How Can Investing Help Your Business Grow?

Growth is on the mind of every business owner, no matter the size of their company or how long they’ve been in business. And while most of them will actively and carefully consider different ways to improve their operations, they may omit to consider investing as a way to grow.

Let’s examine how investing can help your business grow and what you need to keep in mind if this is the route you decide to take.

The Benefits of Investing in Stocks

Investing in stocks can be very beneficial to your business in several different ways:

1. The average stock market return is around 10% per year, and it has been this high for nearly a century. This is higher than what you can expect from most other forms of investment.

2. The annual inflation rate stands at around 3% per year. When you compare it to the above-mentioned 10% in returns, you’ll notice that investing in stocks can help you protect yourself from inflation to a certain degree.

3. Dividends are also a great way to earn a passive income. While it may not be exceptionally high, it is still money you don’t have to work to earn, which you can further invest in your business.

4. Stocks are a liquid investment, and you can buy and sell them very easily. If you ever need a cash influx, you can obtain it by selling some of your stocks.

5. Investing can also help you connect with other people in your industry, as well as people who run other companies you can learn from or partner up with.

6. You can start small and work your way up. You don’t have to have a huge capital available, and you can get the ball rolling with as little as a couple of hundred dollars, or even less.

This is why a lot of individuals and businesses choose to invest in stocks. If they choose the right stocks, they get to see a steady income without having to spend a lot of time managing them.

The Risks of Investing in Stocks

Investing in stocks does come with some risks as well. Here’s what you should know before you consider it:

● The stock market is volatile. It declines 10% from its high every 11 months, around 20% every four years, and over 30% at least once in a decade. This means that you may end up losing money, if the crash occurs at a time when you’re actively investing.

● If you have a lot of debt to pay off, focus on that rather than on investing in stocks, as early repayment can have a higher return.

● You always need to have an emergency fund that will cover any unplanned expenses your business may face. This should not involve selling your stock.

● You will need to invest some time in researching stocks that are worth your attention. While blue chip stocks are often considered the best investment to make, you can also choose others that have a decent return and that are issued by credible companies. If you don’t have the time or can achieve more by investing it in your business, reconsider your stock market investments.

The risks of investing in stocks are usually outweighed by the benefits. As long as you can afford to lose some of your investment and you’re able to do your research, you can find the funds to grow your business.

Where to Find the Money to Invest

The question that naturally arises is where you will find the money to invest. Since this is a business investment (and not your personal one), you can (and should) consider taking the money out of the business, in a way.

You can, for example, choose to pay yourself a smaller salary or skip a couple of payments that you will use as an investment. Of course, this is only feasible if you can cover your personal expenses from what you’ve already earned or if there’s another family member who can take on the household expenses for a month or more.

You can also choose to lower your operating expenses. This may not always be an option, but you may be able to save some money in several ways. Letting people go is not the only way to do it, though, so don’t immediately start considering making a personnel cut.

You can change suppliers too, for example. Take a good long look at your expenses and figure out if there is any room to cut costs. If not, don’t worry; you can also take the profits and use them as an investment. This means you will again have to take away from what you may otherwise have taken home or refrain from investing the money back into the business, but it can be a viable option.

Understanding What You Want to Get out of It

Before you start investing, you should also carefully consider why you are doing it. Since the goal is to grow your business, set yourself a specific figure to make sure that you’re on track and that the investment is bringing you closer to your goals.

Make sure that the goal is not a very important one or one that you want to achieve in the next year. Investments take time to pay off. If you want to earn money to increase your ad spend for the next quarter, you will need to find the money elsewhere.

Maybe you want to find the fund to refurbish the office or branch out? Aim to set yourself a “nice to have” investment goal, one that you don’t need to achieve immediately to grow your business. As your stock portfolio grows, you can invest more, earn more, and ensure that some of your short-term goals are met as well.

Wrapping Up

Investing in stocks can be a great way to help your business grow. However, you’ll need to be prepared for a potential loss. Also, make sure to take stock market volatility into account when making the choice to generate additional funds for your company this way.

About The Author

Sarah is a life enjoyer, positivity seeker, and a curiosity enthusiast. She is passionate about an eco-friendly lifestyle and adores her cats. She is an avid reader who loves to travel when time allows.