5 Ways to Find the Right Venture to Invest In

You don’t have to be someone who starts your own business to gain financial freedom. Instead, you could find someone else who has already started a business and invest in that business. There are over 500,000 businesses started each year; there’s plenty of opportunities to find one to invest in. But remember, there are 500,000 businesses and 450,000 of those will fail.

Investing in businesses can be safer than starting your own business or even investing in the stock market. I’m not talking about opening a McDonald’s and becoming a franchisee. When you’re looking for the right venture to invest in, you’re looking for a business you can gain equity in. A business where you can be in touch with the founders and other employees. In a sense, you can act as your own board of directors for the company.

The companies you invest in will be from the start to ten years old. These will be companies that haven’t surpassed $10 million in revenue, letting anyone with at least $100,000 to gain 1% stake in the company. You can invest more or less than $100,000 depending on much revenue the company has generated. Look to invest as much as it takes to get a 1% stake in a company, if not more. You can also trade your skills and experience for equity in a company through the use of the eMINDSCLUB.

As mentioned earlier there are over 500,000 businesses that start each year, and that doesn’t include the businesses that have already started. There will always be an opportunity for you to invest in a business, but just because you can invest in a plethora of companies doesn’t mean you should. There are certain guidelines you should adhere to when looking for ventures to invest in.

Numbers

When you’re first investing in a company, you need to know their numbers. What are their exact profits and losses since the conception of the business? Be careful to not be too gun shy, however. Just because a business has lost money in its early stages doesn’t mean it will always lose money. Look carefully at how the money was spent. Was it spent on machinery? Or was it spent on miscellaneous items that have no effect towards growing the company’s profit?

People can lie but numbers can’t. Numbers will always tell you how healthy a business is. No matter how good a business idea is, always ask to see the numbers to make sure it’s as good as it sounds.

When you don’t check the numbers, you could invest in a poor company without knowing it. You could miss the fact the company isn’t making sales because it doesn’t have a trademark or a patent. When you check the numbers, all your questions can be answered.

Payback Period

When you’re investing in a company, you will get equity in that company. But besides equity, you will want to strike a deal for when the money you invested can be paid back. If you invest $100,000, you can say you’d like to get paid $20,000 every year for 5 years. Or you could say you’d like to get paid $30,000 every year for 5 years, netting you $50,000 in profit from your initial investment. While you’re still making money, you also get equity and if you picked the right company to invest in, your equity will have grown in value from year one to year five.

Always make sure that when you invest in a company, you set a payback period for yourself. If the money can’t be paid back during a certain year, then you should put into the contract that you get more equity in the company. You will always want to set the contract up so you can protect yourself. Just because a business seems great in the beginning doesn’t mean it will stay that way.

Founders’ Identity

Sometimes the right company to invest in can be found through the identity of the founders of the company. What are their personalities like? You always want someone to be optimistic to a degree but not blind to how the company is really doing. Do you feel as though you’d mesh well with the founder of the company? Is this someone you trust? These are questions you have to ask yourself because the founders will be the ones who execute on their idea with your money supplementing them. Have they already started a business beforehand? What went right and what went wrong? With eMINDSCLUB you can meet tons of different business owners looking for someone to invest in their business.

The more questions you ask the founder, the better idea of their identity you will be able to gather. Take them for a golf outing. How do they react to certain shots? What is their temperament? Understanding the founders’ identity is key to ensuring your investment gives you a return.

Founders’ Knowledge Of Subject

What do the founders of the company know about the subject of the company they are starting? Why would you want to invest in a juice bar if the founders don’t juice themselves? They won’t have a feel for what the juicing culture is like. You will want to make sure that the founder is passionate about the company they’re starting. They’re not going to be passionate if they aren’t passionate about the subject of the company they’re starting. Make sure they love what they’re doing because if they love what they are doing, they are more apt to succeed. By knowing they’re passionate about their company’s subject tells you whether they are starting the company to make money or have an impact on the world.

Your Knowledge Of The Subject

When your money is on the line, you will want to know what you’re investing in. To know what you’re investing in, you have to know the subject of the company. If you juice yourself, then you’ll be able to provide input to the company. You’ll know where your money is going and you don’t have to question the decision of the founder, which you shouldn’t be doing anyway if you took the time to understand their identity. Make sure when you invest in a company, you know where your money is going. If you don’t, stay away from the company.

You’re not always going to win when you invest in a company and there will be ups and downs, but if you do the proper legwork needed, you can lower your chances of a failed investment and increase your chances of a successful investment!