You are proud of your local businesses, and you are looking for different ways to support them and help them grow. Or perhaps you don’t know much about the entrepreneurs who are starting small businesses in your community, but you would be interested in getting to know them better.
No matter what your motivation is, investing in some local businesses makes a lot of sense. There are many fantastic business investment opportunities available locally. Of course, you could earn a return on your investment if you are lucky and if you invest wisely, but above all, you will be giving back to your city or your region in a unique way.
Are you new to investing? It’s time to learn how to invest in local businesses:
1. Don’t invest funds that you can’t afford to lose
Unfortunately, many new businesses don’t survive after two years that’s why it’s important for you to know these helpful ways on how to invest in local businesses. If you invest in a promising local business that ends up failing, you will lose your investment. And even if the business succeeds, it could take a few years before you start seeing a return on your investment.
Keep this in mind, and don’t invest funds that you simply can’t afford to lose, or money you think you might need in a year or two. Investing only a small percentage of your available funds would make more sense, especially if you are new to investing.
2. Consider moving your money to a local financial institution
A great way to invest in local businesses is to move your money to a local financial institution. After all, your local banks and credit unions are local businesses as well.
And since they are certainly providing business loans to small businesses in your area, doing business with them is a simple way to indirectly support local businesses.
You will be managing your money as usual, and your local financial institution will use their capitals to help new businesses get started, and grow.
3. Pre-purchase local products and services
There are different ways you can invest in new local businesses. If you want to be sure you will get something in return for your investment, you could start by pre-purchasing products and services from local startups. This counts as a form of investment, as it can provide businesses with the capital they need to get started and keep going.
Similarly, you could search crowdfunding platforms to find local businesses looking for contributors, and get some interesting perks in exchange for your money.
Of course, if you want to invest money because you are hoping to get a return on your investment, you can search for bigger investment opportunities.
4. Look for local investment opportunities
Not every local business will be pre-selling goods or services, or will turn to a crowdfunding platform to gather funds. You will need to search for interesting local investment opportunities.
Perhaps your local newspapers will allow you to find some opportunities. But going online to search for opportunities will probably yield more results, more quickly.
A local investment attraction agency could make it a lot easier for you to learn about different businesses looking for serious investors, and to get in touch with them.
5. Consider your own experience as an entrepreneur
If you are, or have been an entrepreneur yourself, you should consider your own experience when looking for businesses to invest in.
It’s best to invest in an industry in which you have some experience. It could allow you to predict how well a business might do, and you could even provide the business owners with some advice if you feel like they would be receptive.
On the other hand, if you invest in an industry you know nothing about, it will be more difficult for you to have some insight.
6. Do some research about opportunities that interest you
When you find one, or a few opportunities that interest you, do some more research about them before you make a decision. Learn all that you can about the business, and about the owners’ plans. Do you feel like they will be using their capital wisely, or does investing in them sound risky?
If the statements of the business seem to indicate they have the potential to grow and to expand, investing in them could become profitable for you in the long run.
7. Get in touch with business owners
Finally, it would be a good idea to get in touch with the owners of a business before investing in their venture. Don’t hesitate to ask them questions about their plans for the future, about their experience as entrepreneurs, and about the way they run their business.
If you find that the owners have invested some of their own money in their business, you will know that they are serious and that they have the drive to succeed and to make their business become profitable.
If you can fully trust the owners, investing in a local business will be an even more pleasant experience.
