A frequent search term is: I am looking for an investor with capital or an investor with capital is looking for business partners. Have you ever had to look for an investor? Maybe as a small child, you wondered how to encourage your parents to invest in making your dream come true and buying the toy you wanted? Later in life, it was probably investing in education, your future professional or personal life and more serious dreams. Each of us is an investor in a way. What makes us different is our more or less well-off wallet. In our youth, we saved up to invest in our dreams, and in the later years of our lives, we consciously create our future by choosing more serious goals. We are creative beings who like to act and invest in it because we like to see the results of our efforts. Every day, we choose goals and become investors. The goals can be diverse, but they all have one thing in common: achieving the desired results.
Although the topic seems to be very simple, it is not. Looking for an investor is a serious matter. Nowadays, investors and those who are looking for an investor are forced to behave in a certain way. They are designed to protect the interests of both parties from the negative effects of reckless or hasty actions. There are companies on the market that specialize in securing transactions between parties. Therefore, any investor or person looking for an investor can secure their interests in a way that satisfies both parties.
WHO IS AN INVESTOR, WHAT DO THEY DO, AND WHY
An investor can be both a private person and a company. An obvious condition that such an investor must meet is to have sufficient capital. This can be both domestic and foreign capital, capital that belongs to a large company or capital that is in the pocket of a natural person. The investor's interest is the overriding factor in the actions taken. Of course, the idea, the investment object, and the effects of the investment activities matter, but what really drives the whole spiral is the profit for the investor. This is the most important factor that the investor takes into account.
WHERE TO LOOK FOR AN INVESTOR
Some people say that money is lying on the street. There is probably some truth in every such statement. It is certainly about the ease with which funds can be obtained today, not the physical place where they are located. Some borrow them from a bank, others from friends or acquaintances, and still others look for alternative sources. It is not uncommon for us to unexpectedly receive such resources as an inheritance or donation. While the ease of access to them is a reality, it is more difficult to invest someone else's funds. Therefore, the task of looking for an investor becomes a greater challenge. Where to look for an investor, how to do it? This is the question asked by a person who wants to try their hand at basing future profits on investing other people's money.
WHAT TO INVEST IN
Investments can be made on the stock market, in securities or in precious metals, antiques or works of art. Regardless of the investment objective, the overriding goal is to find the funds to be able to invest profitably. There are many possibilities that such a person can consider. Many websites enable the matching of future investors and those seeking funds. A large group consists of those who have ideas but lack finances. You can find both private and business offers there; “I am looking for an investor”, “I am willing to invest”, “I am looking for an investor for a joint business”, “I am looking for a partner”, “Investor with capital wanted”, “I am looking for an investor to develop the company”, etc. There are many offers and everyone will certainly find what they are looking for.
An interesting solution is the “social loan”, which, in a way, bypasses the participation of banks in transactions (more about it later in the article). In this virtual space, the 'big fish' meet the 'small fry'. Overcoming their own limitations, and often even unjustified fears, they take entrepreneurial action. They want to make a name for themselves, earn money or get rid of a problem by selling a business that is no longer attractive to them.
WHAT IS WORTH DOING BEFORE CONCLUDING A CONTRACT WITH AN INVESTOR
Once we have found an investor and intend to conclude a contract with them, there are a few basic steps to remember before signing it.
- Checking the investor
This is the first step to take to avoid being scammed. So how do you check such a person? You can talk, turn on your brain and turn off your heart! Limited trust, this is the thought that should guide anyone who does this. It is worth searching the web for information about your potential partner. Communities of forum users like to share various information, especially “bad experiences”, so it is worth taking a look in such places. If the investor is a big fish in the industry, it is worth visiting their websites and analyzing them to see if there are any measurable effects of their activities. Certificates, industry space in which they operate, business records, opinions, etc. All these tools allow for a wise analysis and drawing conclusions that will help us be sure about future decisions.
- Terms of the investment agreement
Check what you are signing. Before we sign the documents binding us to the investor or when we invest ourselves, let's check the contract. It would be advisable to hire a good lawyer who, with a professional eye, will catch any irregularities it may contain. Not only that, but they can also draw our attention to certain details that could work to our disadvantage. It often happens that the vagueness of the provisions allows a party to take actions whose (negative) end results we would not want to experience first-hand.
- Key issue - duration of negotiations with the investor
It is important because our actions are subject to time constraints. A rigid framework can change expected profits, and delays can eliminate us from lucrative transactions and investments. Time can limit our actions, and the competition can use the idea and take over the profits. You have to be proactive and anticipate the other party's behavior.
- Control what you give away
If you are dealing with long-term (and not only) transactions, it is worth controlling their progress. You cannot let things take their course. It is good to “keep your finger on the pulse” so that you can act effectively if necessary. A collapsing market, wrong strategic decisions made by a business partner, illness or even death force you to take appropriate action to minimize possible losses. A prudent investor will take care of the investment, look after it, strive for the success of their actions in order to reap financial benefits.
WHAT TO INVEST IN
Assets that are owned, borrowed or received can be invested in many ways. These can be investments in real estate, securities, raw materials such as oil, metals, precious stones including gold, or alternative investments such as vintage vehicles, machinery, wine, works of art, bitcoins, etc. For some, investing is a passion and a way to increase their capital, combined with connoisseur pleasure. Every enthusiast devoted to their passion gains twice. They accumulate capital by investing, then profit by selling and enjoy the pleasure of the transactions.
RISK OF LOSING INVESTMENT CAPITAL
This is a serious problem that many novice and advanced investors have to face. How much to allocate for investments so that a possible loss does not drastically deplete the budget. Losing the investment capital is a serious problem when taking this risk. A good start could be to invest in instruments that are certain to yield a profit, such as buying government bonds. More difficult is investing in investment funds or direct investments on the stock market. Every investor must first assess the risk that the investment carries. It happens that the expected profit is within reach, but changes in conditions, e.g. economic, can suddenly collapse the economic and political system and expose us to irreversible losses. All this must be taken into account before investing and be included in our safety margin.
SOCIAL LOANS
Social lending is a very interesting tool that allows you to earn income with money that is not yours. However, investing borrowed money creates more stress and additional costs. These include contract collateral, liability to the lender, and loan interest. Third parties are then needed as guarantors, provided that this is stipulated in the contract. They too may want to, or expect to, profit. If we decide to go down this route, we can use the services of specially appointed companies. They offer us a certain peace of mind, for which, unfortunately, we have to pay. It's a rather complicated process. With the right skills in managing other people's capital, however, it may turn out to be the best solution, bringing us the right profits. After all, nothing ventured, nothing gained.
LITERATURE ON INVESTING
I think that every investor should prepare well for the activities they intend to undertake. They can use relevant literature to help them understand the basic mechanisms and relationships that occur in this type of activity. The first must-read will certainly be the book “How I Lost a Million Dollars in the Stock Market and What I Learned from It” by Jim Paul. Another book is: “Think like a crook, so you don't get caught” by Maria Konnikova. Next is “The Conscious Investor: Discovering a Company's Hidden Potential” by Paweł Zaremba-Śmietański and “Rich Dad, Poor Dad” by R.T. Kiyosaki. The Tortoise Way by Curtis M. Faith, The Intelligent Investor by Benjamin Graham, How to Beat the Stock Market by Peter Lynch, The Road Not Taken by Robert Frost.
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//M.K.
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