Business Investment Advice
From Adviceopedia
If you have ever considering owning a business, business investment advice can be found online and through consultants or lawyers.
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Business Investment Advice
Investing in a business is not the easiest way to grow your money, but it can be financially and emotionally more rewarding than other investment options, such as the stock market where you do not have much of a say in the business' operations.
Franchises
One of the most common ways to invest in a business is to purchase a franchise, which you can then choose to either run yourself or hire somebody else to manage. This kind of business investment allows you hands-on involvement in the ultimate success or failure of your investment.
Advantages and Disadvantages of Franchises
As with any business, you will find both advantages and disadvantages. The most important issue is the over all picture and predictability of profits and loss.
The advantages include:
- Support from the parent company including advice, standardized marketing, and brand recognition
- Ability to purchase products at a better wholesale rate
- Considerably lower failure rate than independent new businesses
- Built-in system for selling the franchise should you choose to invest elsewhere
- Some independence in making decisions
The disadvantages include:
- Some loss of independence in making decisions, particularly around marketing and product selection
- Higher start-up costs than a comparable independent business
- Ongoing payment (called royalties) to the parent company that means you don't profit as fully from your success as you would from an independent business
- Dependence upon the success and efficiency of the parent company
Selecting a Franchise
When you begin researching a franchise, be sure to match the franchise opportunity to your own strengths and to your working style. Consider aspects such as:
- Technical skills needed
- Time and effort involved
- The risks and rewards involved
- How comfortable you are with the parent company's level of control
- The quality of the franchise business investment advice from the parent company
- The effect on your day-to-day life
- Your personal interests
For example, if you are not interested in a full-time business investment, consider investing in a vending machine franchise, instead of a retail or services franchise such as a restaurant or car rentals.
Angel Investing
Angel investments are private investments in businesses, usually start-ups. (Individuals do angel investing, while firms participate in venture capital.) These carry heavy risk because start-up firms typically have very little collateral against your investment, but they can also have substantially greater rewards. Most angels expect returns of about 20-30% annually, but they also face the possibility of losing most or even all of their business investment.
Angel investors usually make their investment in exchange for a share of the business (or business equity) rather than a standard loan that pays interest. Many but not all angel investors take a very hands-on approach to their investments and provide the entrepreneur with advice, connections, and other support.
Angel Groups
Angel groups are an excellent source of business investment advice. These groups meet regularly to review proposals and discuss possible investments. Some invest as a group while others invest individually and merely use the group for advice and to pre-screen applications from entrepreneurs.
The Angel Capital Association has a list of its member angel groups. Most groups have a minimum income or investment amount, but some, such as college alumni groups, have fairly low amounts.
More Business Investment Advice
For more business opportunities advice here are some other resources:
