Entrepreneurs often have a lot of unique qualities. They tend to be willing to take risks when it comes to business and their careers, and they’re often creative and think outside the box. That’s a lot of what propels them toward being entrepreneurs and building their own companies.
When you do have your own company, there are some unique investment strategies and considerations to keep in mind, however. There are ways that investing as an entrepreneur may be different than someone who works for a company, for example, and invests a portion of their salary.
The following are some things to consider if you’re an entrepreneur and you want to build a smart, sustainable investment strategy.
Have a Long-Term Business Model
Before you can start looking at specific investment strategies and asset allocation objectives, when you own a business and are an entrepreneur, it’s essential that you have a business model that works not only presently but also plans for the long-term.
When you’re an entrepreneur your principal investment is your business, so that should always be your top priority.
Make sure you have the components in place that are necessary to build over time, and that you’re planning for the future as far as your business is concerned, then you can move outward from there.
Be Careful with Risk Outside of Your Business
Here’s a critical area where investment strategies might be different for an entrepreneur versus a non-entrepreneur.
When you own a business, you’re already invested in something that is potentially high-risk. You might want to build much of the rest of your portfolio around more stable, less risky options.
However, if you feel like your business is at a point of stable growth where you can be a bit riskier, you might create a portfolio that pairs long-term investments such as ETFs with something that has more risk. Explore options that are diversified away from your business and your industry. For example, consider reading the Tim Sykes challenge review to see where you could invest in industries or sectors that are well outside of your business, to protect you in the event of a downturn impacting your industry.
Build Your Savings
Key to a successful investment plan for any entrepreneur isn’t just having money in diversified investments outside of your industry. You also need to make sure you’re saving money as well, and that you have access and liquidity if you need it.
This is actually an area where a lot of entrepreneurs struggle. By nature, they tend to be willing to take more investment risks than most other people, but they’re less willing to save money, instead opting to put it in the stock market or back into their business.
These are important objectives, but having an emergency fund is as well.
To wrap up this list of essential investment strategies for entrepreneurs, make sure your financial and investment plans protect your assets. You want to structure your business, your personal assets and your investments in a way that protects the personal aspects of your portfolio and finances in the event your business experiences trouble.
You want to make sure you have assets structured in a way that they’re not only protected against business debts but also so that they transfer appropriately to investments for your spouse or family.