basics-of-investingOne of the best things you can do is invest in is your business. It could be making your product or service better. It’s going to be hard to beat the returns of your business, especially if it’s increasing your cash flow.

Have liquid assets. Savings are important for everyone, but especially if you’re a small business owner. Until a business is stable, getting the business to a point where an owner can make a living doing it should be the main goal, not saving for retirement.

Plan to live off personal savings for the first year, possibly two. You need to have sufficient capital because most businesses go out of business because they run out of capital. You need to have to have a rainy-day fund. 

Building in the contingencies will help for multiple reasons. The financial benefits are obvious, but the physiological benefits are immeasurable. Just knowing your business can make it afloat for a year gives you piece of mind and better decision making ability.

Be conservative when investing in a physical space. Once new business owners have enough cash flow, many rush to get a fancy office to have bricks and mortar. Even though the cash flow is fine, the expenses quickly become too high. Depending on the business you probably won’t need it. There are ways to do it so you’re not saddled with a high fixed cost base. You want to have a high variable cost base where you can scale it up or down depending on how much demand, but not a fixed cost of building or a location that’s too pricey.