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Expert Answers to Biz Questions

Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.

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Investments You Can Make to Grow Your Small Business

 

Business owners spend 68% of their time performing daily tasks and only 31% work on growing their enterprise. Nurturing your business is important not only for sustenance but also for growth. One way to do this is to invest in different portfolios and opportunities. Reinvesting your earnings is also critical in helping your company grow and withstand shocks in the market.

Consider Stocks and Shares

There are thousands of stocks and shares that you can invest in, it is recommended to study the market so that you know where to invest. Know that there are high risks involved when you bet on stocks and shares as their value can fluctuate daily.  Hence, the more you invest, the higher the risk will become.  For example, utility stocks are relatively stable investments generating consistent earnings. Gas, water, and electricity are some examples of utility stocks. Demand for utilities is relatively stable even in times of recession while prices may be regulated or unregulated.

Hence, utility companies can pay shareholders and investors dividends because of the predicted income and profitability. However, you must also know which utility stocks to buy. There are several ways to do this. One is to use stock market investment research sites such as Utility Forecaster. These sites offer insights, top picks, and trade ideas. You can also use a robo advisor or tap the services of a stockbroker.  Whatever medium you take, it pays to do your own research to make the best decisions.

Putting Your Money in Money Market Funds

Another possible investment area for your small business are money market funds. Although they are not as popular as stocks or shares, they offer less risks because these types of funds are invested in short-term securities. By shortening the time frame, uncertainty is reduced which, in turn, helps manage risks. The typical maturity date for money market funds is 397 days or less.

An additional advantage of money market funds is their liquidity. The investments you make are liquid and you can take your money out in a few days. Moreover, money market funds are convenient since some companies allow you to issue checks to withdraw your money.  Thus, you enjoy the benefits of earning dividends and easy access to your capital. Evidently, you must study the restrictions and any fees that institutions are charging. Like any type of investment, you can also lose your principal due to fluctuating share prices. Even though fund managers will try their best to keep the share price constant, the risk of losing part or all your capital remains. In addition, money market funds are not insured by the Federal Deposit Insurance Company (FDIC) unlike saving or checking accounts which are covered for up to $250,000.

While it is important for your small business to grow by finding opportunities that will improve your cash flow and increase assets, it is vital as well that you don’t make hasty investments that can endanger your company’s financial health. To sum it up, do not invest in something that you cannot afford to lose, or you risk the life of your business.

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