Let’s talk about liquidity. All businesses need it and few ever seem to have enough of it. Just so that we’re all on the same page… Liquidity is cash and cash is liquidity. Liquid flows and so does cash, thus every entrepreneurs worth their salt understands the value of a healthy cash flow. Your cash flow plays a big part in determining your business’ ability to grow and stay agile in a competitive climate. If an opportunity comes along in the form of a capital investment like new software or hardware or any other tool that can increase productivity or drive down overheads, businesses need to grasp it quick before it floats away. Although this may be elementary to many seasoned entrepreneurs, it’s all too easy for neophyte businesses to let their cash flow get away from them.
Thus, setting aside a small pot amongst your profits to invest in outside interests can be a useful way to help grow your business or, if you prefer, supplement your personal income by investing some of the wages that you pay yourself. Either can reap significant dividends and with the average high street bank offering an APY of just 0.06% on their savings accounts, it’s a perfectly viable alternative and higher yield alternative to saving.
Whether you’ve always fancied trying your hand at investing in overseas property or have been thinking about buying a property that your kids can rent from you, property is one of the best places to put your money. Of course, a property requires a significant initial investment but it can also guarantee you a steady stream of passive income, enabling you to withdraw less from your business in personal wages, giving you more liquidity should you need it.
In other businesses
There are two ways to invest in other businesses, the first and most familiar is to buy stock in a PLC, thereby becoming a shareholder. You will receive a quarterly dividend commensurate with the amount of stock you own which you can either use to supplement your personal income or invest back into your business. The alternative is to make an equity investment or a debt investment in a small business. The principle of an equity investment is exactly the same as buying stock. You pay cash for a stake in the company and thus a share in its profits and losses. Debt investment is slightly different. You lend a company cash to pay off its debts in exchange for the promise of interest income and eventual repayment of the principal loan.
Just because Bitcoin’s value has plummeted of late, doesn’t mean that all cryptocurrencies are a bum steer. Cryptocurrency use is so widespread and diverse that it’s undoubtedly here to stay and as long as people continue to use it, it will continue to have value.
For those who don’t trust the market foreign exchange or Forex is a potentially lucrative alternative with a potentially high yield and much quicker turnover. Forex involves the strategic buying and selling of currencies in accordance with exchange rates in order to make a profit. It takes time and effort to learn to do it well, but it has seen many an investor turn a healthy profit.