7 Smart Investments That Entrepreneurs Should Consider

Investing is a central part of entrepreneurship. If entrepreneurs hope to succeed in a competitive market, they must put their earnings towards technologies, services, assets, and ideas that ensure ongoing growth. Most leaders already understand this, but what exactly these investments are is often less clear.

Investing always involves some amount of risk, and that goes doubly for entrepreneurs investing in their company’s future, not just their private wealth. In that spirit, here are seven smart investments that entrepreneurs in any industry should consider.

1. Cybersecurity

No matter what line of work an entrepreneur is in, they should invest in robust cybersecurity for their business. Cyberattacks are rising in both number and severity, and 60% of small businesses go out of business within six months of an attack. Many smaller companies also lack sufficient security infrastructure, making them ideal targets for cybercriminals.

Cybersecurity services and software can feature significant upfront costs, but these don’t compare to the cost of a breach. Thankfully, while many options are expensive, there are many affordable solutions, too. Reliable cybersecurity does not have to be a substantial investment to produce significant benefits.

What tools and services a small business needs will vary depending on their specific situation. In most cases, though, even a marginal investment in stronger cybersecurity can accelerate growth. On top of stopping costly attacks, cybersecurity is a useful marketing tool to partners and clients who are increasingly concerned about data privacy.

2. Tax Management

One often overlooked investment that entrepreneurs should consider is tax services. Taxes may be one of the few certainties in life, but how much they cost isn’t set in stone. The right tax strategy can offer significant savings, so it’s often worthwhile to invest in employees or services to guide these decisions.

Tax strategy is often complex, requiring expert help to make the most of it. Entrepreneurs with their hands full with other considerations may not have the time to investigate opportunities and loopholes thoroughly. Hiring expert tax consultants, either as permanent employees or on a contractual basis, helps even the busiest leaders minimize their operating expenses.

In addition to freeing up extra cash, investing in tax management can help entrepreneurs avoid tricky legal situations. As their businesses grow, these considerations will become increasingly crucial.

3. Real Estate

Real estate is one of the most versatile investments an entrepreneur can make. Buying commercial properties can help businesses expand and take greater control over their operations. Alternatively, entrepreneurs can buy and sell residential properties as a secondary income source to sustain their other businesses.

Investing in real estate has a relatively low barrier to entry and can yield substantial returns. However, there are a few considerations people should keep in mind when getting into the real estate market.

Improvements like adding a pool to a residential property can improve sale prices and income but require proper planning. For example, contractors should be ASPS certified and list all factors, including indirect costs, in estimates. If investors remember to watch for these smaller details, they can use real estate to accelerate their growth.

4. Sustainability

Generally speaking, entrepreneurs should be hesitant about investing in flashy, trending areas, but some current trends show long-term potential. One such potential investment to consider is sustainability. As the climate crisis grows more severe, sustainability will become all the more in-demand, so investing in it now can ensure long-term growth.

Even industry leaders in historically non-environmentally-friendly sectors are moving towards sustainability. For example, Maserati plans to release electric models of every new car in the next few years. Investing in similar initiatives, either in sustainable businesses or in making their own business more eco-friendly, will prepare entrepreneurs for the future.

Stocks in green technologies will likely see considerable growth as government environmental programs rise over the next few years. Similarly, as consumers become more environmentally minded, green business practices will serve as helpful marketing tools.

5. Insurance

Like tax management, insurance is easy to overlook as an investment for entrepreneurs. However, much like cybersecurity, investing in relevant insurance can decrease long-term costs in the event of an emergency, providing a slow but crucial ROI. Many people may not realize that insurance can serve as a powerful economic tool in some circumstances.

Some life insurance plans can provide entrepreneurs with tax-free retirement income. This security can give people the confidence they need to invest more in other areas, accelerating their business’s growth.

Business leaders in some industries can use some forms of insurance as a marketing tool. Customers may be more willing to do business with a company that boasts insurance against accidents that could come back to harm clients. Insurance offers customers peace of mind, attracting them away from competitors.

6. Professional Development

Entrepreneurs should also invest in professional development to equip them with the tools they need for future success. Ongoing education programs, training in new industries or specialties, and new certifications can all help people expand their businesses or side projects. Learning from these initiatives can help entrepreneurs refine their craft or open new revenue streams and offer a sense of fulfillment.

This applies to any employees an entrepreneur may have, too. A 2019 survey revealed that 94% of all employees would stay at a company longer if it invested in their learning and development. Offering support for ongoing learning can foster loyalty, driving company-wide growth and success.

7. Other Businesses

Finally, as strange as it may seem, entrepreneurs should invest in businesses other than their own. This doesn’t mean funding competitors, but buying stock in growing companies or creating strategic partnerships can provide a needed source of passive income.

For the greatest security, entrepreneurs should look for businesses with long-term potential for investment. Trading fast-moving stocks may reap impressive rewards for some investors but is too risky for a business. Looking for companies with a history of success that still evolve with the times will offer more reliable income.

Entrepreneurs should remember to look outside their own industry, too. While they may feel more comfortable investing in what they’re knowledgeable about, diversification offers security. Having investments beyond their sector can provide relief if unexpected circumstances harm their industry.

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