Investment is an industry all about managing risk and reward. With no completely guaranteed or fool proof way of evaluating a potential business opportunity and how they’re going to fare in the future, there is an element of calculated wagering taking place. While this can lead to some abject failures and loss of funds, there can also be some significant wins and successes if the right business is backed at the right time.
Something that will only come with experience and the development of solid business acumen and market awareness, becoming a good investor that experiences more success than failure is all about being as open minded as possible, while maintaining the hardnosed financial sense required to judge whether or not a certain venture is worth your time and money.
Does The Potential Reward Outweigh The Risk?
Although you’ll be getting a stake back in the business which will guarantee a cut of profits, the real reason to inject money in a company is if you can see the potential for some real return on investment after growth. If you’re able to act as the catalyst that heightens the financial ceiling of a business and allows them to reach previously untapped opportunity, then the money made back is soon going to far outweigh what was initially parted with.
Patience is also key, as these ventures are rarely overnight successes. With plenty of horror stories present of people who once had a stake in the likes of Apple and Amazon, only to sell them prematurely due to impatience and lack of belief – costing themselves multiple billions in the process – it’s always worth making sure the companies you invest in are long term interests, because there may be work required in the time between money being put in and that windfall you’re hoping for taking place.
How Can You Best Judge Viability?
Sometimes, the best way to proceed when you’re unsure is to seek further judgement and advice. An offshoot of financial advisement, there are now independent investment advisors available, such as Hymans Robertson, that have the sole purpose of ensuring that your money is being put in to the best possible businesses. Again, while there’s no guarantees where investments are concerned, having external unbiased input is a healthy way to avoid making rash or kneejerk decisions, as they may be able to raise concerns or highlight positives you hadn’t previously considered.