One of the undoubted side-effects of modern technological advances is the massive growth of entrepreneurship.
The internet has virtually removed the old barriers-to-entry across many business sectors. In the past, the average person would have had limited opportunity to set up their own business, many would have no opportunity at all.
But with the arrival of the internet, we have seen an explosion in business opportunities at grassroots levels. From the global reach of online marketing to the ever-increasing choice of eCommerce platforms like Shopify, a magento enterprise alternative that is capable of handling small startups and growing online businesses, thousands of ordinary people are now able to follow their passions and visions, setting up businesses and enterprises at all levels.
There are hobbyists, just following an interest in their spare time to make a bit of extra cash. Then there are ‘solopreneurs’, often driven by the desire to be their own boss, work from home or live the laptop lifestyle. The next level entrepreneur is the lean start-up, a small business with big dreams and plans for organic growth.
And of course, there will always be people starting up traditional small businesses or setting up family-based enterprises.
Starting, running or owning a business has long been a dream for many and today’s cultural trends and commercial opportunities are enabling people to turn their entrepreneurial dreams into reality.
Many of these people will be born bootstrappers, building their businesses from the ground up. But a good proportion of this expanding group will require outside funding to get off the ground.
So, if you are new to investing and keen to find viable, sensible ways to begin, these budding or even seasoned entrepreneurship could be an ideal opportunity for taking your first steps into the world of commercial investments.
Here are some tips for finding suitable entrepreneurs and ventures to get started.
Start close to home
One of the best ways to start investing is with people you know and trust. Are any of your friends or family looking to begin new ventures?
In his book, How To Be Smart With Your Money, business titan Duncan Bannatyne explores the option of loans to family and friends as a viable source of funding, which can work well as long as everyone is clear on what’s expected. If you’re looking to invest in a small or budding project, asking around within your current social circle may be a good place to begin.
This tactic has the added advantage of knowing who you’re dealing with. This is often one of the biggest risks in any investment, because a business’s success can sometimes be less about the idea or venture and more about the person or driving force behind it.
So if you believe in your friend or family member, if you trust them and know they have the drive and commitment to make a success of their idea, investing a relatively small amount in backing them can be a great way to begin your investing career.
Many small businesses require only relatively small investment sums to achieve their funding needs or growth objectives. This makes them an ideal opportunity to begin ‘experimental investing’, where the goal is more about learning skills and investment savvy than massive financial gains.
With small investments, there is also less pressure for instant wins and less expectation for a substantial return. So, if the investments do turn out to be a ‘learning experience’, ie you don’t make any money or lose your capital, (which can happen to even the most seasoned pro), you can consider it an Investment School tuition fee, or simply an investment in your business education.
It’s much easier to write off these as a learning experience when you have only invested a small amount of your money.
Investing in people you know on a small scale can be savvy tactics for a Beginner Investor, as long as you don’t get carried away with emotion or excitement.
Before you decide who or what to invest in, get clear on your circumstances as well as your intentions and define some sensible guidelines about what would make a worthwhile investment for you.
Here are some good questions to ask yourself before you go out looking for investment-seeking entrepreneurs:
- How much can you afford to invest?
- How much do you want to invest?
- How much are you prepared to risk?
- How comfortable are you with the different levels of risk?
And some sensible questions to ask once you find a potential opportunity:
- How much do you trust the business owner?
- How much you believe in the venture?
- What sort of return do you think is realistic?
- How does the likely risk compare to the potential return?
Hopefully, these tips will inspire you to explore the current trend of entrepreneurship for ways you can begin your investment adventures. You may find it to be an experience that rewards you on all levels – from the joy of supporting a friend’s dream to the satisfaction of learning new financial skills, and of course, the lucrative benefits of putting your money to work for you.