{"id":3209,"date":"2021-11-18T12:52:32","date_gmt":"2021-11-18T12:52:32","guid":{"rendered":"https:\/\/michaelleander.me\/?p=3209"},"modified":"2021-11-18T12:52:33","modified_gmt":"2021-11-18T12:52:33","slug":"best-types-of-investments-for-small-businesses","status":"publish","type":"post","link":"https:\/\/michaelleander.me\/best-types-of-investments-for-small-businesses\/","title":{"rendered":"The Best Types of Investments for Small Businesses"},"content":{"rendered":"\n
As an entrepreneur, you already understand you need to invest in your business if you would like it to be successful. <\/p>\n\n\n\n
Many business owners are also looking for an additional business income, whether that\u2019s by giving themselves a raise, increasing their staff or simply investing in their businesses. <\/p>\n\n\n\n
While you can invest as an individual, there are always some investment options you can do through your business so your business becomes the investor and takes on everything that that entails. <\/p>\n\n\n\n
To maximise your return on investments and avail additional funds to your small business, we are going to look at some of the best investments small businesses and their owners can make.<\/p>\n\n\n\n
While there are various ways to invest in other businesses, direct investments are becoming very popular. <\/p>\n\n\n\n
There are two main ways of investing in a business directly. <\/p>\n\n\n\n
The first one is where a business makes an equity investment into another business. In this type of investing, the secondary business gets a percentage of the primary company. <\/p>\n\n\n\n
The primary company then gets the funds it needs for its own investments or for whatever else it needs the money for.<\/p>\n\n\n\n
When businesses buy an ownership stake in another business, they take a share of the profit made by the second company. <\/p>\n\n\n\n
One important thing to note is that the secondary business also takes on the losses and the liabilities of the second company at the same percentage as their ownership stake. <\/p>\n\n\n\n
This means business owners who are looking to invest in other businesses have to do thorough research and be careful to ensure they are investing in profitable and reputable companies.<\/p>\n\n\n\n
The second way a small business can invest in another business is through what is known as a debt investment. <\/p>\n\n\n\n
Here, the secondary business loans the primary business cash which is to be paid back at an agreed interest rate or the prevailing market interest rate.\u00a0<\/p>\n\n\n\n
Businesses can invest through regular amortisation, where the interest is paid off first and the rest of the loan is paid later, or through the purchase of a bond, which we will explore further below.<\/p>\n\n\n\n
The main advantage of debt investment<\/a> is that the lender always gets the priority should the business they have invested in go under. <\/p>\n\n\n\n This means the risk is lowered for the business making the investment as there is a high chance to get its money back no matter what happens.<\/p>\n\n\n\n Stocks have been a favourable investment option for a very long time. <\/p>\n\n\n\n Investing in stocks means buying shares (equities) of other businesses so you own a part of those businesses. <\/p>\n\n\n\n When you do this, you make a profit when the price of the shares rises and you have to take on the risk that the share price can fall.<\/p>\n\n\n\n For businesses that are looking to invest in stocks, the best option is investing in dividend stocks. <\/p>\n\n\n\n Dividend stocks are stocks that pay a certain amount depending on the terms of the contract entered into when investing. <\/p>\n\n\n\n Many companies pay a dividend annually, but it is possible to find companies that pay a dividend every three or six months.<\/p>\n\n\n\n When a business invests in dividend stocks, it means they earn money from the profits made by other companies, which is a great option to have. <\/p>\n\n\n\n The other option is to invest in growth stocks. These are stocks of companies that are growing very fast. <\/p>\n\n\n\n Although these types of stocks are riskier than other types of stocks, you will see faster growth of your investments when you invest in them. <\/p>\n\n\n\n Do note that growth stocks do not often pay a dividend because the companies behind them opt to invest money back into the company instead of paying their investors a dividend.<\/p>\n\n\n\n No matter the types of stocks you decide to buy, things have become easier for new and experienced investors. <\/p>\n\n\n\nStocks<\/strong><\/h2>\n\n\n\n