Monday, March 8, 2021
Home Strategy & Tactics A Stock Investment Guide for Small Business

A Stock Investment Guide for Small Business

Investing your excess cash flow in the stock market can be a good revenue growth strategy for your small business. Many small businesses don’t know what to do with their revenue so they just keep the money lying in their bank accounts. They do know that those savings are doomed to be spent unless they invest them somewhere. They have also heard about the wonders of stock investment and how it can help save and grow their business assets. But they don’t go down that road because they have never done that before and it sounds too scary.

Has your business been through the same thing? And do you want to crack this hard nut of stock investment and use it to grow your business revenue? Here’s good news: the stock market is not scary at all.

However, that does not mean that your business can jump into stock investment right away. You have to first understand the stock market and get a hang of how stocks work. Then, you do some experiments with small investments and learn from real experiences. Most of the time, those experiences come with some money losses. But, given the right strategy, stocks can be good investment opportunities for beginner businesses. 

What are stocks and how can they make your business money?

Stocks are basically shares of a publicly held company. Investors buy these shares when they are undervalued and then sell them when they are fully valued and make profit out of them. The investors also get to enjoy the profits that the company makes along the way. 

The crucial part is that stocks are volatile investments. The profit or loss depends on the market sentiment. Sometimes, the market can price a well-doing company way under its true value and vice versa. So, the “value of the company” and “price of the stock” are not directly proportional. 

How to invest in stocks?

Now that we have established what stocks are and how they work, let’s move on to the investment game plan.

Set your investment budget

So, the first thing your business needs to do is set aside an investment budget. An amount of money that you would like to take out of your business and invest in stocks every month. It does not have to be too big, you can even start with a hundred bucks. 

Hunt the best stock investment opportunities

As a beginner investor, it’s going to take a lot of time for you to find the right investment opportunities for your business. You can start by identifying companies that relate to your line of business. For example, if your business is related to medicine, you can make a list of growing pharmaceutical companies. If you are running a business in the tech industry, you can look for rising tech companies to invest.

Once you have your list of companies to invest your business money in, you can then go on and evaluate each one. Watch their stock value histories to find out which companies are worth investing in. That sounds like a lot of work, doesn’t it? Don’t worry, there’s a way around it. There are technical trading tools available online that let you find potential investments in a fraction of time. You can set a search criteria and the system will scan millions of pieces of market data to find you the best trading opportunities.

Invest in long-term stocks

When you decide to invest your business revenue in a company and buy its stocks, you can then carry the transaction at stock exchange or open an investment account with an online broker. A broker will hold assets on your behalf and execute the trades with the exchange.

Monitor your investments

When you invest in a long term, your profits are due for a certain period of time, usually years. That is why, checking the performance of your business investment portfolio on a daily or weekly basis is not a good idea. The stock market is volatile and the volatility of your stock value can influence your decisions. So, don’t check your portfolio too frequently.

But that also does not mean that you should just set it and then forget it. You should definitely have a look at the performance of your stocks at least once a month. If they are making profit, good! Consider reinvesting them in the same company and buying more stocks. If not, be patient and rebalance your investments as per your strategy.

That’s how the investment journey of every beginner business starts. Follow this guide and make your business one to save and grow its revenue by stock investment. 

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