Why Entrepreneurs Need To Save And Invest Money
Position yourself for growth in 2017—join us live at the Entrepreneur 360™ Conference in Long Beach, Calif. on Nov. 16. Secure Your Seat »
An entrepreneur is meticulous about his marketing strategy, will not compromise on the product or service quality, and will leave no stone unturned to make sure the team meets its target. His saving acumen and investment insights, however, may be a different story altogether. Ironically, saving and investing money is as important for an entrepreneur as his commitment to deliver value to his customer. Not to sound pessimistic, but 50 per cent of enterprises fail within the first year, and 95 per cent, within the first five years. Not just that, do you really want to worry about your retirement fund when you are spending sleepless nights on your product launch? Why not plan ahead? Why not make saving and investing money a habit? Here are five solid reasons for you to do so:
A healthy habit
If you make saving and investing a habit, it helps you in the long run, no matter who you are – a housewife, an entrepreneur or a salaried executive. But there’s more to it for the entrepreneur. Getting involved in the inflow and outflow of money, having a better understanding of yields and returns, understanding the importance of tax planning and optimization of returns, reflect upon your business decisions, too. Gradually, your business language changes, and you are more cued into looking at returns on investment – the mainstay of any successful venture.
A positive sign
Your saving and investment habits make a positive impact on stakeholders and investors. They realize that you, as an entrepreneur, are frugal and want to make every penny go a long way. Just like when they inspect your venture, they don’t look at how much you have done – you can’t have done too much since you are a startup. But what they are closely looking at is your processes and your mindset. Savings and investments are reflective of a good intent.
For a freer mind
While you are busy bootstrapping, you are also creating a kitty for yourself, no matter how small you start. In a few years, you realize you don’t have to go out scouting for money since it is available. Also, like I said, once you make it a habit, you will not overspend money when you get it – from funding or loans, for instance. This mindset helps a startup in optimizing resources.
Saving for a rainy day
Savings and investments mean you have something to fall back on when you are down and out. This holds true for everyone. For an entrepreneur, it is even more important because he understands equity is more expensive and comes with a rider to take away profits from you. With smart saving and investment decisions, you can buy out those equities. You are also free to start another business.
Spreading the word
A positive take on savings sets the tone for a savings culture in the company, and within a group. It becomes a trend and it is contagious. When you talk about investments with your team, and advise them about it, it has a positive effect on others as well. Not just does it help them plan better for future, this mindset of their also passes on to their business decisions within the venture as well.