Practical Tips On How To Invest In A Profitable Small Business

 

Practical Tips To Invest In A Profitable Small Business

This entrepreneur article discusses the best small businesses employees can invest in to create a second income source.

Why is it important to focus on this subject at this time?

 

The reason is because millions of employees worldwide now understand the importance of establishing a second source of income to supplement the income from their 8-5 day job.

Therefore, many have chosen small business investing as a way to implement what they call their “Plan B” . . . that is, their plan to create an alternative source of income.

Unfortunately, a large proportion of employees who ventured into entrepreneurship have had their fingers burnt as they found themselves losing a significant part of their small business investment capital within 1-3 years of venturing into business.

 

Consequently, this premium guide is focusing on showing proactive employees the best small businesses to start so as to improve their chances of becoming successful entrepreneurs.

 

Small Businesses Are Not Created Equal

As an employee considering venturing into entrepreneurship, one of the first thing to understand about starting a small business is this: Not all small businesses are created equal.

This means that . . .

Some small businesses have a higher failure rate than others

Some small businesses require the entrepreneur’s physical presence much more than others and

Some small businesses by their very nature will deliver low returns on the money you invest in them while others will deliver a higher return on your investment.

In addition, the way you set up the business (and your business philosophy) will determine to a large extent how successful the business will become . . . even when you invest in a small business with high profit potential.

 

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From the above it is obvious that the first step to ensure that you successfully transition from being an employee to a successful entrepreneur is to invest in a small business that has the potential to deliver the level of cash flow that you dream of getting from your preferred small business.

 

In turn, for you to make the right business choice, you need to acquire some measure of financial education.

For example, to succeed in investing in the best small businesses, you need to understand simple things like . . .

The impact of product or service target market on profitability

The impact of product or service repeat purchase potential on business profitability

The difference between profit margin and gross profit margin

The top 5 priorities of an entrepreneur

The impact of target setting on productivity and how to set effective targets and

The criteria for choosing the best small businesses to start

 

Criteria For Determining The Best Small Businesses To Start

Employees who adopt small business investing as part of their retirement planning strategy have three goals in mind:

1. To create an alternative source of income that enables them earn extra income while still in paid employment to supplement their current salary

 

2. To grow the income from that small business (over time) to the point where the income from the small business eventually surpasses the income from their day job and

3. To eventually retire from their day job and remain financially independent for life because of the continuous monthly cash flow from their small business

Since that is the three-prong goal for employees venturing into entrepreneurship, the best small businesses for these group of smart and proactive employees must meet the following criteria:

Criteria #1: The small business must be such that it will not disrupt the day job of the employee. That means, it should be a business he can manage in his spare time . . . outside official hours.

One great way to achieve this particular objective is to start work at home business.

Criteria #2: The small business must have good profit margin and a reasonably large target market. This will ensure that the business can grow in sales volume and profit year after year.

 

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Criteria #3: The business must be scalable. It must be a business that can be incorporated and expanded nationally and internationally. The business should also be such that it can even be listed in the stock exchange to gain access to even more capital to grow the company’s brand and profits

Bottom line.

The best businesses to start are the businesses that meets the three criteria listed above.

Now pause and think.

Does the above discussion spark any small business startup ideas in your mind?

No business ideas have struck you yet?

No problem.

Click here to explore lucrative business ideas.

The more you read and learn, the sooner a smart (and life-changing) business idea will come your way.

Trust me, when you invest in one of the best small businesses while still in paid employment, you give yourself an opportunity to earn extra income while still in paid employment.

Thereafter, you will achieve financial freedom through the cash flow from your preferred small business, even after retirement.

 

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