Springtime can be a great time for entrepreneurs to consider investing. Like the budding of flowers after the cold winter, it often brings a sense of rejuvenation, optimism, renewal and growth. With the weather warming up and spirits lifting, individuals are more inclined to open their wallets and explore new products or services.
Investment Evaluation Worksheet
For some businesses, that extra money in the bank can feel like it’s time to invest. But not so fast. Extra money in the bank does NOT mean profit, but it could. The only way to know is to analyze the numbers, especially businesses with inventory that could have extra costs associated with that revenue sitting on shelves.
Even though we, as entrepreneurs, feel energized and ready to tackle new projects, these decisions to ultimately invest should be made after consulting with us, or your tax and investment advisors. What I will do in this post is give you a 30,000 feet view of the topic so when the extra does appear, you’ll have a good idea of how to proceed.
Outline
Filed Your Taxes? Take Advantage of New Insights
Now that the look into the past for tax liability is behind us (or on pause with an extension), it’s time to look forward to Spring. It’s true, we’re a fan of extensions here, because we know the power of a) tax deductions for creating savings, and b) the actual returns for making or breaking the deal for accessing capital down the line.
As entrepreneurs, both outcomes are too important to rush through if we’re not ready.
But by crunching the numbers and getting the filing behind you early in the year, seeing where you stand taxwise, you gain a clearer picture NOW of the funds available for potential investments.
This newfound clarity often sparks increased investment activity among individuals and businesses alike. As you evaluate your financial position, you’re not only making use of your past year’s earnings picture, but also setting the stage for future growth.
So, if you’ve filed the return already, don’t overlook the significance. Use the return as an opportunity to assess your financial health and explore new avenues for investment.
P.S. On the flip side, if you haven’t filed, and are serious about investing – let’s get the return filed SOONER rather than later so you, too, can take advantage of what you just read!
Research & Prepare In Advance For The Good Times
Spring can also be a time for entrepreneurs to strategize and plan their investments for the rest of the year. Conducting market research, assessing potential risks, and developing a solid investment plan can set the stage for successful investment decisions later in the year. Think of it as laying the groundwork for success in the months ahead.
Doing your market research now helps you understand what’s happening in your industry and where the opportunities lie. Assessing risks might not be the most exciting task, but it’s crucial for staying ahead of potential problems. And having a solid investment plan in place gives you a roadmap to follow when things get busy. So, instead of just enjoying the warmer weather, use this time to set yourself up for success in the long run.
Take Advantage of Seasonal Trends: Your Business BFF
Depending on the industry, certain businesses may experience increased demand during the spring. For example, outdoor recreation, gardening, and tourism sectors tend to see growth during this season.
Entrepreneurs operating in these industries may find it advantageous to invest in expanding their offerings or improving infrastructure during this time.springtime isn’t just about warmer weather and blooming flowers—it’s also a season of opportunity for certain businesses. Think outdoor recreation, gardening, and tourism—they’re like spring’s best friends, thriving as people emerge from winter hibernation.
If you’re an entrepreneur in one of these sectors, you’ve got a front-row seat to the uptick in demand. And guess what? Now’s the perfect time to seize that momentum. Investing in expanding your offerings or sprucing up your infrastructure can pay off big time when customers come knocking.
Like all seasons, though, they do change. So, don’t let spring slip by without taking advantage of the seasonal surge in business. Think of it as planting seeds for future success in your industry’s fertile soil.
Let the Entrepreneur-Investor Beware!
Investing is not saving. It involves risk, meaning you can make a lot of money, but you can lose it too. We just don’t need the drama right? We work too hard for the profits!
This section is to make sure you’re prepared with full awareness of the dangers because it’s crucial to keep an eye on the potential risks lurking in the shadows.
1. Market volatility –
But while this season brings a sense of renewal, it can also stir up some turbulence in the markets. Picture this: economic uncertainties swirling around, geopolitical events making waves, hurricane season (if you’re in the south like we are) —you name it. These factors can throw a curveball into investor confidence, making the investment landscape a bit rocky.
By staying vigilant and doing your homework, you can navigate through the market volatility and make informed investment decisions. So, as you embrace the spirit of spring, don’t forget to tread carefully and keep a steady hand on the helm of your investments.
2. Competition –
You know what else comes with this activity uptick? Increased competition for investment opportunities. It’s like everyone’s coming out of hibernation, ready to pounce on the next big thing.
So, if you’re an entrepreneur looking to make some strategic investments, you’ve got to be on your A-game.
That means keeping your eyes peeled for those unique, under-the-radar opportunities that others might overlook. And when you do find them, be prepared to roll up your sleeves and negotiate like a pro. After all, in a crowded market, it’s the ones who hustle the hardest that come out on top. So, as you navigate through the springtime flurry of activity, remember to stay sharp, stay proactive, and stay hungry for those investment wins.
3. Bad Timing
But not every business operates on the same seasonal rhythm. Some industries march to the beat of a different drum, and their peak times might not sync up with the blossoming of flowers.
So, if you’re considering making investments during this season, it’s essential to pause and consider whether the timing aligns with your industry’s natural cycles and your investment goals.
After all, success in investment often hinges on timing as much as it does on opportunity. So, take a moment to evaluate whether spring is the right season to sow the seeds of investment in your particular field. By aligning your timing with the unique rhythms of your industry, you set yourself up for a greater chance of reaping a bountiful harvest down the road.
4. Bad Advice
While the change in seasons does bring a prime opportunity to introduce innovative offerings and capture the attention of eager customers, as entrepreneurs, we still have the same risks, including the ups and downs of cash flow and the need to access capital throughout the year.
Many financial advisors and investment professionals do not fully understand the intricacies of entrepreneurship and they may struggle to provide comprehensive advice that addresses the unique circumstances of entrepreneurs. They are often employees, who receive paychecks from the firms they work for.
In fact, the investment industry as a whole, often relies on standardized investment strategies and products designed for individual investors who also have jobs. These off-the-shelf solutions like 401Ks, SEPs or IRAs may not be suitable for entrepreneurs, because they restrict access to our funds, and depending on the circumstances, have tax and penalty implications that wipe out the benefits we receive from business write-offs.
We delve into this topic because we only work with advisors who understand business best practices and often own businesses themselves.
It’s your money and it matters, so make sure your advisor understands your unique needs.
Meet Our "Specialists" Advisory Team
If you’re reading this during the month of April and early May, you can join us LIVE in a workshop where we show you how to use the money we free up on taxes and with our accounting strategies to build in wealth and protection for the family and generations to come. Contact us HERE to register or if you find this post afterwards, for the replay.
Ultimately, whether spring is a good time for entrepreneurs to invest depends on individual circumstances, market conditions, and the specific opportunities available. It’s essential for entrepreneurs to conduct thorough research and analysis before making investment decisions, regardless of the season. So what are you waiting for? Grab our investment evaluation worksheet and start your journey and and if you can, join us on May 4 to learn more. Thanks for reading and we’ll see you in our next post.