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Tag: Investments

  • 7 Questions Every Founder Should Ask Potential Investors | Entrepreneur

    7 Questions Every Founder Should Ask Potential Investors | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    When I’ve pitched investors in the past, I prepare for the questions they’ll likely ask me, from market opportunity and size to financial metrics and timeline. From my own experiences and having consulted for multiple founders, I’ve learned that it’s just as important to interview your investors as it is for them to be convinced by your pitch.

    Choosing a partner goes beyond securing funds; it’s about finding a partner who believes in your vision and can contribute to the growth and success of it. Similar to a marriage, the investor-founder relationship should be built on trust, transparency and shared values. Take the time to make an informed decision, as it will significantly impact your company’s trajectory.

    Below are seven questions, alongside specific case studies, that founders should ask investors to help ensure a mutually beneficial partnership.

    1. How do you define your role as an investor?

    I’ve heard many responses to this, ranging from an investor wanting to be a resource to a decision-maker, which is why it’s crucial to ask this. Elle Lanning, Managing Director at Camino Partners and also a key member in the growth of KIND Snacks (currently valued at about $5B), always asks this question because both the investors and founders will have strong points of view. Lanning explains how “passion can be mistaken as direction,” and she’s persistent about reminding prospect and current investors that “while the Camino Partners team has their own point of views, it is up to the entrepreneurs and day-to-day leaders of a given company to run the business and make the best decisions for them.” The investor role is very diverse, particularly as some investors will see themselves in a governance capacity.

    KIND Snacks is a great case study for this question, as the founder, Daniel Lubetzky, bought back the stake owned by private equity firm VMG Partners for $220M in cash and notes. Lanning explains, “VMG was a solid partner for the time we worked together, but we reached a place where our objectives were different. We were fortunate to have run KIND in a healthy and sustainable way, so we had a lot of options when we decided that Daniel and the KIND team were best suited to continue to lead the brand’s growth.” It was a risk, but the result paid off, as the start-up is now valued at about $5 billion.

    Related: 5 Questions Every Entrepreneur Should Ask Potential Investors

    2. What is your exit strategy?

    Having an understanding of the timeline expectation and eventual exit strategy for the investor will help you determine if your future plans are mutually aligned.

    Related: When Should Business Owners Start Developing an Exit Plan? Here’s What You Need to Know.

    3. Can you provide references from other companies you have invested in?

    In line with the saying, “If you don’t know the horse, you check the track record,” it’s crucial to gather insights about the investors’ style, reliability and how they work with partner companies. By speaking with other founders to get references about investors, you’ll get a candid opinion of the personalities, best skills and added value that the investors may be able to provide. Again, aligning values and personalities will set you up for the best partnerships.

    4. What value are you able to bring beyond capital?

    Alongside funding, investors can offer valuable advice, connections and industry expertise. Have they invested in similar companies before? At times, great advice or case studies can support your company even more than their investment. Understanding the additional support and value an investor can provide is paramount.

    Related: Investors Are Overlooking the Gig Economy. Here’s How to Unlock Its Untapped Value.

    5. What are your expectations for growth and performance?

    The response to this question will help you assess if the investor has realistic expectations and if the expectations align with your plans. Adam Harris, Founder and CEO of Cloudbeds, a company founded in 2012 that raised about $250M, prioritizes clarity in outcome alignment. Harris explains, “You need to know if your investors are underwriting your deal to require a 2x, 3x, 4x, or 10x return (or whatever the number is). This answer will dictate the amount of risk they’re willing to pursue and the type of capital investments that follow. Know when enough is good enough for the outcomes you are seeking (future fundraises, liquidity events, etc.).”

    Most investors don’t share their thoughts about underwriting a business, but knowing their outcome requirements will align you with investors at every growth stage.

    Harris suggests that all questions to investors center around the following:

    1. How do you incentivize and keep incentivizing me to build what we both want?
    2. How do you and I stay aligned with risk appetite, enterprise value extraction and what’s right for the business?
    3. How do you underwrite my deal?

    If you can get full transparency on responses for the above, you’ll have a better shot at alignment, allowing you to move faster to focus on the big objectives.

    Related: How PR Can Attract Investors and Add Value to Your Startup

    6. How often do you expect to meet after funding?

    Some investors are going to be far more high-maintenance than others, and communication styles can make or break a partnership. You do want a decent amount of interaction. Investors can help find clarity with high-level decisions, but I suggest they stay out of the details, as this may weigh and slow you down.

    7. We have a challenge with this issue. Do you have any insight into how we may help solve it?

    The response to this can be very telling because it will shed some light on how the investor thinks, works and the type of value they can offer. It also demonstrates to the investor that you are open to their feedback and value their expertise as a potential partner.

    Choosing the right investors goes far beyond getting capital. Through open and honest conversations, look to find partners who believe in your vision, feel good compatibility and offer a funding package that will contribute to the growth of your business. Take some time to make the most informed decision possible and ensure clarity across all questions and expectations. If it doesn’t feel like love at first sight, reassess.

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    Elisette Carlson

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  • What’s The Best Type Of Tenant?

    What’s The Best Type Of Tenant?

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    With so many fluctuations in today’s market, securing the right tenant has become crucial—they will be a source of cash flow for your investment and losing one could lead to short-term or long-term losses. This means you’ll want to carry out solid research before presenting any leases. You’ll also want to make sure the terms are set up in a way that provides protection for your interests.

    That said, the perception that this type of relationship is a “one-way street,” in which the tenants exist to provide rent for landlords and nothing more, is largely a concept of the past. Today, regardless of whether you are dealing with multifamily, office, or retail, you’ll want to consider what you as a landlord can offer renters. When done well, you can help tenants on their own success paths, which can bring benefits for everyone involved in the investment.

    Carrying out Diligence

    Before taking on a tenant, you’ll want to know, first and foremost, with whom you are dealing. For multifamily, this could be as simple as researching their history and carrying out a credit check. You can follow up on references too. Of course, there are countless nightmare situations which involve tenants who have a bad track record and lack the financial wherewithal to make payments. Taking steps to vet individuals before offering a lease will help you avoid those headaches later. Keep in mind that each state has rules regarding what you can and cannot do when verifying tenants. Speak with a good rental broker for advice on measures you’re allowed to take and to ensure you’re following the legal guidelines.

    For office and retail investments, finding the right tenant can be even more important since the leases are typically longer-term. Retail spaces might have three- to five-year leases. It’s common for office leases to run 5 years, 10 years, or even more. In contrast, for multifamily the length of the lease might be only a year. You could also have fewer office and retail tenants than multifamily (or just one).

    The Right Tenant Lease Terms

    For office and retail, part of the negotiation process often involves how the tenant will initially take the space. There may be specific needs that the business has which require renovations or construction work. You’ll want to agree on how the building will be delivered. There could be tenant improvement allowances, which are given by the owner to help the tenant cover expenses related to moving into the space.

    Many times, landlords will provide tradeoffs with tenants and offer free rent in exchange for the tenant carrying out the upfront work. On other occasions, the landlord may be responsible for a good portion of the tenant improvement allowance. In some cases, these types of concessions could mean that you, as a landlord, won’t receive rent for a year or two.

    For this reason, you’ll want to do all that you can to ensure you’re bringing on a creditworthy tenant. You can speak to past landlords to verify that the tenant is financially capable and a good steward of the space. To know what’s commonly expected in your market, work with a local leasing broker who is familiar with the customs. Also bring in real estate counsel to help you get the best terms and protect your interests.

    When Larry Haber, the managing partner of the Commercial Real Estate Department of the bi-coastal firm Abrams Garfinkel Margolis Bergson, joined an episode of my podcast, “The Insider’s Edge to Real Estate Investing,” he stressed the importance of legal considerations when setting up a lease. Be aware of the “good guy clause,” which states that a tenant who is current on the lease has the option of giving back the keys and walking away, provided the place is in good condition.

    Financials for Office and Retail

    Credit tenants have sufficient guarantees and financial backing, and are often household names or national chains. You can find credit ratings at places like Moody’s or S&P. Avison Young also has Net Lease Advisor, where you can check the average cap rate associated with a tenant along with cap rate trends. As of August 2023, Sonic was listed with a credit rating of B2 by Moody’s, B+ by S&P, and a cap rate of 5.34%. It had a cap rate of 6.10% in 2021 and 5.42% in 2022. CVS had an average cap rate of 4.8%, shifting from 5.70% in 2021 to in 5.40% 2022. Its S&P rating was BBB and Moody’s ranked it Baa2.

    Smaller, non credit tenants will typically have a higher cap rate, and they will often pay higher rents to adjust for that. They may be asked for more security too, since they lack a corporate guarantee. If you’re planning to resell the asset, the tenant and associated cap rate could play a significant role. A bank might be looking for the lower risk that typically comes with a credit tenant that has a corporate guarantee.

    Don’t Overlook Smaller Players

    While some sources will view a national tenant as being more creditworthy than others, I always like to point out that a mom and pop tenant can be just as valuable. Many of these mom and pop tenants have held their business for a long time and maintain great pride in their space. They will often do everything possible to make the space work and carry on, even if there’s a downturn. This was especially true in certain areas post Covid, when we saw many national tenants close stores and make large scale exits.

    With a changing market, the relationships you cultivate with tenants will continue to have utmost importance. As you set up a lease, understand what’s in the fine print, especially if you’re making a significant financial investment initially. When carried out well, you can have a long-term tenant who will ultimately become your partner in the building and investment.

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    James Nelson, Contributor

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  • First Watch Elevates Brunch With New Restaurant in Willis, Texas

    First Watch Elevates Brunch With New Restaurant in Willis, Texas

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    The new location serving a full menu of breakfast, brunch and lunch opens its doors on Monday, Aug. 14 in Willis, Texas.


    WILLIS, Texas, August 14, 2023 (Newswire.com)
    –
    First Watch, the leading Daytime Dining concept with more than 480 restaurants nationwide, announced today it has opened a new location in Willis, Texas. The new breakfast, brunch and lunch restaurant, which features an expansive dining room and bar, is located at 12360 I-45 N, Ste. 400, Willis TX 77378 and employs approximately 30 people. 

    First Watch’s curated menu takes an elevated approach to traditional and innovative offerings that are made to order using farm-fresh ingredients. The menu includes crave-able items such as Avocado Toast, Smoked Salmon Eggs Benedict, Farm Stand Breakfast Tacos and Lemon Ricotta Pancakes. The new restaurant will offer healthy, flavorful favorites like house-made granola and pico de gallo, organic greens, house-roasted vegetables, cage-free eggs and 100% fresh-squeezed orange juice as well as more indulgent, traditional breakfast, brunch and lunch offerings. 

    First Watch Willis will also offer options from the restaurant’s juice bar – including the best-selling Morning Meditation (made with orange, lemon, turmeric, organic ginger, agave nectar and beet) – juiced in-house daily using only the highest quality fruits and vegetables. The new restaurant features First Watch’s brunch cocktail program, which allows guests to enjoy signature creations like the Blackberry Bramble Sangria (a signature blend of Merlot, mixed berries and apple with a squeeze of orange and lime) and Cinnamon Toast Cereal Milk (coconut rum, cold brew coffee, coconut milk and agave nectar).

    The concept also offers a revolving seasonal menu, following the sun to source the highest quality ingredients, wherever and whenever they are in season, which has items like Crab Avocado Toast, Pumpkin Pancake Breakfast, Elote Mexican Street Corn Hash and Watermelon Wake-Up fresh juice, among many others.  

    To celebrate the opening of the new Willis location, customers who dine in-restaurant during its first five days in business will receive free coffee with their meal. In addition, the first 120 customers to visit the new restaurant will also receive a custom, reusable travel mug.

    The interior brightly builds upon First Watch’s Urban Farm design prototype with the addition of warm blue tones, quartz countertops, and a subway-tile backsplash. A grab-and-go retail area will showcase Sweet Street’s new line of GMO-free, additive-free desserts for purchase and the concept’s socially responsible and award-winning Project Sunrise coffee, grown by independent groups of female farmers in South America, called the Mujeres en Café. Communal tables as well as patio and bar seating make First Watch a great place for guests to work remotely in an approachable atmosphere. 

    First Watch serves its entire menu seven days a week from 7 a.m. until 2:30 p.m. for pickup, delivery and dine-in service. The restaurant also offers customers complimentary newspapers and free Wi-Fi Internet access. 

    For more information about First Watch, its menu offerings or to find the nearest location, visit firstwatch.com.

    About First Watch
    First Watch is an award-winning Daytime Dining concept serving made-to-order breakfast, brunch and lunch using fresh ingredients. A recipient of hundreds of local “Best Breakfast” and “Best Brunch” accolades, First Watch’s chef-driven menu includes elevated executions of classic favorites along with First Watch specialties such as the protein-packed Quinoa Power Bowl®, Farm Stand Breakfast Tacos, Avocado Toast, Chickichanga, Morning Meditation (juiced in-house daily), Spiked Lavender Lemonade and its signature Million Dollar Bacon. In 2023, First Watch was named the top restaurant brand in Yelp’s inaugural list of the top 50 most-loved brands in the U.S. In 2022, First Watch was awarded a sought-after MenuMasters honor by Nation’s Restaurant News for its seasonal Braised Short Rib Omelet, recognized with ADP’s coveted Culture at Work Award and named a Most Loved Workplace® in Newsweek by the Best Practice Institute. In 2021, First Watch was recognized as FSR Magazine’s Best Menu and as the fastest-growing full-service restaurant chain based on unit growth. There are more than 480 First Watch restaurants in 29 states, and the restaurant concept is majority owned by Advent International, one of the world’s largest private-equity firms. For more information, visit www.firstwatch.com. 

    About Mac Haik Enterprises LTD (MHE)
    Mac Haik Restaurant Group (MHRG) is a division of Mac Haik Enterprises LTD (MHE), a diversified holding company based in Houston, TX. MHE is a major investor in three rapidly growing fast casual restaurant brands, Original ChopShop, Slapfish and Due Cucina, and one of the largest franchisees of First Watch Restaurants. MHE also owns Mac Haik Outdoor Media, Mac Haik Hospitality, and Mac Haik Automotive Group which encompasses 23 car dealerships. The 11 affiliated companies of MHE have engaged in the development, ownership and management of commercial real estate and healthcare facilities, asset acquisition and disposition, facilities management, property management, leasing, project management, construction plus janitorial services, as well as hotel ownership. Overall, MHE companies employ over 3,000 employees. To learn more about MHRG, please visit www.machaik-enterprises.com.

    Source: First Watch

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  • 3 Investments That Will Transform Your Small Business | Entrepreneur

    3 Investments That Will Transform Your Small Business | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    I’ve been fortunate to spend more than a decade of my career serving the small business industry. One thing that I’ve seen consistently over the years — whether it’s a brick-and-mortar restaurant in Missouri, an ecommerce business based in Virginia or a hair salon in Texas — is that in order for a small business to grow and thrive, owners must invest strategically in tools and technologies to help them succeed.

    This extends beyond simply going online to order a laptop for all your business dealings or setting up a company website — although those are good places to start! The right tools can help power a business, taking it to the next level of growth while making the owner’s life easier and more manageable.

    Here are three areas business owners should consider investing in that can help transform their operations and catapult their growth.

    Related: A Small Business Owner’s Guide to Managing Funds and Investments

    1. Unlocking the power of AI and automation

    Artificial intelligence is the hot, new buzzword — the technology trend that’s generating the most excitement around its potential use cases, particularly as more and more people experiment with generative AI like ChatGPT.

    For business owners who are strapped for time, the opportunity to automate tedious and time-consuming tasks is extremely appealing. In fact, according to a recent survey we did, almost all small business owners are eager to automate operational tasks with the help of AI: from expense management (69%), to invoicing (68%) and completing payroll (51%). They look forward to offloading some of these monotonous but important tasks to technology solutions.

    I recommend evaluating key areas of your business operations that are critical to your cash flow, for example, monthly invoicing. Finding ways to improve efficiency by automating repetitive tasks will help save time and money every month, compounding the overall benefit.

    The impact of the potential time savings from AI is huge, with 43% of business owners saying they’d use the time to develop customer relationships and 36% would develop more products and services with the extra time. The true power of AI is it creates the capacity to focus on building relationships, creating new offerings and innovating — areas where the human touch is still essential to success.

    2. Managing the employee experience

    Another area where technology can make a huge difference is the complicated process of onboarding, managing and paying employees. Personal relationships between a business owner and employees are of course crucial, but by investing in a human capital management (HCM) software solution upfront, business owners can greatly simplify some routine tasks.

    Calculating payroll for hourly workers, managing schedules and deducting appropriate taxes are all things HCM solutions can effectively take off a business owner’s plate. This results in significant time savings (similar to the monthly invoicing example above, these are tasks that repeat consistently, compounding the overall benefit). It also ensures greater peace of mind as tax compliance is an area that many business owners struggle to navigate with confidence. Finally, it helps employees, as it provides greater transparency and accessibility to paystubs and other important financial documents.

    Related: Three Reasons Why It’s Never Too Early to Invest in HR

    3. Reach new and existing customers with breakthrough marketing

    According to our recent survey, half of small business owners agree that customer retention is among the most important business metrics for judging the success of a business. Businesses need customers to buy their products and services, but 20% of businesses said acquiring customers is the biggest obstacle inhibiting their growth, second only to the rising cost of inflation.

    Automation tools can help with both of these challenges by making it faster and more efficient to manage your company email and social media marketing. Whether it’s leveraging an email marketing solution to reach new and existing customers or experimenting with paid ads on social media platforms, more and more companies are taking the guesswork out of marketing for business owners so they can better target, reach and communicate with their intended audiences. Now businesses can leverage the templates, insights and best practices that are available to them via these platforms rather than reinventing the wheel with every ad or email blast. Additionally, the metrics and insights provided on the backend can help businesses to test and learn, seeing what resonates with their audiences and truly moves the needle.

    Our survey found that four in five small business owners plan to invest in digital tools this year. That’s great news for all of us who love and support small businesses, as it will undoubtedly help many companies continue to grow and reach new goals. For any entrepreneurs ready to invest in their brand’s future but unsure where to start, I recommend exploring the capabilities of AI and automation and how tools can help streamline the employee management experience, customer communication and marketing. With the help of technology and tools, the sky is truly the limit for small businesses everywhere.

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    Rich Rao

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  • The Entrepreneur’s Guide to Building Wealth Through Real Estate | Entrepreneur

    The Entrepreneur’s Guide to Building Wealth Through Real Estate | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Real estate, as an asset class, has long been heralded as a critical pillar of wealth creation for entrepreneurs. It is a tangible investment avenue, and its potential for consistent appreciation and income generation makes it an excellent wealth-building tool.

    According to the U.S. Federal Reserve’s 2020 Survey of Consumer Finances, real estate comprises about 30% of American families’ total wealth, demonstrating its significant role in wealth accumulation. In essence, real estate investment represents an accessible pathway for entrepreneurs to achieve financial prosperity — and here are six ways to make money in the industry.

    Related: How to Start Investing in Real Estate With as Little as $5,000

    1. Investing in rental properties

    One of the most conventional ways to create wealth through real estate is by investing in rental properties. The potential for steady cash flow from tenants provides investors with a continuous income stream, which is a form of passive income. For example, consider a property purchased for $200,000. If this property is rented out for $1,500 per month, the entrepreneur can potentially yield an annual return of $18,000, resulting in a 9% cash-on-cash return.

    Successful real estate investor, Robert Shemin, started with a single property and has now built a portfolio of over 400 properties. His estimated net worth is reportedly over $18 million, thanks in large part to his investment in rental properties.

    2. Real estate appreciation

    Property appreciation is another way real estate builds wealth. Over time, properties tend to increase in value — and if an investor holds onto a property long enough, they can sell it for much more than the original purchase price.

    Statistics from the U.S. Census Bureau show that the average price of a home in the United States was about $30,600 in 1940 (after adjusting for inflation). In contrast, by 2020, the average price had escalated to over $300,000, a tenfold increase. The renowned business magnate, Donald Bren, capitalized on this by acquiring a wide array of properties. Today, with a net worth estimated at $15.3 billion, he is one of the wealthiest real estate investors in the world.

    3. Real Estate Investment Trusts (REITs)

    For entrepreneurs who prefer not to directly manage properties, REITs offer a way to invest in real estate without the burdens of property management. REITs, essentially, are companies that own and operate income-producing real estate. As per the National Association of REITs, the compound annual return for equity REITs from 1972 to 2020 was 9.72%, outperforming the S&P 500’s 7.42% return over the same period.

    Investing in REITs is as simple as purchasing shares of a publicly traded company. You can buy shares of a REIT through a broker, just as you would with any other publicly traded stock. There are also mutual funds and ETFs (Exchange-Traded Funds) focused on REITs that provide further diversification. By making real estate investing accessible to a broader audience, REITs open a pathway to real estate’s wealth-building opportunities without requiring extensive capital or expertise in property management.

    An example of an entrepreneur who achieved remarkable wealth through REITs is Sam Zell, founder of Equity Residential. Today, Zell boasts a net worth of approximately $5.5 billion, with a large portion derived from his REIT investments.

    Related: 5 Proven Steps to Become a Real Estate Millionaire, According to an Investor

    4. Flipping properties

    House flipping involves buying a property, renovating it and selling it at a profit. Although this requires expertise and hard work, the potential for high returns makes it an attractive option for entrepreneurs.

    For example, according to ATTOM Data Solutions, the average gross profit for a flipped house in 2020 was $62,300, demonstrating the lucrative potential of this real estate strategy. Christina Anstead and Tarek El Moussa, stars of HGTV’s “Flip or Flop,” exemplify this success. They have built a multimillion-dollar business through property flipping, further highlighting the wealth creation potential in this approach.

    5. Investing in commercial real estate

    Commercial real estate (CRE) includes shopping centers, offices, warehouses and apartments. Generally, these properties yield a higher return than residential real estate due to longer lease contracts and higher rental rates.

    Investing in CRE allows entrepreneurs to diversify their portfolios and minimize risks. A report by CBRE showed that the average annual return for CRE was 9.5% between 2000 and 2018. Though it requires a larger initial investment, the high yield can lead to substantial wealth accumulation.

    Take the case of entrepreneur Rick Caruso, founder of Caruso, a company specializing in creating extraordinary retail, dining and lifestyle experiences. Through strategic investments in CRE, particularly in high-end retail centers, Caruso has grown his net worth to an estimated $4 billion.

    6. Developing raw land

    Another viable way of wealth creation through real estate is land development. Entrepreneurs can purchase raw, undeveloped land, then increase its value by obtaining the necessary permits and building infrastructure like roads, sewage systems and utilities. Once the land is developed, it can be sold to homebuilders or commercial developers at a profit or it can be utilized to construct properties, thus adding another income stream.

    Land development can be highly profitable, but it requires a keen understanding of local zoning laws, planning regulations and market conditions. Entrepreneurs also need significant upfront capital and patience, as this process can be time-consuming.

    Related: Why Real Estate Investment is the Ultimate Adventure for Entrepreneurs

    Reaping the rewards of your investment choice

    The avenues to wealth creation through real estate are vast and varied. Whether an entrepreneur opts for rental properties, capitalizes on appreciation, invests in REITs or decides to flip houses, real estate offers incredible potential for wealth accumulation. While success demands research, financial acumen and sometimes patience, real estate investment remains a proven strategy for entrepreneurial wealth creation. As illustrated by the above examples, those willing to invest the time and effort can reap considerable financial rewards, ensuring their journey towards sustainable wealth.

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    Ari Chazanas

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  • How You Can Afford the Lifestyle of Your Dreams in Retirement | Entrepreneur

    How You Can Afford the Lifestyle of Your Dreams in Retirement | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Entrepreneurship is the new “dream job” for older adults in the U.S., even after they retire. A recent survey from The UPS Store found that 54% of Americans would rather open a small business than retire, and the proportion of new entrepreneurs in the ages 55 to 65 cohort has increased faster than among people ages 25 to 35.

    Working in retirement is not a new phenomenon. Some retirees and older adults have always decided to keep working past the traditional retirement age, whether it’s a few hours a week at a part-time job, solo consulting work or other ways to stay active and earn extra income. But for this new generation of retirees and older adults who are approaching retirement age, entrepreneurship in retirement can be a great way to take on a fun new challenge while making money with a flexible schedule, on your own terms.

    Today’s generation of retiree entrepreneurs is often called “encore entrepreneurs” or “second act” entrepreneurs because they’re coming back to the workforce for one more appearance. Being a retiree entrepreneur can offer special satisfaction and financial rewards. Running an online business, like an ecommerce store, Fulfillment by Amazon (FBA) business, blog, mobile app or another digital asset, has become a popular new strategy for entrepreneurship in retirement.

    But as an online business entrepreneur in retirement, you don’t have to reinvent the wheel or start from zero. If you want to get your foot in the door with online business ownership, more retirees should consider the option of buying an online business. In the same way that some entrepreneurs might want to buy a franchise or purchase an existing business that already has a proven brand and strong foot traffic, buying an online business can be a cost-effective way for “encore entrepreneurs” to have a successful second act in retirement.

    When I talk with entrepreneurs and investors around the world, we’re seeing strong interest in this space from older adults. In the past year, as I’ve attended industry conferences and done meetups in cities around the world, approximately 75% of people in the audience are in the ages 55 to 65+ cohort. Clearly, this age group is interested to learn more about online entrepreneurship. They see how buying an online business or digital asset could be a smart investment.

    Here are a few big reasons why online business and retiree entrepreneurs are a natural fit — and why buying an online business could be the right strategy for your goals.

    Related: Want to Retire Early? Do This One Thing.

    1. You get the lifestyle you want — and the income you need

    Why do older adults often decide to work in retirement? Because they want to earn extra income on a flexible basis, without the all-consuming schedules and expectations of a full-time job. Buying an online business is a great fit for these goals.

    If you want to earn extra money on your own terms, running an online business can deliver the return on your investment that you need, with a flexible schedule and the ability to work from anywhere. If you want to travel in retirement, split your time between seasonal homes or spend more time with grandchildren or other loved ones, running an online business can give you the freedom of being a digital nomad, not tied to any one location.

    Why buy an existing online business, instead of starting your own business from scratch? Because when you buy an online business, you’re getting a built-in customer base, a known brand and reliable revenues. You’re getting a stronger foundation to build upon. This is another reason why buying an online business can be a perfect fit for older adult entrepreneurs — it helps you avoid the time-consuming struggle of finding new customers and building a brand.

    2. They’re cost-effective investments of extra cash

    Retirees sometimes have access to a lump sum of cash that they can use for investing in a new venture. Whether it’s an early retirement severance package from your last job, proceeds from the sale of a house after downsizing, an inheritance from a loved one or other windfalls, retirees are (hopefully) in a stage of life where they have some extra cash that could use a good purpose.

    There are a few ways to invest extra cash. You can put it into a savings account, CD or money market account and barely earn enough interest to keep up with inflation. You could buy an investment property — but real estate inventory in most U.S. cities is limited right now due to rising interest rates — or you can invest cash in other asset categories, like the stock and bond markets, which can be risky and go up or down for reasons beyond your control.

    But what if you could invest some extra cash in an online business — and invest in your own skills, talents, expertise and entrepreneurial energy? Buying an online business is a way of betting on yourself. Online businesses can deliver steady monthly cash flow to boost your retirement income, as well as a long-term appreciation of the asset price. And hopefully, with an online business that you’re passionate about in a niche you know well, you can achieve a bigger long-term ROI than other investment categories.

    Related: 3 Tips for Buying an Online Business

    3. They can be low-risk

    Buying an online business doesn’t have to cost a lot of money. You don’t need hundreds of thousands of dollars to buy an online business, and you don’t have to bet your life savings on one single business idea. Unlike buying a franchise where you have to be part of that larger brand and follow its rules, running your own online business gives you the freedom to make your own choices, try new things and follow your own intuition. Unlike buying a brick-and-mortar business like a restaurant or retail store, online businesses tend to have limited overhead costs and big potential profit margins.

    Choosing the right online business to buy depends on striking a balance between how much cash you want to invest upfront vs. how much time/expertise and additional cash you’re prepared to invest into the business as you manage for future growth.

    For example, there are lots of online businesses (like ecommerce stores, mobile apps or revenue-generating content-based websites) that are for sale for as little as $5,000 to $10,000. If you’re willing to put in some effort to improve the performance of these businesses, with better content, higher customer retention, sharper SEO (search engine optimization), diversified sources of traffic and more precise advertising, you could boost the business’s monthly revenues and recoup your initial investment within a few months to a year.

    Not every online business is an immediate slam-dunk moneymaker. Some online businesses require some extra help and careful management to reach their potential. But in general, if you’re a recent retiree or soon-to-be retiree who wants to earn extra income in retirement while keeping your entrepreneurial skills sharp, buying an online business could be the best strategy for you to get in the game. Buying an online business helps you save time and start selling to customers faster, without the growing pains of getting a new venture off the ground.

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    Blake Hutchison

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  • Smart Investors Evaluate the Founder More Than Their Pitch. Here’s How You Can Persuade Them You’re Investable. | Entrepreneur

    Smart Investors Evaluate the Founder More Than Their Pitch. Here’s How You Can Persuade Them You’re Investable. | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    I’ve invested in more than 25 world-changing, disruptive businesses in the last decade. These innovative companies have made women safer on the streets, children more protected online, people healthier and given us all more fun via some of the world’s most entertaining creators. Here’s the thing: While all the businesses had a completely new concept at their heart, I invested in the founder more than the idea.

    What I’ve learned as a serial entrepreneur and investor is that a business doesn’t need to have the best idea in order to be a worthwhile investment — they need an investable founder. Just think about the world’s most recognizable entrepreneurs today. Do you know Elon Musk for city guides, Jack Dorsey for a podcasting app or Richard Branson for a student magazine? Of course not. Behind every famous entrepreneurial idea is a pivot or evolution from a determined, skillful founder.

    Every investor has a healthy appreciation for the unreliability of ideas — so often at the mercy of external influences out of your control — versus the reliability of people. If you have successfully returned 10 times once or twice, you will have already proved yourself a worthy, reliable investee — but what if you haven’t? Highly experienced investors have developed an instinct and shorthand to find founders worth investing in.

    Many new entrepreneurs misunderstand this, so focus on the wrong things in crucial meetings to raise capital. In the “shark tank,” the founder might think it’s most important to draw attention towards bullet point three on slide five of their deck, but investors only looked at the headline (as they do with every slide) in order that they can instead peer into your soul. They’re more interested in getting a measure of you, not your idea. So what traits are they looking for in you?

    Related: Here’s What’s Brewing in the Minds of Startup Investors

    1. A superhuman determination to succeed

    People have different reasons for wanting or even needing to succeed. Many that I know like to have control over their lives, from making their own lot better to improving the future for millions (or billions) of people. Whatever is feeding your determination to succeed, make sure it’s a deep well.

    To win, entrepreneurs typically endure relentless decision-making, constant risk-taking and strings of failures. The successful ones are more right than wrong, have great ideas to manage risks and turn failures into opportunities.

    Determination must be a lifelong habit, too, as founders should have a strong sense of urgency (procrastination won’t fly) yet also have an unusual amount of patience (as their idea can take years to come to market or generate profit) combined with persistence. No wonder so many entrepreneurs run marathons and ultramarathons, as being a founder is the ultimate endurance test where resilience is the name of the game.

    2. Endless curiosity

    Being able to remain insatiably curious allows entrepreneurs to continuously seek new opportunities. So rather than just settling for what you think you know, show investors that you always ask challenging questions and explore different avenues.

    Incidentally, this curiosity can usefully extend to skepticism, especially about technology. On the one hand, you should be able to pull things apart from a quality point of view, and on the other hand, you should be able to really focus on what problem you are solving. In the words of my business partner, Chris, “Question everything.”

    For a killer combination, put curiosity together with a willingness to break the rules that you’re questioning. Asking, “Why has no one done this?” could identify a great opportunity to disruptively innovate.

    Related: Do You Have These 6 Personality Traits? You’re More Likely to Score Investors

    3. Commit to building a great team around you

    It’s true that, as an entrepreneur, at first you are the proverbial “chief cook and bottle washer,” you are doing every role in the business. To grow, you need a team, and to exit (which you will, one way or another) you need a team to run the business after you have moved on. So smart entrepreneurs show interest in building a great team around them.

    That’s not only co-founders but indeed the total management team that’s in (or going to be in) the company. Back to the curiosity point, founders who know what they don’t know are really valuable. More than that, ones who can put their ego to the side and see there are specialists — who are better designers or marketers or whatever — are gold.

    4. Focus on execution more than the idea

    There are new ideas to be discovered, and that’s one reason I’m optimistic about the future. We live in a dynamic world, so new ideas are always needed. That said, a great team can execute a mediocre idea, make it great and make a great company. So investors look for your ability to execute. They want to see an exceptionally talented product and technical leadership with domain expertise.

    So, if you’re building a product for a specific market or an ecosystem, ideally you have brilliant experience in that world. When billionaire investor Peter Thiel’s fund was investing in cleantech entrepreneurs, they quickly realized that the people wearing suits to pitch for capital were salesmen with no real technical expertise, so they instituted a rule to never invest in cleantech founders wearing suits.

    5. Old-school hard work

    We’ve all heard stories about entrepreneurs sleeping in the office at night. I’m not saying that’s optimal; however, you will work harder than you ever have in your life. Ever tried running a startup and running an investment raise at the same time? They’re both full-time jobs, but no one else can do it — it’s all on you. Beyond that, it’s true that the person who works more hours is almost always going to succeed or do better than the person who works fewer hours, and investors will be looking for a solid work ethic.

    Related: Beyond the Basics: 5 Surprising Qualities Investors Seek in a Winning Team

    6. Be a good storyteller

    Being able to articulate a bold vision and your mission, as well as your personal story that brings you to the investment pitch is incredibly helpful. It’s about amazing storytelling. When he took over Tesla, Elon Musk said fossil fuel will run out, so we need electric cars, but because they’re expensive, Tesla will make the most luxurious ones and rich car owners will fund the development of mass-market ones.

    That’s great storytelling that let investors see the opportunity, made rich car owners feel good and mass market owners feel excited about the advent of cheaper electric cars. When you’re captivating, and of course have great control of your commercial numbers, you’re going to be able to raise money.

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    David Newns

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  • Why Investing in the Accessibility Space Is a Smart Business Move | Entrepreneur

    Why Investing in the Accessibility Space Is a Smart Business Move | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    As entrepreneurs, we’re always looking for ideas on how to effectively run our businesses, launch new ventures, raise more capital, be better leaders and attract incredible employees. Investing in the accessibility space is one surefire way to accomplish many of these goals at once.

    Six years ago, I launched a startup, Verbit, which quickly grew into a $2 billion company that’s leading the way in accessibility. Many of my entrepreneurial peers and our partners are building and running thriving businesses and attributing their success to greater investment in access.

    Everyone from Google to Microsoft to Harvard University has an accessibility policy or inclusion arm. Microsoft launched a neurodiversity hiring program, while Apple is giving prescription hearing aids a run for their money with its AirPods’ hearing aid feature.

    Here are some tips on how and why entrepreneurs like you should commit more resources to accessibility for business longevity and financial success.

    Related: How Accessibility Teams and Executives Can Work Together for Disability Inclusion

    Why entering the accessibility space is such a smart move

    One key indicator of business success is the total addressable market, the size of the audience you can appeal to. Apple and other tech giants are pushing resources toward accessibility-focused innovations because they understand the statistics

    More than 1.5 billion people have some form of hearing loss globally. Projections suggest that by 2050, that number will rise to over 2.5 billion. That reality has boosted the over-the-counter hearing aid market, one ripe for innovation, to over $1 billion.

    Hearing aids, and now even assistive technology in cars that helps people continue to drive as they age, are examples of innovations that improve people’s lives by helping them maintain autonomy. It’s lucrative for entrepreneurs to start businesses that give people more control, freedom and better quality of life. Businesses that open themselves up to accessibility are attracting more talent, customers and best of all, investors.

    Start by looking internally: Your current hiring practices and employees

    Filling positions can come with a price tag of $15,000 for each employee who earns around $45,000. It only goes up from there. Being unable to fill positions also puts existing employees at risk of burnout.As an entrepreneur building your startup into a functioning business, you need to eliminate opportunities for turnover. Enlisting inclusive hiring practices is one place to start.

    Studies at CVS and Microsoft showed that their initiatives aimed at hiring employees with disabilities improved their bottom lines. People with disabilities are underemployed, even in job markets with low unemployment levels. Start by training your team to prevent ableism — the idea that candidates with disabilities may not be able to perform — when they are more than qualified. Educating hiring managers and ensuring that your process is an accessible one is a great place to start. From the CV submission process to the interview, make sure your team is trained and platforms are accessible to all applicants.

    I’d also recommend hiring someone or making a current team member responsible for accessibility and inclusion to orchestrate these efforts, review your processes and hold you accountable. Creating a leadership position to address accessibility and inclusion highlights the importance of them to your startup, which investors will find attractive as well.

    Related: Employing Individuals with Disabilities May Solve Your Talent Crisis

    How an accessibility focus can help you attract investors

    Investors are paying attention to what startups and companies are doing for the common good. You’ve likely seen the term “ESG” pop up. Environmental, social and government (ESG) considerations evaluate a company’s impact on the natural world and humanity. These metrics are vital for many investors and accessibility is an important part of the equation.

    Inaccessible businesses neglect the social component of ESG and expose themselves to legal risks. As a result, even if they aren’t put off by the lack of accessibility, risks of costly lawsuits can deter would-be investors. To prevent this, even newer founders should be in discussions ESG consultants. Consultants, even if you don’t have enough funding yet to hire them, can help you identify areas to focus on. Is your website accessible? Are you contributing to air pollution? Investors will be impressed by your efforts to track changes in these areas.

    ESG reporting is all about transparency. Investors will want to see your scores and showing them the proactive steps you’re taking to develop a responsible corporate culture will attract them.

    Doubling down: How to start an accessibility-minded business or arm

    There are so many barriers impacting the lives of individuals with disabilities. As an entrepreneur, you’re gifted at identifying key problems. Why not find one that they’re facing and solve it to create a positive impact?

    My product was initially developed for the legal industry. I started considering additional use cases and the TAM. I founded my company in Israel, which is home to 1.8 million people with disabilities. However, even from the startup stage, our prospecting and growth efforts were focused on selling abroad to serve the 61 million adults with disabilities in the US. Putting out Verbit in the US meant an exponential increase in our TAM. Now, our solutions are making it easier for people worldwide — not just those with disabilities — to study, work and live their lives more efficiently. That’s why entrepreneurs are poised to enter the accessibility space — we think big and can have big impact.

    My advice to you is to keep finding ways to pair your ideas and startup’s capabilities with greater problems in need of solutions. Investors need to understand that your mission will be lucrative, but if they also buy in to the “why” with the good you can do for the world, their commitment and mentorships will extend beyond the financial investment alone. The same goes for your team — if they buy into your mission or see how you’re reinventing your hiring processes, they’re going to stay. They won’t see it as just another job.

    Creating something that’s able to improve the lives of millions rather than a “nice-to-have” offering makes for smart business. Get into the accessibility space if you’re interested in doing just that.

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    Tom Livne

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  • The Benefits of Contrarian Real Estate Investing | Entrepreneur

    The Benefits of Contrarian Real Estate Investing | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Contrarians, in contrast to most investors, prefer to go against the prevailing market sentiment. By doing so, they seek out opportunities that others may overlook and attempt to capitalize on them. In this article, we will explore the concept of contrarian investing, its benefits, and how it can be applied to the real estate market.

    Contrarian investing involves adopting an approach that goes against the grain of popular opinion and prevailing market trends. Often referred to as “value investing,” contrarianism is based on the belief that markets are not always accurate or rational in their pricing of assets.

    Rather than following the crowd, contrarian investors seek out undervalued assets that others may overlook due to pessimism or lack of awareness. By taking a different stance, contrarian investors aim to identify undervalued assets and capitalize on their potential for future growth.

    Related: How to Profit From Value Investing

    The current real estate landscape

    The housing market in recent years has experienced significant challenges. Rising property prices and high mortgage rates have made it difficult to find income properties or affordable homes for renovation and resale.

    These market conditions can deter many conventional investors. However, for contrarian investors, these challenges can present unique opportunities.

    Contrarian perspectives in real estate

    Contrarian investors in the real estate market recognize that market fluctuations and rising interest rates are part of the long-term investment landscape. They understand that real estate typically outperforms other assets in terms of value appreciation and is less affected by short-term volatility compared to the stock market.

    Contrarians also consider factors such as population growth, economic development potential and property trends to identify potential opportunities that others may overlook.

    Contrarian real estate investors also look at regions that are unpopular or not trendy among most investors today. These areas can have hidden potential for economic growth, job creation and population growth. By looking beyond the popular, contrarian investors can capitalize on the potential gains that others may miss.

    Related: 5 Amazing Tips on Turning Real Estate Into a Real Fortune

    Benefits of contrarian investing in real estate

    1. Lower competition: Contrarian investors thrive on less competition and lower pricing. When popular sentiment is negative or hesitant, there is often reduced competition for real estate opportunities. This can provide contrarian investors with a better chance to negotiate favorable deals and secure undervalued properties.

    2. Favorable interest rates: Although interest rates have risen in recent years, they are still historically low compared to average rates over the past few decades. Acknowledging that interest rates are expected to rise further, contrarian investors understand the long-term nature of real estate investments and how today’s rates can still be considered attractive.

    3. Creative financing: Contrarian investors have the ability to think creatively and explore alternative financing options. This mindset can lead them to uncover financing strategies that others may not have considered, further enhancing their ability to seize valuable investment opportunities.

    4. Wealth creation through appreciation and cash flow: Contrarian investors recognize that real estate investments offer the potential for both short-term cash flow and long-term appreciation. By selecting properties that offer positive cash flow and have the potential for future value appreciation, contrarian investors can build wealth over time.

    5. Diversification: Contrarian investing can provide additional diversification to a real estate investor’s portfolio. By considering demographically or geographically different markets than conventional investors, contrarian investors have the potential to earn additional returns from diversification.

    Implementing a contrarian strategy

    Successful contrarian investing in real estate requires thoughtful analysis, research and the ability to identify opportunities others might miss. Contrarian investors should keep an open mind, constantly seek creative financing options, stay aware of market trends and economic indicators and conduct thorough due diligence on potential investment properties.

    It’s worth noting that contrarian investing can be a high-risk strategy, particularly if not implemented properly or if due diligence is not conducted well. However, by identifying undervalued assets that have the potential to appreciate with time, contrarian investors can generate substantial returns on investment that they might not achieve using traditional investment strategies.

    Related: This Boutique Father-Son Investment Firm Thrives By Ignoring Conventional Wisdom

    Contrarian investing in real estate is a bold approach that can potentially provide significant rewards for investors. By going against the crowd, contrarian investors have the opportunity to discover undervalued properties and capitalize on their potential for long-term growth.

    As with any investment strategy, it’s crucial to conduct proper research and analysis to make informed decisions. By embracing a contrarian mindset, aspiring real estate investors can set themselves apart and unlock unique opportunities in the market.

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    Roy Dekel

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  • The Tale of Two Super Bowls — How Crypto Startups Can Thrive in a Bear Market | Entrepreneur

    The Tale of Two Super Bowls — How Crypto Startups Can Thrive in a Bear Market | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    While you might expect anything to grow in the winter, it is not the same with the cryptocurrency market. Startups do, surprisingly, start, and some even flourish. In this article, we will address your pressing question: to launch your dream project during the seemingly barren crypto winters or to wait for a bull.

    A crypto tale of two super bowls

    There was, of course, a time of superabundant flourish for all of crypto — 2022 was one. Super Bowl 2022 saw a slew of ads from crypto companies. In fact, Super Bowl 2022 was nicknamed the “Crypto Bowl.” The reason for this was not difficult to figure out: it was the crypto bull market. There was a rising demand in the market powered by the increasing popularity of NFTs, meme tokens and the metaverse.

    Fast forward to 2023, the market crashed — no thanks to Luna, FTX and the stiff crypto regulations that followed. There have been no Super Bowl crypto commercials this year, except for one misleading ad from an NFT-based game. The market’s image in 2023 starkly contrasted with what it was in 2022. Retail and institutional investors who embraced crypto last year didn’t want to touch it this time with a ten-foot pole. Crypto startups that once thrived struggled to stay afloat, while potential startups looking to enter the market now faced a dilemma: to launch or not to launch?

    Related: Bear With Me: 3 Ways To Capitalize During the Crypto Winter

    The dilemma of crypto winters

    There is no right or wrong answer to the question: to launch or not? However, this article will provide perspectives to help potential founders decide. But first, we will have to flashback to 2009 – the origin of Bitcoin.

    In the beginning, there was no market — When Satoshi Nakamoto created the first cryptocurrency, there was no crypto market. All the anonymous creator had was an idea that could solve global economic issues by democratizing finance. They were unsure of what to expect. Why would anyone believe, accept, and use a digital currency? Despite this and other valid concerns, Satoshi Nakamoto went ahead to create Bitcoin. And from that one currency, 25,794 coins and tokens (per data from CoinMarketCap) have been birthed.

    Early currencies that followed Bitcoin, such as Ethereum, Litecoin and Ripple, stuck to the plot of innovating within the established democratized financial system. But this wasn’t the case with many of the thousands of projects afterward. These projects, especially after the 2017 crypto boom, went off script. From ICOs and IDOs to meme coins and NFTs, the crypto industry became a center for speculation. Users were not concerned about use cases; they kept hopping from project to project, looking to make quick profits. This is why new founders face the dilemma of crypto winters. Should they risk their new project failing because of the high fear index of the market, or should they just wait to ride on the wave of market hype, albeit temporarily?

    Related: How should investors weather this ‘crypto winter’

    Startups vs. crypto winters: The present dynamics

    During bear markets, investors would rather stick with the few resilient projects they know and trust. New projects, even with viable utilities, may not get their attention if they do not see any quick way to profit from them.

    This is why the founders of meme coins do not bother about offering utility. PEPE, for example, had no utility yet surged by about 7000% within days, reflecting how greed, not value, drives the crypto market.

    But this is not to say that no utility-based projects have successfully launched during crypto winter. UniSwap is one such project. The decentralized crypto exchange launched in 2018 amid a rough bear market. But as of October 2022, the parent company, Uniswap Labs was worth $1.66 billion, controlled 64% of all DEX volumes, and the $UNI token had a market cap of over $5 billion. Users were able to see the project beyond temporary gains.

    Solving the dilemma

    I believe crypto winter is the best period to launch a crypto company or product. It is a period marked by less noise and less hype. A period to test the loyalty and sentiments of users or investors. However, the founder who wants to be successful during this period needs to fulfill two duties: (1) Have a viable product, and (2) Control the narrative.

    Viable blockchain solutions stand a high chance of surviving crypto winters. Though the market is looking for the next cash machine, a utility-focused project would never capture the market’s attention.

    Owning your story as a crypto startup

    Often, founders who successfully navigate the crypto winter are those that control their narrative. They are those that do not let the market stamp them with the “get-rich-quick” tag. These projects continue to present themselves as utility-based and community-centric, even when the market wants otherwise.

    Any founder can capture the attention of the market during bear markets. In fact, a bear market is a period where investors’ attention isn’t divided among the many projects displaying profitability simultaneously. So it is the best moment for startups to emerge provided that they are coming with unique crypto solutions. Once that’s settled, it becomes easy to sell their story to the market.

    Hence, by focusing on viable products with utility and controlling the narrative, emerging crypto startups can increase their chances of success in an unpredictable crypto market.

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    Vladimir Gorbunov

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  • How to Build an Impressive Investment Portfolio | Entrepreneur

    How to Build an Impressive Investment Portfolio | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Building an impressive investment portfolio is a pursuit that requires careful planning, strategic decision-making and a long-term perspective. While there is no one-size-fits-all approach, several key principles and strategies can help investors construct a portfolio that maximizes returns while managing risks.

    Here are some of the best ways to build an impressive investing portfolio, highlighting diversification, asset allocation, thorough research and the importance of patience and discipline.

    Diversification (foundations of success)

    Diversification lies at the core of building an impressive investing portfolio. By spreading investments across various asset classes, industries and geographical regions, investors can reduce the impact of individual investment failures and potentially enhance overall returns.

    Diversification helps to mitigate risk and protect against market volatility. A well-diversified portfolio encompasses different types of assets such as stocks, bonds, real estate, commodities and even alternative investments like cryptocurrencies. The right mix of assets depends on an investor’s risk tolerance, investment goals and time horizon.

    Related: How to Diversify Investments: 4 Easy Tips to Help You Get Started

    Asset allocation (balancing risk and return)

    Asset allocation refers to the strategic distribution of investments among different asset classes. It plays a vital role in determining the risk and return profile of a portfolio. Investors should carefully assess their risk tolerance and financial goals to allocate assets accordingly.

    Generally, younger investors with a longer time horizon can afford to take more risks and allocate a higher proportion of their portfolio to equities. On the other hand, older investors nearing retirement may opt for a more conservative approach with a larger allocation to fixed-income investments.

    Regular rebalancing of the portfolio is crucial to maintain the desired asset allocation over time.

    Thorough research (keys to informed decisions)

    Thorough research is a critical component of building an impressive investment portfolio. Investors should dedicate time and effort to understand the companies, industries and trends they invest in. Fundamental analysis, which involves studying financial statements, evaluating business models and assessing competitive advantages, can help identify companies with solid growth potential.

    Additionally, staying informed about macroeconomic trends, geopolitical events and regulatory changes can provide valuable insights into the investment landscape. Investing in what you understand and conducting due diligence can significantly increase the chances of making informed investment decisions.

    Related: The Investing Strategy That Can Lower Risk in Your Portfolio

    Patience and discipline (long-term perspectives)

    Successful investing requires patience and discipline. Markets can be unpredictable, and short-term fluctuations are inevitable. Investors should resist the temptation to chase quick gains or make impulsive decisions based on short-term market movements. Instead, adopting a long-term perspective allows investors to weather market downturns and benefit from compounding returns.

    Regularly reviewing and adjusting the portfolio is necessary, but knee-jerk reactions to short-term market volatility often lead to suboptimal results. Staying focused on long-term goals and adhering to a well-defined investment strategy are crucial elements of building an impressive portfolio.

    Below are two handfuls worth of simple ways to set investors on the right path:

    1. Set clear financial goals: Define your investment objectives, and align them with your overall financial goals. This will help you determine the appropriate investment strategy and time horizon.

    2. Conduct thorough research: Before making any investment, conduct comprehensive research on the asset or company you plan to invest in. Understand the fundamentals, financial health, competitive position and growth potential to make informed decisions.

    3. Diversify your portfolio: Spread your investments across different asset classes, sectors and geographical regions. Diversification helps mitigate risks and allows you to benefit from various market opportunities.

    4. Follow a long-term perspective: Successful investing requires a long-term outlook. Avoid short-term market noise, and focus on the long-term potential of your investments. This approach allows you to ride out market volatility and benefit from compounding returns.

    5. Understand risk tolerance: Assess your risk tolerance, and invest accordingly. Be honest with yourself about how much risk you can handle, and adjust your investments to align with your comfort level. Balancing risk and return is crucial for long-term success.

    6. Stay informed: Keep yourself updated on market trends, economic indicators and industry developments. Stay informed about the companies you invest in, and monitor their performance regularly. Knowledge is power when it comes to making smart investment decisions.

    7. Avoid emotional decision-making: Emotions can cloud judgment and lead to impulsive investment decisions. Avoid making investment choices based on fear or greed. Instead, rely on research, analysis and your predetermined investment strategy.

    8. Consider dollar-cost averaging: Invest a fixed amount of money at regular intervals, regardless of market conditions. This strategy, known as dollar-cost averaging, allows you to buy more shares when prices are low and fewer shares when prices are high, potentially lowering your average cost per share over time.

    9. Take advantage of tax-efficient strategies: Be mindful of taxes, and consider tax-efficient investment strategies. Utilize tax-advantaged accounts like IRAs or 401(k)s to minimize tax liabilities. Also, understand the tax implications of different investment vehicles, and seek professional advice if needed.

    10. Monitor and rebalance: Regularly review your portfolio’s performance, and make necessary adjustments. Rebalance your portfolio periodically to maintain the desired asset allocation. Changes in market conditions or your financial situation may require reallocation to align with your goals.

    Related: Want to Make Smart Investments? Use These Expert Tips.

    Following these 10 steps can help investors make smarter investment decisions that align with their financial goals, manage risks effectively and increase the likelihood of long-term success.

    Building an impressive investing portfolio is a gradual and continuous process that requires careful planning, strategic decision-making and patience. By diversifying across different asset classes, allocating assets based on risk tolerance and financial goals, conducting thorough research and maintaining discipline, investors can increase their chances of achieving their investment objectives. While the investing landscape may present challenges and uncertainties, adhering to these best practices can help navigate the complexities and build a portfolio that stands the test of time.

    Ultimately, building an impressive investment portfolio requires a blend of art and science, combining knowledge, experience and the ability to make sound decisions in pursuit of long-term financial success.

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    Michael Stagno

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  • Why a Franchise Is the Best Long-Term Investment Strategy | Entrepreneur

    Why a Franchise Is the Best Long-Term Investment Strategy | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    While today’s economic landscape is uncertain, making the right choices to build wealth isn’t something to take lightly. Choosing the right investment is not something that comes naturally to most people. In many cases, people save money or invest in a 401(k) plan provided by their employer. Others take on more risk by investing in individual stocks or practicing classic principles like the 60/40 rule of portfolio diversification.

    No matter the expertise, there is always a level of risk involved when investing and there are other strategies to diversify your overall investment portfolio.

    Related: 7 Things You Need to Know Before Becoming a Franchise Owner

    Investments in franchising are an alternative

    Franchising can be a worthwhile option for those who want to expand their investment portfolio in the long term. It offers advantages with numerous benefits as a long-term investment strategy. The long-term growth prospects are exciting, and there are plenty of franchises (and their respective industries) to choose from.

    Many examples of franchise investments in the food and beverage or health and wellness industries exist. Subway, Dairy Queen and Anytime Fitness, to name a few. With these particular brands, franchisees benefit from substantial brand equity and it helps that they’re built on proven business models, training and ongoing marketing and back-office support, including financial management tools and access to capital.

    Several industries have recently been recognized for strength and viability even during turbulent or uncertain economic times, including the Great Recession of 2007-08 and the Covid-19 pandemic. These franchises have been referred to as recession-proof franchises, as many of them were called to the frontline to help provide baseline human and business services.

    For example, one industry that continues to prove itself during strained economic times is commercial cleaning. Franchising opportunities in commercial cleaning are plentiful and many brands have survived and thrived during past recessions and global pandemics.

    During the Covid-19 pandemic, commercial cleaning companies were relied upon to keep businesses (including hospitals, medical testing centers, doctor offices, grocery stores, etc.) clean and disinfected. Commercial cleaning suddenly became a topline business operation process as a redefined customer expectation, and the definition of cleanliness materialized. According to industry analysts, the commercial cleaning industry is expected to hit more than $468 billion in revenue by 2027. That’s a 51.67% increase over the market’s $308.7 billion value in 2020.

    Building on an existing model

    Master franchising is an investment many are discovering due to recent economic uncertainties. Master franchising involves taking control of a region or territory to expand unit franchises under the same brand umbrella.

    As an investor looking to increase returns, the master franchisor aims to invest in an established brand through territory ownership and selling unit franchise models to local entrepreneurs looking to go into business themselves. As the regional franchisor, the investor controls high-level business decisions, such as marketing and sales, while the party franchisee staffs, manages and executes at their independent location.

    The benefits of franchising go beyond just expanding your business reach. Engaged franchise brands help their franchisees in many ways, including financial management tools, marketing technologies and cash flow. By using your established brand, you can attract potential franchisees who may not have considered starting their own business otherwise.

    In addition, the benefits of franchising as a long-term investment strategy are immense. One key advantage is that franchisees make decisions and are their own boss, allowing them to run the franchised business according to their preferences. When a franchisor welcomes a new franchisee into its system, they ensure the franchisee is well-equipped to take on this new venture. This includes extensive training, support, assistance and guidance in every aspect of the business. This allows for greater flexibility and control over one’s career path.

    One significant benefit of franchising is that it allows investors to acquire a franchise and develop their own franchise company. This approach pays off as the franchise program provides access to a proven business model, which has been tried and tested in various locations. Additionally, franchising enables investors to open more locations under the brand, increasing the business they can generate. Buying into a franchise also means lower risk, as the brand network offers ongoing expert support while operating within an established business model.

    Another significant advantage is the opportunity to invest in an established franchise business product already developed and modified for market success while operating under a recognized brand. Additionally, franchisors often modify their franchise agreements to suit individual franchisees’ markets.

    Related: The Pros and Cons of Franchising Your Business

    Is franchising safer than a savings account or stocks?

    Recent events in the banking and financial sectors are concerning for many people looking to build a portfolio that can sustain their lifestyle through retirement. With bank failures like Silicon Valley Bank and others, investors are nervous about cash sitting in savings accounts (not to mention the next-to-nothing returns) while the banks ineffectively raise investment rates against inflation. Investors are looking for other vehicles to utilize their cash where they can earn a more substantial return with lower risk. This is where franchising starts to look safe, attractive and viable, especially given the scrutiny of the franchise purchase process.

    Franchise disclosure is a critical component of the process, offering prospective franchisees the opportunity to read about the rules, laws, and requirements before investing. The Franchise Disclosure Document contains a wealth of essential information, such as crucial operating details and locations of other franchise operators. This allows entrepreneurs, both experienced business owners and first-time investors, to make informed decisions about owning their business. The franchise rule requires franchisors to offer support to keep franchise operators’ employees and provides growth opportunities for owner-established investors.

    Franchising might be an exciting option for investors looking for new and creative ways to protect their savings while putting their money to work. As with any decision, due diligence, research and learning are always recommended. Additionally, franchise investment is a topic of conversation that investors can engage with their fiduciary, wealth or financial advisor.

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    Adam Povlitz

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  • 4 Profitable Ways to Invest in Real Estate for First-Timers | Entrepreneur

    4 Profitable Ways to Invest in Real Estate for First-Timers | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    When it comes to investing, few sectors offer the level of profitability and stability that residential real estate does. For first-time investors, this venture can be a powerful tool to generate income and accumulate wealth.

    The real estate market, particularly the residential sector, has consistently proven to be a solid investment choice. According to the Federal Reserve’s report on consumer finances, the primary residence accounts for about one-quarter of all wealth among U.S. households as of 2020. Additionally, a study by the National Association of Realtors found that in 2020, despite the challenges of the global pandemic, the median sales price of houses sold in the United States still saw an increase of 6.7%. These stats underline the remarkable resilience and profitability of the residential real estate market.

    When you consider investing, it’s hard to overlook residential real estate’s dual advantages — steady cash flow through rentals and potential asset appreciation over time. Furthermore, real estate investment has a long-standing history of being a hedge against inflation. As living costs rise, so does the value of properties and rental income, providing real estate investors with a level of protection against the dollar’s declining purchasing power.

    For first-time investors, investing in residential real estate can be a powerful tool to generate income, accumulate wealth and diversify an investment portfolio. And while the venture might seem daunting at first glance, there are several accessible strategies that can maximize profitability and mitigate risk. Armed with these strategies and a solid understanding of the market, you’ll be well-positioned to reap the rewards of real estate investment.

    Related: Why Savvy Investors Prefer Investing in Real Estate Over Equities

    1. House hacking

    House hacking involves purchasing a multi-unit property, living in one unit and renting out the others. The tenants’ rent can cover your mortgage and even provide some extra income.

    For example, if you purchase a triplex for $300,000 with a monthly mortgage payment of $1,500, and you rent out each of the two units for $800, you’re receiving $1,600 in rent. You’re effectively living for free and making a $100 profit each month.

    Start with market research to look for multi-unit properties in areas with high rental demand. Financial planning is critical here; ensure you have a solid credit score to secure a favorable mortgage rate. Once you’ve acquired the property, you’ll have to be ready to take on landlord duties such as rent collection, maintenance and conflict resolution. If you’re not comfortable with these tasks, consider hiring a property management company.

    2. Long-term rentals

    Long-term rentals can provide a consistent cash flow while also building equity over time. As a landlord, you can profit from rent payments and property appreciation.

    Consider a $200,000 property that rents for $1,200 per month. After expenses (mortgage, insurance, taxes, maintenance), you might net $200 per month. Over the course of a year, that’s $2,400 in cash flow. Plus, as you pay down the mortgage and the property appreciates, your wealth grows.

    For long-term rentals, the location is key. You need to choose areas with strong rental markets, considering factors like job growth, population growth and economic stability. When it comes to financing, it’s crucial to obtain a mortgage that allows you to generate a positive cash flow. Once you have tenants, you’ll need to manage tenant relations and property upkeep.

    Related: 7 of the Most Common Mistakes Made By Beginner Real Estate Investors

    3. Fix-and-flip

    Fix-and-flip is a more short-term investment strategy. This involves buying a property in need of work, renovating it and selling it for a profit.

    For instance, you might buy a distressed property for $100,000, invest $30,000 in renovations and then sell it for $170,000. After closing costs and expenses, you could net a substantial profit.

    With the fix-and-flip strategy, your first step should be finding a good deal on a property. Look for distressed properties sold below market value. You might need to work with real estate wholesalers or scour foreclosure listings. Budgeting is also crucial. Accurately estimate your renovation costs and potential resale value to ensure profitability. Lastly, you’ll need to manage the renovation process, overseeing contractors or even doing some of the work yourself if you’re skilled in that area.

    4. Short-term vacation properties

    The rise of platforms like Airbnb and VRBO makes short-term vacation rentals an attractive investment strategy. These properties can generate higher income than traditional rentals due to their per-night pricing model.

    For example, a beachfront condo might rent for $1,500 per month long-term. But as a vacation rental, it might fetch $150 per night. If you rent it for just half the month, you’re already making twice as much.

    Location is everything for short-term vacation properties. Choose a property in a high-demand vacation area, considering factors like tourist attractions, seasonality and local regulations. Once you’ve acquired the property, you’ll need to market it effectively. Listing your property on popular short-term rental platforms and investing in professional photography can help attract guests. Lastly, be prepared to handle frequent guest turnover or consider hiring a property management company that specializes in short-term rentals.

    Residential real estate offers an array of profitable strategies for first-time investors. By understanding and leveraging these methods, you can create a robust and profitable investment portfolio. Each strategy — house hacking, long-term rentals, fix-and-flip and short-term vacation rentals — has its unique set of benefits and considerations.

    Related: 5 Proven Steps to Become a Real Estate Millionaire, According to an Investor

    The secret to success in residential real estate investing isn’t much of a secret at all. It’s about diligent research, careful planning and strategic execution. By following the actionable steps provided in this article, you’ll be well-positioned to profit from your first residential real estate investment. However, remember that every investment carries risk, and it’s essential to thoroughly understand these risks before jumping in. Start small, learn as you go and scale up as you become more comfortable and experienced. With patience and persistence, your real estate investments can be a significant source of income and wealth accumulation over time.

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    Ari Chazanas

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  • 4 Location Factors To Consider For Real Estate Investments

    4 Location Factors To Consider For Real Estate Investments

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    The southern and western regions of the U.S. hold the highest growth rates, per data from U.S. Census Bureau, with cities in Texas, Florida, and Arizona topping the list. Workers searching for an all-around great place to reside might find spots like Green Bay, Wisconsin, and Huntsville, Alabama, appealing, as these communities rank first and second in the U.S. News & World Report’s list of Best Places to Live. Raleigh and Durham, North Carolina, followed by Boulder, Colorado, come in close behind.

    When it comes to real estate investing, statistics like these can serve as a starting point—yet there’s much more legwork to carry out when choosing the best spot. The adage “location, location, location” still rings true today. It’s one of the most important aspects of the game, and the features surrounding the property you acquire will play a key role in its current and future values. As such, you’ll want to carefully note the landscape before making a bid. Use the following guidelines to help you begin your search on the right foot.

    Choose Familiar Territories

    If you’ve lived in the same neighborhood for the past decades, you’re likely in tune with its best features—along with areas that could be improved. Use this insight as a competitive edge. As you walk around, check for signs that indicate missing features. Is there room for another coffee shop on your block, or is the area saturated with cafes? Are residents having trouble finding housing close to downtown? The answers could help you spot opportunities to invest in a property or change an existing location to better suit the neighborhood’s needs.

    Learn The History

    Research how properties in the area you’re considering have been used in the past. Why were they first built? How have they changed over the years? Also review zoning codes or tap an expert who knows the local laws. The exercise will help you think about the possibilities for upgrades or renovations, along with understanding your limitations. There might be rent regulations in place, for instance, or codes that inhibit the way a structure can be modified.

    Meet The Locals

    When I started on the real estate scene 25 years ago, I was assigned a territory in the Chelsea neighborhood of New York City. I spent the following three months studying it and getting to know the people there. I talked to everyone from the small business owners to the building superintendents and the residents. I soon learned the spaces were set for a transformation: seemingly overnight, art galleries started popping up and replaced the flea markets that had been there. The new construction attracted additional amenities, including businesses and the nightlife scene, all of which presented incredible options for investors who were in the know and got in at the right time.

    Check For Trends

    Changing neighborhoods could present strong opportunities. In New York City, four new subway stations are opening in the Bronx. Think about the real estate potential around those stops. Retail values are set to increase, as shops and restaurants cater to the influx of foot traffic. The opposite can be true too: in areas where residents are leaving or offices sit empty, properties may not be considered as valuable.

    When considering drivers for an area, check for tenant relocations and expansions. Tesla
    TSLA
     moved its headquarters from California to Texas in 2021. Amazon
    AMZN
     opened its initial phase of HQ2 in Arlington, Virginia, in May 2023. The company predicts the investment will generate 25,000 direct jobs by 2030 and support thousands more indirect positions in the region. Shifts such as these will bring new employment opportunities to the market.

    Smart investors look not only at population growth, but also future jobs. Considering which cities have the most job postings can be an indicator of a growing market. Track new store openings too. Companies like Starbucks
    SBUX
     spent considerable time and resources to decide where to launch a new branch. Identify which co-tenants you’d like to have and follow them. As Wayne Gretsky famously said, “Skate to where the puck is going!”

    When it comes to choosing a location, there’s little that tops getting out and walking the neighborhood. Use the intel you gather along the way to build your business plan. You can then share your idea with your partners or team and take the next steps forward. If you time it right, you could get a great deal in a prime location that provides long-term returns.

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    James Nelson, Contributor

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  • 5 Ways Real Estate Investors Can Thrive in the Current Economy | Entrepreneur

    5 Ways Real Estate Investors Can Thrive in the Current Economy | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    In only six months, the average interest rate on a 30-year fixed mortgage has surged significantly, climbing from 2.65% to 3.17%. This substantial increase of 0.52% has undoubtedly caused concern for real estate investors. However, amidst the changing landscape, it is important to remain optimistic as there are still viable opportunities within the market waiting to be explored.

    The sudden spike in interest rates has undoubtedly created a challenging environment for those involved in real estate investment. Nevertheless, it is crucial not to succumb to worry as the market presents avenues for potential gains. Despite the rising borrowing costs, strategic and astute investors can adapt to these changes and uncover untapped prospects that align with their investment goals.

    Related: How to Invest In Real Estate Amid High Interest Rates and Inflation

    1. Keep your eye on the long-term prize

    The rising interest rates may make it more difficult to purchase property in the short term, but remember the long game. Real estate is an investment that can appreciate over time, and the key is to make smart purchases that will hold their value.

    Instead of buying a fixer-upper that may require expensive repairs, consider investing in a property already in good condition and with growth potential.

    2. Consider alternative financing options

    With the rise in interest rates, traditional mortgages seem less appealing to some. However, it is worthwhile to consider alternative financing options. One such option is hard money loans, short-term loans secured by the purchased property. While these loans usually have higher interest rates, they offer greater flexibility and are often easier to obtain.

    Hard money loans can benefit those looking to make a quick purchase or who need help meeting traditional lending requirements. By using the property as collateral, the lender takes on less risk, making the loan easier to obtain. Additionally, hard money loans can allow for more flexibility in purchasing, making them a valuable tool for real estate investors looking to act quickly on a good opportunity. Though they come with a higher price tag, hard money loans can be an attractive financing option in certain situations.

    Related: How Does Inflation Affect Real Estate? Here’s What You Need to Know.

    3. Focus on up-and-coming neighborhoods

    The adage “location, location, location” still holds regarding real estate. Although some parts might be unaffordable due to increasing interest rates, several good neighborhoods still need to be explored. As a prospective homebuyer, focusing on areas experiencing renovation projects with excellent educational institutions conveniently located near public transportation is crucial.

    When searching for a neighborhood, keep in mind that revitalization efforts can have a significant impact on property values. These areas often attract new businesses, increased foot traffic and community events. Furthermore, families with children should prioritize areas with reputable schools, as education quality can affect property prices. Lastly, being close to public transportation is ideal for those who rely on it for work or leisure activities. This not only saves time and money but can also increase the accessibility of the area to potential buyers.

    4. Diversify your portfolio

    Diversification is a vital aspect of achieving success in real estate investing. Although investing in a single property can be alluring, spreading investments across various properties and neighborhoods can help reduce the risk of loss. It’s crucial to explore different types of real estate investments, such as commercial or multifamily properties, and not limit oneself to only one variety.

    Investors should be bold in taking risks in exploring alternative types of real estate investments. Rather than relying on a single property, investors should consider diversifying their portfolio to include a range of assets. Commercial or multifamily properties, for instance, are excellent options for those looking to diversify their investments.

    Related: The Real-Estate Game Is Changing Fast. Are You Ready to Win?

    5. Take advantage of low inventory

    Rising interest rates can affect confident prospective homebuyers, leading to a decline in the number of available properties. However, this situation can present an advantage for real estate investors. With decreased market competition, investors may uncover valuable opportunities to acquire previously acquired properties beyond their financial reach. The reduced buyer demand creates a favorable environment for investors to find lucrative deals and expand their portfolios.

    The increase in interest rates has the potential to deter potential homebuyers, resulting in a limited supply of homes for sale. Nonetheless, this circumstance can benefit those involved in real estate investment. The decreased market competition opens avenues for investors to secure properties at favorable prices, which were previously unattainable. As buyers become scarce, investors

    In conclusion, while rising interest rates may pose challenges for real estate investors, there are still opportunities in the market. You can adapt and thrive in a changing market by keeping a long-term perspective, exploring alternative financing options, focusing on up-and-coming neighborhoods, diversifying your portfolio, taking advantage of low inventory and maintaining a sense of humor. Remember, real estate investing is a journey, and with the right strategies and mindset, you can navigate the challenges and continue to find success. So stay proactive, stay informed and keep investing with confidence.

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    Chris D. Bentley

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  • 4 Risk Levels To Know When Investing In Real Estate

    4 Risk Levels To Know When Investing In Real Estate

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    The San Francisco Office Tower was worth $300 million four years ago, but is now for sale, with some estimating it will sell for 80% less, as reported in The Wall Street Journal (and by the way, it’s mostly empty). Meanwhile, in Dallas, nearly 6 million square feet of office space is under construction, amid a corporate project surge, as mentioned in The Dallas Morning News.

    Headlines such as these serve as examples of the ongoing fluctuations in real estate markets. For beginning and veteran investors, there are always risk levels to factor in when making decisions. Some properties are more likely to generate a safe return, while others have a less certain forecast. (And keep in mind, what is a disadvantage for some might be an advantage for others!)

    Before investing, it’s essential to know the risk level attached to the asset. In this second article (see the first here) of the series, “Making Investment Decisions in Today’s Real Estate Market,” we’ll look at the financial factors commonly attached to properties.

    Here’s an overview of the four main types of risk levels in commercial real estate:

    Core investment: These properties usually have a credit tenant already in place. A credit tenant will have a strong financial standing and present lower risk than others. This type of investment is known for its safe return and low levels of risk, which could make it a great fit for a passive investor.

    Core plus: Assets in this category are cash flowing, which means the income begins upon acquisition. There could be some opportunities to fix up the property and increase rents too. However, tenants in this category may not have the outstanding credit of those in the core investment space. Furthermore, renovations and repairs for these properties could require additional funds.

    Value-add: Properties in this segment often come with high potential (and higher levels of risk). Professional investors frequently look for this type of asset, which might require massive renovations or a complete reimagining of the space. While there may be major work required upfront, the returns on these properties could be higher as well.

    Opportunistic: These projects frequently involve heavy development, which might include demolishing a building and putting up a new one. While the chance for high returns appeals to some investors, there is also significant risk involved. The initial funding required will be higher than other asset classes, and if plans go awry, the promised future income might not become a reality.

    Surveying the Real Estate Scene

    Once you’re aware of the property types available and have an understanding of the risk profiles, the best place to make an initial commercial real estate investment is often close to home. You’ll be more in tune to the current fluctuations in your own neighborhood or city. There’s nothing quite like walking through a property and talking to those involved in it! The process will provide key insight on why the property is being sold, what condition it is in, and where value could be added to it.

    Finally, being aware of the ongoing market shifts will enable beginning and veteran investors to make wise decisions. With office spaces emptying, there could be opportunities to look at residential properties and find ways to make them more comfortable for remote workers. Carrying out research on a place and making a move when you’re ready will increase your chances for positive outcomes—and returns that outperform the market.

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    James Nelson, Contributor

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  • How to Craft a Values-Aligned Investment Offering | Entrepreneur

    How to Craft a Values-Aligned Investment Offering | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Mainstream business investment advice usually tells us this: A business owner seeking investment capital should go out and look for investors, then once they’ve decided they’d like to invest, those investors set the terms of the offering.

    What does this mean for the business owner over the next five to 10 years? Often, it means the owner has little to no control over what their own business looks like and that they are beholden to the terms set out by the people holding the purse strings.

    If you are a business owner and this sounds unappealing to you, I have good news: Business owners can 100% set their own investment terms — defining how the investment is structured and what the relationship looks like — then go out and find the values-aligned investors who believe in their business and want to help it grow.

    What’s the catch? Well, for Option B to work for you, you need to put in the work to create your own outside-the-box investment offering. That means building the knowledge, team and expertise to structure the right investment offering for your unique goals, values, plans and projections.

    Fortunately, I specialize in just this kind of work, and in this article, I am going to share with you the basic information you need to know to get started on this process.

    Related: Funding Your Values-Based Business: How to Clarify Your Goals and Values in Preparation for Fundraising

    Defining “investment”

    “Investment” is a vague term that simply means someone is giving someone else money with the expectation that, by some means, they will get their money back, plus some extra on top. Investments can happen in several ways: An investor could lend business money, which is called a debt investment.

    They could buy a piece of the company, which is called an equity investment. Or they could buy some kind of a convertible instrument that starts as one thing and then later converts into something else. It’s important to define the terms of the investment people are making in your company.

    Who should define the terms of the investment?

    Given that there are so many ways to structure an investment (literally an infinite number of ways), who should decide what the investment terms will be? To be honest, I’m always surprised by how many entrepreneurs will talk to investors without having clarity about the terms they’re offering and are willing to accept.

    I think it’s because business owners are often told not to worry about the terms because the investor will decide how they will invest in your business. But that’s not a very good idea because the way someone invests in your business has a huge effect on the likelihood of success of your business, the likelihood that you’re going to have a good long-term relationship with your investors and whether the entire partnership goes smoothly or goes off the rails.

    I believe the investment terms should be determined by the company founders, not by an investor, because the founders know best what will be most aligned with their vision, mission and goals. This is why I work with my clients to create their own investment offerings, designed to fit exactly what is right for the company.

    Related: Stop Competing on Price — Compete on Value

    Debt vs. Equity

    One fundamental decision to make about the type of investment you’re going to offer is whether it will be a debt or equity investment. With a debt investment, someone is lending you money you agree to pay back with interest. Pros of a debt investment include that it can be easier to document and understand; investors may perceive it as less risky as debt repayment typically takes priority over payments to equity investors; and you don’t give up any ownership of your company. Cons of a debt investment include that it can look bad on your balance sheet and therefore prevent you from getting other loans; it must be paid back to prevent a default; and payments generally can’t be delayed for too long, or there is a risk that the IRS could recharacterize it as equity.

    An equity investment means an investor is purchasing an ownership interest in your company. Equity must be “priced,” meaning you and the investor agree upon a certain dollar amount per share of your company in what is known as a “priced round.” If you are not planning on a venture capital-type investment dependent on a future sale at a higher valuation than the investor bought in, the value you set is not that important.

    Pros of equity investments include that equity generally doesn’t have to be repaid, and it looks good on a balance sheet. Cons of equity investing include that you are giving away some rights of your company, and equity investing can be more complicated to document and understand.

    The standard venture capital investment model is a type of equity investing that, in my opinion, is not right for most businesses. Yet many lawyers and business financial consultants recommend it as a one-size-fits-all approach. With the venture capital model, an investor buys a piece of your company at a certain price with the expectation that within five to seven years, you will sell the company to a larger company for at least ten times the value. It is quite difficult for most companies to grow that fast in that short of a time, so pretty much every aspect of the company must be dedicated to rapid growth at all costs following this type of investment.

    However, there are many other ways to structure an appealing equity investment offer that does not require the sale of the company for the investors to get paid.

    Related: Investors Can Safeguard Their Money By Focusing on One Crucial Step

    Defining terms

    If you’ve ever raised money or looked into raising money, you’ve probably heard about “term sheets.” A term sheet defines the details of an investment, including the investor’s right to receive payments and the investor’s voting rights, if any. While a term sheet is not required to seek investments, it is a useful tool when raising money outside the VC model because it enables you to describe exactly what an investor will get when they invest in your business.

    Once you’ve decided between equity and debt, you can describe the details in the term sheet.

    You’ll want to decide whether to offer dividends for an equity investment. Dividends are a way investors can get paid without you selling your company. Dividends are paid to investors when a company becomes profitable. Once the company starts to become profitable, some of the profits are paid out to investors in the form of dividends.

    Another element to consider including in an equity term sheet is a “liquidation preference.” A liquidation preference outlines what happens if you sell the company or go out of business. There are many ways to structure a liquidation preference, and you can decide what you want that to look like: What would the investors get in the case of a sale? What would you get? For example, I have some clients who don’t want to be pressured to sell their company, so they set up the liquidation preference to say that if they were ever to sell the company, the investor could only get back what they originally put in and nothing more — discouraging the investor from pressuring the founder to sell.

    A third thing to consider putting into an equity term sheet is “redemption options.” This is another way someone can exit from their investment without you having to sell the company. Redemption happens when someone who has made an equity investment in your company exits from the investment by selling their stock, or equity, back to the company. Again, there are many ways to structure it so you can buy the investor out over time.

    If you decide to offer debt, there are also lots of options. For example, you can structure a revenue-based debt instrument that provides for a quarterly payment to your investors that varies based on your company’s revenues.

    If you decide to offer a convertible instrument, it is up to you what triggers the conversion, e.g., from debt to equity. For example, maybe the conversion happens when your business reaches a certain level of gross revenue.

    These are just a few of the terms you can consider including in your term sheet and which ones you choose, and the details of the provisions will be determined by your specific situation.

    Related: 6 Steps to Finding the Right Investors for Your Business

    What investors want

    While the technicalities of what you offer an investor are critical, values-aligned investors also typically have other considerations when determining whether to invest in your business. For example, your ideal investors will want to support the outcomes or impact your company is having, whether on your community, employees or the planet.

    Investors may also be looking at the risk involved with the investment — how likely they feel they are to get their money back. If an investor knows you and believes in your capabilities and dedication to the company, they may be more likely to invest (they may be tired of investing in faceless Wall Street companies whose managers often seem to care more about short-term profits than the long-term interests of their investors and other stakeholders).

    When speaking to potential investors, first make sure that they are values-aligned and passionate about your company’s mission. Once that is established, show them your customized term sheet and explain the thinking behind it. Your investors will likely be impressed that you took the time to design your investment terms based on your plans, goals and values rather than pulling a cookie-cutter document off the shelf. If you’ve taken the time to design your terms thoughtfully in a way that creates the greatest likelihood of the long-term sustainability of your company, a reasonable return for investors, and a positive impact on people and the planet, there will be investors who will enthusiastically say yes.

    In conclusion

    A lot more could be said about crafting an appealing values-aligned investment offering, but it all boils down to putting in the work to define what you want out of the investment and design terms that align your goals with those of your investors while being realistic about what is possible. Once you have your customized term sheet, you can begin to connect with values-aligned investors with confidence.

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    Jenny Kassan

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  • The Metaverse Has Definitely Lost Steam — But Is It Dead? | Entrepreneur

    The Metaverse Has Definitely Lost Steam — But Is It Dead? | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    The Metaverse: an immersive virtual world where we can interact with each other using smartphones, PCs, special glasses or VR headsets. A digital world that up until recently enjoyed huge buzz and excitement surrounding the opportunities it might have presented for businesses and consumers alike.

    The Metaverse arrived with a variety of investment and money-making opportunities, where users could purchase a wide variety of digital goods and services for their avatars and their own virtual experiences. Ranging from brand-name accessories to cars in virtual stores and even being able to buy virtual land. The NBA’s Brooklyn Nets made sports history as the first pro sports team to broadcast a game in the metaverse, which they coined the “Netaverse.”

    Big early bets have been made on the Metaverse, too. Meta has spent eye-watering levels of money on its metaverse play. Reality Labs, the division inside Meta that houses Metaverse projects, recorded cumulative losses of nearly $24 billion across 2021 and 2022.

    Related: What Is the Metaverse and Why Is It Important to Entrepreneurs?

    Not as popular as expected

    But, as fast as the hype built around the Metaverse though (much the same time as Mark Zuckerberg made huge announcements about Facebook’s future being connected to an immersive 3D world and rebranding the company to Meta), interest equally waned. Evidence of this can be seen by looking at Google search traffic for the Metaverse, which dwindled significantly over recent months, taking it back to pre-announcement levels.

    Over the span of a few years, tech and entertainment giants invested heavily in building this virtual world, only to discover that most of us haven’t got much of an appetite for the Metaverse. It looks like we are much more attached to reality than tech leaders first thought. Statistics across retail and air travel confirm we are moving back into the real world following Covid-19 lockdowns. Most people still don’t yet understand what the Metaverse is, how it works or what it means for them, which could be categorized as a fairly significant failure considering the huge investments and media coverage this space has received.

    Meta has been actively slimming down its virtual world operations. Disney and Microsoft are both closing their Metaverse departments. Apple looks to have all but given up on its virtual reality headset, while Tinder has announced that it will abandon its plans for virtual world dating.

    What was once a potentially exciting business and investment opportunity has become a terribly expensive gamble that looks to have all but failed so far. The Metaverse is looking to be turning into a great corporate collapse, at least in the immediate term, with billions of dollars of investment at risk and reputations being impacted.

    Tech innovators and leaders tend to think in terms of the hype cycle: the roller coaster journey from concept to widespread adoption. For now, it looks like huge sums of investor money have been spent on a technology whose potential has yet to be realized — and may never be.

    More recently, Mark Zuckerberg made an announcement to the market about Meta’s renewed focus on AI, which could likely be a sign that he’s silently killing off the Metaverse project and walking away from the vast investments he’s made in this tech. And while Zuckerberg has pointed out that the Metaverse is a long-term investment for Meta — and he has promised to dial down the Metaverse rhetoric — this gamble is looking more and more like an example of corporate hubris.

    Related: Why Your Business Needs to Prepare for the Metaverse

    The metaverse is out and AI is in

    Generative AI has stolen the Metaverse’s thunder. The real-world application of OpenAI’s ChatGPT is hard to compete with at the moment, and rightly so. It has immediate and very real and meaningful uses that can be hugely helpful to individuals and to businesses. It’s having a meaningful impact on bottom lines across the world and isn’t speculative like the Metaverse.

    AI also goes well beyond ChatGPT. It can be categorized into four areas at the moment:

    1. Automated intelligence: Automates manual routine and non-routine tasks.
    2. Assisted intelligence: Assists people to perform particular tasks faster and sometimes better.
    3. Augmented intelligence: Helps people make better decisions.
    4. Autonomous intelligence: Automates decision-making processes without the need for human input.

    Whether it be machine learning, smart applications and appliances, digital assistants or autonomous vehicles, AI has very real scope across the global economy right now and also into the future, helping it avoid the tag of being a fad. As a result, it’s viewed as a safer and less risky investment bet.

    What needs to change for the Metaverse to recover?

    For the Metaverse to have any chance of success at some point in the future, consumer education must be front and center. Dissolve the mystery surrounding the virtual world and its applications to both consumers and businesses.

    The enormity of the challenge must not be underestimated. At its best, from a user experience perspective, the Metaverse requires hyper-realistic 3D display technology that would be offered through a normal pair of glasses. This virtual world is quite simply too early in its journey right now to have any real impact, hence it’s viewed as a dangerously speculative and risky investment at present.

    The Metaverse is not about to simply die on the vine overnight. With time, we will stop being asked to spend our time in virtual worlds using kooky avatars to simply chat with friends or hang out on some digital land we purchased. Virtual spaces will become far more natural and realistic — with time. And that’s the critical ingredient: time.

    I think that with its evolution, we will see it more broadly adopted, perhaps in a more narrow and focused manner — likely for short bursts, i.e. truly immersive experiences such as product launches, concerts, meetings, education and training, socializing and much more, rather than the inaccurate or unrealistic concept that we will somehow spend much of our waking days inside a virtual world.

    Related: 5 Metaverse Trends That Will Shape the Next Decade

    Is the Metaverse dead?

    An investment in the Metaverse is only as valuable as the demand for the technologies involved. When the hype was at its peak, there was an argument to be made about the value of an investment (albeit a risky one) in the virtual world, but when that hype dries up and the punters leave, that investment fast becomes worthless.

    While Meta has confirmed that it remains a long-term focus, and big corporates such as Siemans, Proctor and Gamble and others are using Metaverse technology for various applications related to their businesses, no one has yet brought that magical application or experience to the table as yet, probably because the hardware devices required to achieve this don’t yet exist.

    So is the Metaverse dead? I don’t think so. Not yet anyway. It’s too early to make that call. It’s not that the real world is back and the online world is in the past, but rather that the two will run in parallel. It is not that the online universe is going to disappear, but rather that it may have reached its limit — for now. If you have an appetite for significant risk-based investing, a passion for bleeding edge technology and making bets that are wildly speculative, then there’s probably an angle for you to explore in the Metaverse, but get advice and tread very carefully.

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    Nathan Sinnott

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  • 3 Common Myths About Real Estate Investing Debunked | Entrepreneur

    3 Common Myths About Real Estate Investing Debunked | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Successful people know the value of investments. There are several ways to become extremely wealthy in life, but few carry the same track record as investing in real estate. Real estate investing is one of the best wealth generators in the world. There are arguably more millionaires in the field of real estate, than any other category of business. So what is a “real estate investor” and how can you become one?

    The term “real estate investor” often refers to individuals and businesses that buy, sell and renovate houses. However, you don’t have to be a professional house flipper to hold the title of real estate investor. Anyone in any industry that actively chooses real estate as an investment option is a real estate investor. Some individuals choose real estate as an alternative to stocks, bonds and mutual funds and others choose to add real estate to their existing portfolio of investments. The question often asked: Is it obtainable to everyone?

    Here are three of the most common misconceptions about investing in real estate.

    Related: 10 Reasons Why Every Entrepreneur Should Invest in Real Estate

    You have to be wealthy in order to invest in real estate

    When most people think of real estate investing, they think of mega-rich celebrities and their massive real estate portfolios. Just because you don’t drive a Lamborghini or draw a salary from a multi-million dollar trust fund doesn’t mean that you can’t invest in real estate. There are numerous ways to start investing that require very little out-of-pocket expenses.

    Traditional wholesaling and joint ventures are just a few methods that require little to no capital. Hard work and dedication are really all that is required to become a very successful real estate investor. With the right methods, you can flip your first property with very little money and possibly without ever spending a dime.

    You need good credit in order to finance real estate deals

    If you’re applying for a traditional bank loan, then you’ll need an adequate credit score for the approval process. However, there are a variety of other ways to secure financing for your real estate investments. Let’s take a look at two of the most common financing options that require little to no credit approval.

    Transactional funding aka flash funding

    Transactional funding is a short-term loan that is borrowed and paid back within 24 hours in most cases. This type of financing is common during a double closing that occurs back-to-back. It allows an investor to secure the A to B side of a real estate transaction. Then, once the investment is secured, the investor can sell the property on the B to C side. After they collect the funds from that closing, they immediately pay back the initial flash fund loan. In most cases these loans are secured by the asset being purchased and not the investor.

    Hard money financing

    Hard money financing is another popular strategy that real estate investors use to acquire investments. This type of loan is known as a bridge loan. It’s a short-term loan that allows the investor to purchase a property without a lengthy application or approval process like the ones required from traditional banks. Hard money loans are asset-based, which means they are not contingent on the investor’s creditworthiness. They are normally used in rehabbing projects where the investor purchases a property at a discount, then remodels the home and resells it at a profit, at which point they repay the loan. These loans rarely exceed a 24-month period.

    Related: 3 Ways Entrepreneurs Can Save on Real-Estate Costs

    You need experience to invest in real estate

    The fact that you’ve never invested in real estate, should not stop you from investing. A little research can go a long way. Experience is gained by actions. After all, to become an experienced driver, you have to drive. That doesn’t mean you should get into a sports car and hit the race track. It means you begin with driving around your neighborhood, your town, city, highways and eventually interstates, etc. It’s no different with real estate investing. Your first attempt at investing shouldn’t be a 500-room condominium with a 60-page purchase agreement. It should be an affordable single-family home in areas that you’re familiar with.

    There’s no question that you can begin investing with little to no previous knowledge or experience. However, if you are looking to fast-track your learning curve, you may want to seek out the assistance of a seasoned professional as a mentor. A successful investor can not only teach you what to do but more importantly what not to do. Being able to bypass costly rookie mistakes is a huge benefit and will increase your chances of success. Many successful business professionals have mentors and real estate is no different. Just make sure you do your research to ensure that you’re seeking counsel from a qualified advisor with years of real estate investing experience.

    Conclusion

    There’s a reason so many people turn to real estate as a vehicle to generate wealth. Simply put, it works. Don’t get discouraged by false information and myths about what is required to get started. The only thing stopping you from becoming a real estate investor is you. One of the world’s most famous investors Warren Buffett once said, “Be certain of your success, even when no one else is“. Don’t procrastinate, do your research and begin your journey.

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    Michael Ligon

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  • GolfSuites Announces Auburn University Community Development – Opelika, Alabama

    GolfSuites Announces Auburn University Community Development – Opelika, Alabama

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    OPELIKA, Ala., May 1, 2023 (Newswire.com)
    –
    GolfSuites is pleased to join the city of Opelika and the Auburn University community with its 4th golf driving range entertainment site which is planned to commence development later this year. Ryan T. Koenig, Co-Founder, Board Member, and Chief Development officer of the company is working closely with government officials and his design team to ready everything for the development at the site located at The Landing – I-85 and Gateway Drive in Opelika.

    The facility will consist of about 6,400 sq ft indoor area including restaurant and bar, 40 hitting bays, a large outdoor covered patio with stage, a putting green, and meeting rooms for catered events, parties and watching the big games. 

    Scott McCurry, the company’s Chief Operating Officer, is readying management for the opening late-2nd quarter 2024. “We are pleased to become part of this growing community. GolfSuites was founded on the real passion for the game of Golf; it’s this authentic spirit and enthusiasm for the game, combined with the element of Fun, Food, Drinks, and Entertainment, that fuel everything the company stands for. And we look forward to bringing it all to the Community of Opelika /Auburn!” said Mr. McCurry.

    GolfSuites entertainment comes in a variety of forms at our venues from date nights, birthday parties, corporate functions, family fun, or to just grab a bite and watch a big game; GolfSuites is Fun for everyone.

    GolfSuites operates in Tulsa, OK, Lubbock, TX, and Baton Rouge, LA. For more information on GolfSuites, visit our website – www.golfsuites.com.

    Final approval by Zoning and Building Dept. pending.

    Source: GolfSuites Inc.

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