5 Important Things to Consider Before Making a Business Investment

When you’re investing in a new business, it’s easy to get wrapped up in the excitement, as you dream big about the future of your career. But there are several things that you should consider before investing in a new business, or when deciding on which residual income franchise model to pursue.

business investment

Here are the top 5 things we suggest to  prospective entrepreneurs who are considering investing:

Test Your Theories.

Before putting money into a business, do your homework. Test the model, and research business ideas similar to yours to see how they operate (or well they fared in the market). You can also use AdWords to test to see if there is a need in your market and if your business idea could be a success. If you know customers in the industry, get their insights about what types of businesses they are (or aren’t) likely to work with.

Determine if it Measures Up to Your Key Performance Indicators (KPIs).

KPIs are the metrics that you shoot for in a project’s success. You need to make sure that your business is going to help you achieve your goals for the future, and that can only happen when your chosen model uses resources (and generates revenue) efficiently. Once you lock in your KPIs, you are sure to have success with finding a good match for your new business ideas.

Take a Deep Breath.

It is very easy to get wrapped up in the promise of starting a new business.  Many business owners struggle because they “made the leap” too early to understand all the processes and demands along the way. Don’t worry about taking your time to decide if you want to proceed forward as planned. A lot of business ideas change over time, so creating the right timeline is vital to your success.

Weigh the Positives and Negatives.

Before you pursue any decision to invest in a new business, you should always see if the ends justify the means. You want to enter into any situation with your eyes wide open, keen to all of the issues you could potentially face. Make a list of all the positive and negative factors you can think of associated with each option. [If you’re not sure, do some informational interviewing, mentoring, or shadowing with someone who owns a business similar to the one you want to start.] A thorough evaluation of the positives and negatives will leave you with a much clearer idea of whether a particular business venture is right for you. 

Analyze Your Numbers.

When you are thinking about investing in a new business or a residual income franchise, it is critical to count the cost of your venture. Get the best idea you can of what your estimated income, expenses and time demand will be, so you can make sure you have a good return on your investment. Otherwise, you run the risk of losing both money and time, two of your most valuable resources. Some simple research– and setting aside the time to do a cost/benefit analysis– are two of the best ways to save yourself time and money in the long run.

Following these guidelines will make it much easier for you to be confident that the business investment you are pursuing is (or isn’t) worth your time. Time and research are going to be the most valuable tools in your toolbox. The more you know about a model, a business, or an industry, the better prepared you will be.