Expert Interview Series: Barbara Friedberg"Investing with the Goal of Starting a Business"
Have you ever thought about investing in your own business?
Whether you’re thinking about an independent sole proprietorship, a limited liability company, a partnership, or taking advantage of the vast tools and resources that come along with a franchise, one of the most common questions that people ask is this:
"How do I invest with the goal of starting a business?"
Barbara A. Friedberg, Publisher of Barbara Friedberg Personal Finance, teaches savvy professionals to save, invest, and build wealth. To learn more about investing with the goal of starting a business, Franchise Gator reached out to Barbara.
What tips could you offer for investing with the goal of starting a business?
First, do these things:
- 1. Get your financial life in order. Eliminate credit card debt first and save up 6 to 9 months of living expenses.
- 2. Do market research and create a business plan for your idea.
- 3. Start your business on the side while working to test the waters and make certain you have a viable idea.
- 4. If you want to start a business, you don’t want to put that investment capital in the financial markets (stocks, bonds, etc.). Investing in mutual funds and other financial assets is only for money you won’t need in the next 5+ years. If you want to start a business, keep your money liquid in a savings or money market fund.
How is this process different if you’re looking to invest in a franchise rather than an independent business?
A franchise is a different enterprise than starting a business from the ground up. The most important part of investing in a franchise is doing your due diligence first. You need to study the industry and the owner of the franchise to make sure the business fits in with your skills and interests.
Also:
- 1. Speak in person with 3-5 existing franchise owners to evaluate the business.
- 2. Do a financial analysis to plan out how much the franchise will cost and what the future expected cash flow will look like.
- 3. Make sure to have additional sources of income to tide you over until the franchise becomes profitable.
- 4. If borrowing money to buy a franchise, find franchising with low interest rates and favorable terms.
Judging by feedback from your own business, how has the advice you’ve given helped to boost the financial independence of your readers?
Our readers are interested in building wealth through smart money habits, saving, and investing. Additionally, my husband and I increased our retirement account 538% with smart living and investing strategies.
Please be aware that no information contained in this article should be considered to be investing advice. All financial information is solely for educational purposes. I’m not a licensed financial advisor. Please see your own professional for personal investment advice.
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About the author:
Joe Ruiz is an author, podcaster, MBA graduate and marketing professional. He writes on a variety of topics including business, leadership, news, and politics.