When creating a business, you have a lot of decision making to put into place. Making good decisions can mean major gains, for yourself and your business. Bad investments can mean you stay in the red or even worse, a business failure. Some personal investments can sink your business. Take care to steer clear of investments that could possibly take your business and dream off the map.
One of the worst investments that anyone can make is depreciating equipment. Investments such as cars should not always be considered investments. The price of vehicles always depreciates, and continues to do so year after year. If you are in a business that must have certain equipment, purchase equipment models that are known to hold their price. In the event that you must liquidate some of your business assets, you will receive some of the monetary value of these back rather than losing cash.
Volatile Real Estate
Purchasing a home is something that many people dream of. Investing in real estate can be a dream come true or can turn into your worst nightmare. If you live in a real estate market that is not on solid ground at the time, making this investment can cause you to lose a good amount of money in your personal life and can cause harm to your business. It is best to avoid real estate while the market is still unstable. If you do wish to invest in real estate for the business, choosing a good brick and mortar location for your store can be the best real estate investment possible.
High Interest Loans
Loan products can help you get the business off the ground, however, be careful about the types of loans that you sign for. High interest loan product can be a major risk more so than an investment. The payments on high interest loans can be large. High interest loans are also likely to be longer in terms, meaning more money has to be paid out to the company and for many years. Be careful not to bankrupt your business by attempting to find more loans for the business. If necessary, save rather than going the high interest route. If you do need a high interest loan amount, you may want to make a plan to pay off the loan faster than scheduled.
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Too Much Venture Capital Risk
Venture capital is one of the most unpredictable markets ever. It has great rewards and it also has the risk of losing all of your money completely. Venture capital should be reserved for those who are ready for major risks. In order to be ready for venture capital, all other ducks must be in a row. Proper insurance, including health insurance and life insurance must be in place. It is also advisable to have a hefty savings and good plan if you are interested in venture capital investing.
Investing in Failing Business
Some people choose to invest in businesses that are failing or business that are looking for a new buyer due to their poor performance. An entrepreneur should approach buying or investing in other businesses with much caution. Buying other business and revamping or bailing out businesses may not work, and the business may close. If the business closes or goes bankrupt, the investment will be completely lost, bringing in no return to put into your real business.
Blind Stock Investments
With any investment path, you must have a plan. Though the stock market can be played similar to a game, you do not want to blindly purchase stocks. This can cause a monetary loss, which can make things harder for your business. Make out a plan, perform the necessary research, and possibly seek out advice that you need to invest properly.
Making No Investments
One of the worst investments is making no investments. Not attempting to save or make money for a business through other ventures can be detrimental. If you don’t make any other investments, you may find yourself constantly taking money from the business to afford everything else. No investments, even in smaller arenas such as bonds, CDs, and secure investments mean that you will likely take longer to get the business off the ground. The longer your business takes to make the money it needs to survive with no personal investments to fall on, the higher the rate of business failure.
What kinds of personal investments have you made, and how profitable are they? Are you one of those who are afraid to invest? Share your experiences with us. Leave your comments in the comment box below. Please share this post with your friends if you find it helpful. Remember to join our mailing list to receive our updates and promo announcements.
Travis Holmes is a financial blogger with a passion for business and frugality. He believes a balanced wallet is a balanced business and that if you plan on making some personal life investment moves that you are sure.