Best Investment Strategies for Small Businesses

By: First Union | Date:

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Best Investment Strategies for Small Businesses

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As a small business owner, you're looking to gain success in your field and make some money along the way. With almost 30 million small businesses in the US alone, competition for customers can be fierce. Entrepreneurs need to have their eye on what they can do to stand out from a crowded field while also taking the time to make smart investments both for the business and for their futures as well. So where are the sound investment strategies for business owners? What are the best money moves to make in this coming year to help cushion that nest egg? In this article, we look at some of the best investment strategies for small business owners in the coming year.

Investing in Your Business

Yes, we are looking at strategies to help business owners make better and smarter investments for themselves, however, investing back into the business is one of the wiser investments an entrepreneur can make. The more successful a firm is, the more money the owner of that firm will make. Therefore, putting money back into that brand to help it grow simply makes sense.

What form might such an investment strategy take? You could purchase new equipment with money you're otherwise looking to invest. It might mean an expansion of some form, or how about hiring more staff. Anything that goes toward the overall growth and strengthening of your business infrastructure is going to be beneficial to you as the business owner. Look at investing in your company like this, the better and stronger you make the business, the better chance your income from it will follow suit.

Consider the Stock Market

If you do opt to invest in the stock market, you don't necessarily have to spend a fortune on big-name stocks. That is where many investors are mistaken. In fact, in recent weeks some of the lower-cost stock options have proven the most lucrative and have consequently made shareholders a decent amount of money. How do you know which stocks to invest in? You could start by researching various industries and sectors and see where the potential lies.

Especially given the current circumstances around the globe, certain sectors are emerging as increasingly popular and thus successful. This means that the value of some of the lower cost stocks within those sectors is bound to rise in the coming year.

Understand Risk

Investing in entities and assets that carry a bit of risk could potentially net you a greater return on your investment. If the asset has little risk involved, the amount of return will be relatively low. This is why having a diverse portfolio and a mix of both lower and higher risk investments is often the best strategy. In this way, you are mitigating that risk but also increasing your chances of making money by potentially big returns down the road.

Invest in a Retirement Account

Perhaps one of the biggest mistakes that business owners make is not dedicating enough to their retirement accounts. At some point in time, you will step away from the business whether it is sooner, or the company endures until you are ready to officially retire That said, do you have enough put away to live on even when no longer working? This is why having a retirement account to which you make monthly contributions is so critical for any business owner. You need to ensure that your future is protected financially.

Hire an Accountant

Probably the primary reason a business owner should always have an accountant…taxes. As an entrepreneur, you are responsible for both the business's taxes as well as your returns. Taxes, as most know, can be frustrating not to mention time-consuming, and you do have a company to run after all. An accountant can save you time, plus probably a fair amount of money, as they often understand how deductions and write-offs work better than someone not conversant with the tax code. If you miss crucial deductions, you may as well just leave money sitting there on the table. Using an accountant and getting all relevant deductions, it stands that you might receive a larger refund which in turn can be invested.

Establish Your Budget

Having a budget in place for any business is absolute, without question necessary to the ultimate success of that business. You want to know exactly what is coming into the company and what is going out. At any given time, you need to know where your cash flow stands. And you also want to make sure that you are not overspending on a budget item and therefore losing money. A budget can help you to determine where the firm might be inefficient and thus what cuts need to be made. Here again, could be more money for you to use as far as your investments go.

Have a Cushion in Place

Usually, a business will have reserve funds to use in case something unexpected emerges and money is needed to handle the issue. Business owners though don't always have this for their personal use. Having your cushion to deal with problems and the surprise is essential. What happens if something occurs that prevents you from working for a time and the company for whatever reason needs to temporarily halt operations? You will need money to live on; this is where a cushion is so important to you personally. You can start small; put away a few dollars each week. The important thing is to grow that reserve fund over time.

First Union Lending is here to help. We work with small business owners across the US. We get our clients the working capital they need when they need it. And all of our loan programs are custom-tailored—no one size fits all approach with us. Call today and let's get started together!

Invest in a Retirement Account

Perhaps one of the biggest mistakes that business owners make is not dedicating enough to their retirement accounts. At some point in time, you will step away from the business whether it is sooner, or the company endures until you are ready to officially retire That said, do you have enough put away to live on even when no longer working? This is why having a retirement account to which you make monthly contributions is so critical for any business owner. You need to ensure that your future is protected financially.

Hire an Accountant

Probably the primary reason a business owner should always have an accountant…taxes. As an entrepreneur, you are responsible for both the business's taxes as well as your returns. Taxes, as most know, can be frustrating not to mention time-consuming, and you do have a company to run after all. An accountant can save you time, plus probably a fair amount of money, as they often understand how deductions and write-offs work better than someone not conversant with the tax code. If you miss crucial deductions, you may as well just leave money sitting there on the table. Using an accountant and getting all relevant deductions, it stands that you might receive a larger refund which in turn can be invested.

Establish Your Budget

Having a budget in place for any business is absolute, without question necessary to the ultimate success of that business. You want to know exactly what is coming into the company and what is going out. At any given time, you need to know where your cash flow stands. And you also want to make sure that you are not overspending on a budget item and therefore losing money. A budget can help you to determine where the firm might be inefficient and thus what cuts need to be made. Here again, could be more money for you to use as far as your investments go.

Have a Cushion in Place

Usually, a business will have reserve funds to use in case something unexpected emerges and money is needed to handle the issue. Business owners though don't always have this for their personal use. Having your cushion to deal with problems and the surprise is essential. What happens if something occurs that prevents you from working for a time and the company for whatever reason needs to temporarily halt operations? You will need money to live on; this is where a cushion is so important to you personally. You can start small; put away a few dollars each week. The important thing is to grow that reserve fund over time.

First Union Lending is here to help. We work with small business owners across the US. We get our clients the working capital they need when they need it. And all of our loan programs are custom-tailored—no one size fits all approach with us. Call today and let's get started together!

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