We are in the age of young aspiring entrepreneurs dreaming to become professional businessmen. According to CNBC, 50% of people ages 18-25 are aspiring to start their own businesses rather than work for someone else (Morgan Smith, 2023). The dream is big, and the current economy poses challenges that can stalwart or bring those dreams to a halt without the right investment mindset. Young professionals will need to take sound investment tools to help their businesses grow, and to do that, they will need to assess the current economic landscape, build a strong financial foundation, explore investment options, seek mentorships, and adapt.
Assessing the Economic Landscape
Before diving into entrepreneurship, your professionals need to assess the economic landscape. The world has experienced significant shifts in recent years, with the COVID-19 pandemic reshaping industries and markets. To make informed investment decisions, stay updated on economic trends, industry disruptions, and emerging opportunities.
Build a Strong Financial Foundation
Before starting a business, focus on building a strong financial foundation. Businesses need a generous amount of capital to get moving. To help generate that capital you will need to practice a few things:
Savings: Save a portion of your income regularly. Establish an emergency fund to cover unexpected expenses.
Budgeting: Create a budget to track your expenses and ensure you are living within your means.
Debt Management: Minimize high-interest debt, such as credit card balances, to free up financial resources.
Credit Score: Maintain a good credit score, as it can be important when seeking financing for your business.
Explore Investment Options
Once you have a solid financial foundation and some financial literacy, you will need to research investment options to help grow your money. This is very important to consider during rough economies like the one we are experiencing now. During this time while running your business, relying on savings alone puts you at risk of lacking financial security in case of emergencies. You will need to take a portion of your savings and put them into investments to help grow your capital and improve your financial security.
Stock Market: Consider investing in individual stocks or exchange-traded funds (ETFs). Start small, and as you gain confidence and knowledge, you can expand your portfolio.
Real Estate: Real estate investment can be lucrative. Explore options like rental properties, Real Estate Investment Trusts (REITs), or real estate crowdfunding platforms.
Start-Up Investments: If you have the risk appetite, consider investing in startups. This can be an excellent way to gain exposure to the entrepreneurial world while potentially earning significant returns.
Mutual Funds: Invest in mutual funds for diversification and professional management of your investments.
Cryptocurrencies: Cryptocurrencies like Bitcoin and Ethereum have gained popularity as alternative investments. However, note that cryptocurrency is highly volatile with some leading to high rewards and also high losses if one isn’t careful.
Retirement Accounts: Contribute to retirement accounts like a 401(k) or an Individual Retirement Account (IRA) to benefit from tax advantages and long-term wealth building.
Seek Mentorship and Networking
Connect with experienced entrepreneurs and mentors in your field of interest. Networking can open doors to investment opportunities, partnerships, and valuable advice. Join local business associations, attend industry events, and use online platforms to build your professional network.
Develop a Business Plan
Following the vein of mentorship, you will also need a solid business plan before you start. You will need to take into account the micro economy you are in and consider these questions: who would be interested in my company and products, how do I market myself, how would my financial projections look?
The answers to these questions will vary between regions as a product and business in one area may not bring in as much financial return as in another region. For example, if you are trying to start a mountain bike business in the city where the closest recreation areas are hours away, you likely will not have much financial return as you are trying to sell a product in an area where there is not high enough need for it. In this scenario, you may want to consider offering different products relevant to what someone in the city would like or planting your business in a different location where recreation is close by.
Stay Committed and Adapt
Becoming an entrepreneur through sound money investment is not without challenges. It requires dedication, resilience, and adaptability. Be prepared to learn from failures and pivot when necessary. The entrepreneurial journey can be a rollercoaster, but with determination and a solid financial foundation, you can overcome obstacles and achieve success.
Young professionals have a unique opportunity to become entrepreneurs in the current economy by making informed money investment decisions. By understanding the economic landscape, building a strong financial foundation, investing in education, exploring various investment options, starting a side hustle, seeking mentorship, developing a business plan, and staying committed to their goals, they can embark on a fulfilling entrepreneurial journey. Sound money investment is not just a means to financial success; it becomes an opportunity to go high on your big dreams.