Among the biggest secrets to maintaining a successful business is figuring out the right investment strategies to meet the needs of an ever-changing market.
The only problem is, investing comes with a lot of risk. And, as a startup business, raising capital can be hard to achieve. This is where an effective investment strategy can make all the difference.
As a startup, you need to diversify your funds to attain financial stability and stay afloat during challenging times. Understanding investment is important to help you make better decisions with regards to your profit and budget.
Learning the right strategies can steer you closer to attaining your long term business goals… Will it be to grow your enterprise? Grow your business with the intention of selling? Or to expand your list of offerings?
Knowing your business goals is important to help you establish a solid foundation for your investment strategies.
Why is investing important for a business?
Inflation rates seem set to continue rising. The longer you keep your money in your cash register or bank account, the more it will lose its value. Although investing is not a prerequisite to running a business, it does help increase your chances for success.
When you invest, you can increase your funds, whether it’s from marketing your products or investing outside your company. This will allow you to have more leeway to take calculated risks moving forward. In this article, you will learn three different investment strategies you can use to achieve steady revenue:
1. Invest in online marketing
As a startup business, it’s imperative to know where your potential customers are going to be. To reach them, you’ll need to invest in a marketing strategy.
Marketing is vital for every business. With limited financial resources, you’ll want to make the biggest bang for your buck. The best choice any business can make in this day and age is to invest in online marketing; it helps build awareness, generate leads, and increase sales.
Who can you reach via online marketing? Well, there are 4.7 billion active users of social media globally. This constitutes around 59% of the world’s total population. These users represent everyone from consumers and small business owners to buyers for massive multinational corporations. No matter what your ideal customer looks like, you’ll find them easiest via online marketing.
What online marketing strategies are available?
Social media marketing
Social media marketing is an effective approach to engage, build awareness, and reach potential customers beyond your local area. While there are many different platforms available, the good news is that you don’t have to be on all of them to generate sales.
Search engine optimization
Search engine optimization (SEO) is another online marketing strategy that increases the credibility of your website, especially to search engines. SEO is an ever-changing field made up of multiple components, making it a long-term online marketing strategy. However, it will require commitment, patience, an innovative mind, and integration of different SEO tools.
But once you find the right strategy, your business will see an increase in revenue.
For a business to increase sales, it’s not all about ‘pitching a sale’. What we mean is, as a business, you don’t have to always promote your brand to try and increase sales.
Content marketing is an online marketing technique predicated on providing valuable information to the public. This could be in the form of an infographic, tutorial video, or insightful blog post. Like SEO, content marketing is a long-term strategy that helps you become a trusted brand in the eyes of consumers.
2. Invest in areas aside from your business niche
As a small business owner, you’ll want to know how to properly invest your funds. And sometimes, that may include investing outside your business niche, especially in the early stages. Even if you see profit early on, you might struggle to innovate and expand later on. This could be due to financial pitfalls and lack of equipment, leading to a decline in interest from your customers.
The idea behind this investment strategy is to diversify the movement of your cash flow. This gives you a better ability to weather any unforeseen events in your niche while still generating income.
There are different places where you can invest your money for positive returns. Here are some of them:
- Stock markets
- Real estate
- Emergency fund
We understand that this may divert your attention from managing the day-to-day operations of your business. Fortunately, there are registered agents and financial advisors who can help take the load off. They’ll handle some of the most time-consuming and rigorous tasks for you.
Invest in bonds
If you’re confident your business will continue to grow, you should consider investing a portion of your profits in bonds. On the other hand, you could also become an issuer of a bond.
While this may offer lower returns in comparison to stocks, bonds are a low-risk speculation for investors. You’ll receive a predictable income stream, financial security, be able to diversify your investment portfolio, and combat inflation through interest payments.
For simplicity, a bond is a loan issued by a private company, municipality, or government entity to multiple investors. Entities will issue bonds to raise capital for future projects, reposition their finances, or sustain day-to-day operations.
Now that you have the basics on how to invest in bonds, what if you become the issuer? What will compel you to file for a bond instead of borrowing from, say, a bank?
Advantages of bonds:
- Bonds offer lower interest rates and less limitations than bank loans
- Income investors make from bonds lowers the issuing company’s tax burden
- Bonds don’t diminish ownership interest
- Bonds help preserve capital and offer more flexibility
In general, there are five types of bonds:
- Treasury bonds
- Savings bonds
- Corporate bonds
- Agency bonds
- Municipal bonds
There are no perfect investment strategies or completely risk-free investments. It takes research, analysis, and most importantly, time. And as a startup business, you may have other priorities that will make you hesitant to shell out any money.
But once you find the right mix, you can create significant returns for your business. If you’re still learning how to invest, remember to never put all your eggs in one basket. Diversify your investments in a way that matches your budget and risk tolerance.
Featured image source: Pixabay