The financial press is on its way in, and business finances will suffer. TechCrunch has highlighted another 0.50% interest rate from the Fed, and that’s putting an end to the era of free and easy finance for startups everywhere. Simply put, there’s less money in the system, and that means fewer ways for businesses to continue growing.
For many businesses, the best option is to hunker down for some time – solidify income streams, embrace their customer base and loyalty, and look to build on their niche. With that will come efficiency savings – and the opportunity to build capital.
One way of achieving that is through private business investment, and doing so in a creative yet pragmatic manner will help to create new capital for future growth. However, with the market itself volatile, it’s important to first look for guidance.
Looking For Industry Information
Investment is, of course, always a difficult process – the investment of your own capital is always a risk. According to the Economic Times of India, the rate of failure is up to 95%. When it comes to business capital, you can end up not only damaging your own financial future, but that of your business, too.
There is of course the benefit of your business being liable, but that means you have an extra level of diligence when it comes to their finances. Accordingly, research is key – you have to be even more pragmatic than you would with your own personal investments.
The first stop is therefore a high quality industry research package. This comes in many forms; there are the popular sites, such as Yahoo and the Motley Fool. For a more granular approach, there’s a huge range of options available, ranging from IQVIA, to Dyanata, to GfK and Chris MacIntosh Capital Exploits and this is where the real research comes in.
Finding the right package for your business might take time. For instance, a recent Capital Exploits review highlights how the subscription provides guidance in avoiding pitfalls and genuine opportunities. For time constrained business owners who need time and security, this can be a huge help.
Practicing Financial Diligence
Businesses have a greater need than retail investors to show diligence in their financial matters. With stakeholders, partners, business debt and employees all requiring a greater level of care, investing to grow business capital needs to be done carefully. This means adding another principle to a business investment strategy – financial diligence and management.
To this end, Fool recommends growth stocks. These are safe stocks that present slow and steady growth, and are a way of making money without needing to spend too much time day trading – a risk – or with too much exposure to risk.
These include mainstays like Walmart, Target, and telecoms companies – aiming for stocks that concern basic human needs, like food and internet, is a good strategy. It’s easy to get swayed by the big ticket names that bring with them the promise of huge gains and quick wins – however, businesses have a greater responsibility that you need to pay heed to when making investments.
Using Index Funds
Taking one step back again are indexes and ETFs. As Investopedia notes, ETFs – exchange-traded funds – are extremely low-risk investments that can generate wealth over five years without creating a huge amount of risk or requiring in-depth attention from the investor. Returns are slower, of course, but can still be managed over a period of time that will be beneficial to business capital. They do, however, have certain risks.
One of the key risks concerns taxation. Certain ETFs bring with them exceptional tax considerations. Depending on the area of investment, tax efficiency can in fact be quite low. Conversely, however, some can offer distinct advantages.
The US Stock Equity Index, for instance, comes with superb tax efficiency, and can offer businesses advantages over what they might gather from private investments. Businesses need to be savvy with their tax arrangements and make the most out of everything they have – and that includes in investments.
Accordingly, ETFs can be a wonderful tool for growth, but you have to be judicious when picking out a scheme that works for your business.
A key theme runs through any potential investment a business is looking to make in the stock market – responsibility. Your capital is at risk, but so is the capital of your business.
There’s a lot more at stake than just your own financial health. Investment is a powerful way to raise new capital and push back against the current financial climate, but it has to be done in a way that protects the integrity of your business and keeps your risk levels as low as possible.