Overcoming Investment Fear
Fledgling businesses often have limited capital to play with. Every investment decision must be weighed carefully, to ensure that it will pay for itself in the long run – and even then, survival rates are not promising. Where funds are especially scarce, this can lead to a sort of paralysis. Business owners resist investing for long periods, in the hope that some truly worthwhile opportunity will arise. Investment fear can cripple a business’s ability to expand and develop.
So how can we overcome investment fear? There are several factors worth examining.
Make a Plan
If you know where you intend to be in five, ten, or twenty years, then you can start to set out a roadmap to that objective. You’ll better understand which investments are necessary at which point, and thus you’ll eliminate the temptation to defer investment to a later date.
Without a clear business plan, it’s easy to waste money and later label it an ‘investment’. You might feel that you need to spend huge amounts on an elaborate website, or a marketing scheme to give your business the exposure it needs at the outset. In many cases, this might be an entirely sensible course of action. Knowing this, however, depends on first formulating a plan.
Manage the Risk
Where the outcome of your investment is uncertain, you can limit it. The amount you invest, in other words, should be roughly proportionate to the risk.
Of course, a risk assessment can help you to understand the exact shape of the problems that might occur. Unexpected expenses, like legal costs, are easily dealt with if they’re anticipated, but they can be crippling if they’re unexpected. Budget for big investments, breaking everything down and understanding what each component does. This will allow you to make better decisions – and it’ll lend you the confidence you need to inspire your workforce.
Look into Financing
Businesses with limited cash and high-value fixed assets like vehicles and machinery might look to asset-based lending. This involves the loan being guaranteed against the assets, in much the same way as a mortgage on property. These assets might include non-physical things like stocks. Secured business loans can be obtained from online lenders like Nucleus.
In emergency situations, you might go for invoice financing. This involves selling unpaid invoices to a third party for a percentage of the value being demanded. On the other hand, you might sell shares in your business for cash. This is called equity finance, and it involves surrendering a degree of autonomy to the lender.
