Do you want to invest in a business? If this idea excites you, then you are not the only person who is thinking like this. Every year many first-time buyers and investors join the crowd. With the existing business, some of them can test their entrepreneurship skills and ability to take decisions. The decision regarding buying a business or invest in one is not easy decision for some people and it can be a callous decision for them to take.
Buy a Business
Over the last few years, we have experience with thousands of business owners and investors. Now we will discuss about the few practical insights to help you understand the implications of buying and investing in a business. Before buying or investing into an existing business we recommend you to ask yourself certain questions which will help you to decide the most suitable opportunity for you.
Primary Objective
What is the prime object? Do you want to setup your own joint venture? Are you interested in entrepreneurship? Do you want to be your own boss?
If your answer to the above-mentioned questions is ‘yes’, then the most suitable opportunity for you is to buy a business. In terms of amount of control and decision-making power
Professional Background and Industry Experience
In case you have experience in the industry to which the business belongs,in case of having prior experience of running a business, in case you have adequate network in the relevant domain, then buying and running a business by yourself will be a lot easier process and it will also be more appropriate. However, in case you do not possess such experience and background then investing in business might be a sound proposition.
Resources
When it comes to run a business, resources are very important aspect. Whether the business have an existing, well-established team or you have to build by your own self?
For a business one need to have loyal client base. Whether the raw material coming from an assured supply base, or vendor management going to be a constant headache?
If above mentioned questions are sorted out then buying can be a good deal. However, in case business have high potential but there are lot of things to be fixedthen it might be better to invest your money and help the owners to figure out.
Existing Commitments
As there is no ‘right time’ to buy or invest in a business. Anyone can invest their money in a business at any point of time asthere are no rules regarding that.
Are you looking to build an enterprise which will sustain your family for generations? Then we will suggest you to go for buying a business. The best way to employ your personal and professional commitments to thebuying and investingand arrive at the suitable opportunity for yourself.
Without wasting time, you should select the option which is best for you and go ahead. Our team already helped many business buyers and investors in choosing the right business opportunity through our platform. We can help you to kick start your journey and get matched to the right businesses and much more.
More Flexibility and Broader Options
- With a business, your options are much broader.
- You can sell physical goods online.
- You can sell info-products.
- You can sell advertising
- You can become an affiliate
- You can sell subscriptions to your content
- Overall, having flexibility over your business model makes running your own business online much more flexible and fulfilling.
Larger Tax Benefits
Because tax rules vary depending on your state and locality, I can’t get into the specifics about the exact amount of money you would save by running a business. But I can comfortably say that the tax benefits of owning a business go way beyond that of investing in stocks.
For example, with a business, you can take tax deductions on pretty much any expense that you incur, that’s related to your business. Plus, there are many creative ways to save on taxes by changing your corporate structure to a corporation or LLC.
With stocks, you pretty much have to sell your asset in order to cash out. And each time you sell, you are stuck paying taxes in the current tax year whenever you sell for again.
Higher Expected Value
Many people believe that starting your own business is way too difficult and that your chances for success are slim at best. After all, I used to think the same way before I started mine.
According to the small business administration, 78% of small businesses fail after their first year, and 90% fail after 5 years or more. But just to be super ultra-conservative, let’s say that only 5% of small businesses succeed.
Investment in a company
When you choose an investment, you must weigh your likelihood of success. You can put money into a business hoping it pays you a return, or you can opt for investments like stocks. However, even buying stocks or corporate bonds is an investment in a business; with stocks you buy shares of a company, and with corporate bonds you are lending money to the company in exchange for interest payments.
Safety
You not only should expect a profit on your investment, you should expect to get your original investment amount back. Investing directly in a business carries a lot of risk. According to the U.S. Census Bureau, 10 to 13 percent of all businesses failed from 1977 to 2005. About half of all new businesses fail in the first five years. If you buy stocks or bonds of a company that has passed the five-year mark, you stand a better chance that the business will continue earning income. Stocks tend to fluctuate in value more than bonds, so your general hierarchy of safety from least safe to most safe is: investing directly in a business; investing in stocks; and investing in bonds. These levels of safety are general; you need to evaluate each company individually.
Income and Growth
When you invest directly in a business, you can either ask for regular payments or receive a percentage of the profits. As long as the company prospers, you receive income from your investment. You have the greatest opportunity for growth by sharing in the profits. If the company is extremely successful, you may make a fortune off your original investment. Stocks also can grow in value, and some provide income in the form of dividends. This income and growth tend to be higher with smaller companies that haven’t fully established themselves, but such companies are more prone to failure than large companies. Bonds are designed for income. You can buy bonds that pay a set percentage rate for the life of the investment. Some bonds grow in value, meaning you can sell them for a profit.
Expected Rate of Return
The higher the return you want, the more risk you must take. This is the closest thing to a hard-and-fast rule in investing. Chances are that if you expect an investment in a business to double or quadruple your money, you are looking at a high-risk investment. Your investment in stocks could yield an upside surprise by doubling your money, but the average return on the stock market has been 7.2 percent for any 20-year period between 1950 and 2010. Bonds pay a set interest rate at the time you make your investment.
Liquidity
Making money is one thing. Getting your hands on it is another. The ease of converting your investment back into cash is known as liquidity. Stocks can be very liquid if they are listed on the NASDAQ, the DOW or the S&P 500 because these exchanges attract millions of investors daily. Often, you can sell stocks on these exchanges in a day and have your funds in three days, the amount of time regulators allows for a stock transaction to “settle,” meaning for the buyer’s cash to arrive in your brokerage account. Bonds can take longer. Even if you offer your bonds for sale through a discount brokerage, you might have to wait several days while people look at competing bonds. Buyers of bonds can purchase them the same day you offer them, but if other bonds pay higher interest, you might have to offer a discount to attract buyers. To get your money out of a business you have invested in directly could require the owner to sell the business or raise cash to pay you off. This makes investing in a business the least liquid of your options