The world has changed, and you need more than one source of income to survive the challenges of the modern world. That is why you need to start up or invest in small businesses, you might fail at some, but you’ll eventually grow as you gather more experience. As we all know, trading has been the oldest occupation of man, and it’s still the best way to generate income. Here, we will discuss how to invest in small businesses and make a good return.
Invest In Personal Business
There are different ways to invest in small businesses today, the first to start up a small business with available resources. There is numerous business you can start, but many depend on the available capital. Below are some of the small businesses anybody can start now.
This business model involves the buying and selling of goods online. It is easy to set up with minimal capital, and you can easily upscale the business. Amazon and Walmart are examples of e-commerce businesses.
This is a smaller version of the e-commerce business, and it is easier to set up with minimal capital. You can set up a one product Shopify store to focus on just one product. Many dropshippers buy from AliExpress and sell to customers in the United States and Canada. You can buy a product at $1 on AliExpress and resell for $20 in the countries mentioned earlier.
This is similar to dropshipping, but you will be buying and selling services instead of goods. Most digital agencies are involved in such business. They receive contracts from big companies and outsource to freelancers on Fiverr, Upwork or other freelance platforms.
Investment in Local Establishments
This is the traditional form of investing in small scale businesses. This method involves the investments of funds in small scale enterprises like restaurants, book stores, hotels, catering, supermarkets, boutiques, and others. It also includes the act of investing in family and friends ideas.
Many small scale businesses are going through financial difficulties and may require a bailout from another party who will be a co-owner or a shareholder. If you’re an investor who wants to invest in such businesses, here are some helpful guidelines.
• Find businesses with potentials.
The first step is to find small businesses with profit-making potentials in your state or region. The company you find should require a financial investment. You can find interested and qualified businesses by posting ads on social media and other media platforms.
• Review the business plans.
Probably you’ve posted the ads, and business owners are now contacting you. The next step is to review their business plans and know if the business meets your standard.
• Check the business current financial position.
It is essential to know the history of business finance before investing your funds. Hence, you should check the business financial statement.
• Discuss the amount to be invested and profit-sharing formula.
This is one of the most critical steps when investing in small businesses. Make sure the estimated amount required is accurate and ensure that you’re on the same page with your partner on the sharing formula.
• Fund the business account.
This is the last stage on how to invest in small businesses. At this stage, both partners have signed the agreement. The next thing is to fund the business account and start working towards your business goals.
• Monitor the businesses grown
Monitor the businesses grown through a easy to use platform like TRUSTe. This platform allows you to monitor the important numbers on the progress of your return, directly from the borrower's bank account for free. As long as your investment is within a specific dollar amount.
Invest In Small Businesses through Investment Platforms
They are numerous investment company that allows members of the public to invest in small businesses through their platform. This is the easiest way to invest if you can’t handle the stress that comes with personal business. Below are some of the investment companies.
Fundrise is one of the platforms that allow anyone to invest in small business. The investment offered through this platform is in commercial or residential real estate. You can invest in a portfolio filled with real estate projects and earn 8.7 – 12.4% annual returns
LendingClub is another platform that lets you invest in making returns. It is a peer-to-peer lending platform that enables consumers to borrow from corporate and individual investors instead of banks. LendingClub lets investors acquire notes, which correspond to portions of loans and to earn competitive returns eventually.
There are many ways to invest in small businesses across the globe. However, it is crucial to choose the best invest method that works for you.