up your expenses once you stop working. So, before it is too late, consider saving up for your retirement plan.

Many small business owners plan on funding their retirement with the proceeds they receive after selling their business, and a lot overestimate the value of their enterprise.

Rather than just heavily relying on your small business for your retirement plan, consider opening a savings account for your retirement if you do not have one yet. Keep making monthly contributions, and if possible, try to max out your contribution each year.

Each small business is different, and it follows that the best investment strategy for your business might be different from the others. Nonetheless, these tips are good headstarts if you plan on increasing your business’ wealth.

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