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Tag: Money & Finance

  • 3 Ways to Shore Up Your Business Finances in a Tight Economy | Entrepreneur

    3 Ways to Shore Up Your Business Finances in a Tight Economy | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Around the country, many small businesses are feeling the burden of inflation. Increased costs on everything from raw supplies and shipping to labor and utilities are cutting into the already razor-thin margins that many of them operate with. Add to this the threat of a looming recession and other macroeconomic headwinds, and it’s easy to see why entrepreneurs are looking for ways to shore up their finances and save money.

    Recently, I joined Intuit QuickBooks, specifically because I wanted to help small businesses better manage their finances amid these challenges. Based on what I’ve seen, the good news is that despite these challenges, there are many ways that businesses can improve holistic cash flow — often with some easy operational changes and simple-to-use tools and platforms.

    Here are three strategies for shoring up finances that I recommend to entrepreneurs to best position themselves for success.

    Related: How Great Entrepreneurs Find Ways to Win During Economic Downturns

    1. Assess your inventory

    One of the first things I recommend for product-based businesses looking to improve their finances is to critically analyze your sales and inventory to better understand your customer base as well as what’s driving expenses and profits.

    For example, soon after joining QuickBooks, I heard the story of our customer, Jessica Spaulding, the founder of Harlem Chocolate Factory. While many of us may not realize it, chocolate is both a capital- and time-intensive business, with high overhead in the form of quality, fair trade ingredients and talented chocolatiers who develop recipes and even individual treats by hand. Soaring prices of raw ingredients as well as supply chain issues threatened to disrupt the business Spaulding worked so hard to build — a message many small business owners can relate to.

    To combat this and move forward strategically, Spaulding took a step back and looked at what her books were telling her. What products were selling the most? What wasn’t selling? Using these insights, she redirected her team to be laser-focused on the products and flavors that were driving the most business and profit. She was also able to decrease her overhead in the short term, as she cut back on the ingredients needed to create less popular flavors.

    As I mentioned, closely examining your inventory and sales history is something that all product-based businesses can do. Use your bookkeeping solution to analyze the sales of individual SKUs and look for any trends in your sales — whether it be seasonal, channel-based, location-based or influenced by another factor. You can also work with your accountant or bookkeeper to better understand where you may be able to trim costs or double down to boost profits. Finally, once you’re armed with these insights, put them into action like Spaulding did — honing in on the products that are resonating most with customers.

    Related: 6 Key Tips for Leading Transparently in Economic Uncertainty

    2. Secure working capital

    It’s often been said that it “takes money to make money.” The more I talk to entrepreneurs, the more I think that’s true. The importance of working capital for businesses that are growing or getting off the ground cannot be understated. Unfortunately, the traditional lending system — with long, drawn-out processes and an emphasis on past business credit — is not designed to support many fledgling businesses.

    The good news is that now more than ever there are alternatives for business owners to explore when it comes to securing funding. One option is crowdfunding through websites like GoFundMe and Kickstarter, which allow businesses to launch digital fundraisers. Peer-to-peer or marketplace lending via platforms like Lending Club or Prosper that connect borrowers and lenders online are another avenue to explore. There’s also a multitude of small business grants out there — from federal and regional-based programs, those sponsored by corporations, or some specifically designed for members of certain communities like veterans or women. Be sure to store your applications in a Word or Google document to reference later, rather than just submitting via the online form. This will save you some leg work when filling out future applications.

    Another path I learned about recently was that of QuickBooks customer, Grace+Love Candle Co., who secured funding through us when they were originally denied by traditional banks. Unlike a bank loan, QuickBooks Capital doesn’t require an extensive application process. Rather, it determines creditworthiness by analyzing the company’s history as shown by the data in their books.

    The most important thing to remember when working to secure capital is not to get discouraged. While you may hear many “nos,” during your journey, it only takes one “yes,” — and as I’ve outlined, there are a myriad of different options available to explore.

    Related: 3 Steps to Effectively Lead Through Uncertain Financial Times or Company Restructuring

    3. Speed up and diversify payments

    Now more than ever, consumers (and even businesses) expect to be able to pay seamlessly in a variety of ways — from credit cards to PayPal, Venmo, ACH and more. This means businesses need to embrace and diversify integrated payment systems, allowing customers to pay across multiple channels (i.e. mobile, online, etc.) and accept multiple forms of payment. In addition to meeting customer expectations and helping to increase sales conversion, digital payments also mean money hits a business’s bank account faster.

    While it may not seem significant, the impact of real-time payments can be tremendous. For example, instant payments — rather than a delay of a few days — may help a small business owner who needs to make payroll, pay rent or place an order for supplies. Take a look at how quickly your payments are currently processed. If it’s longer than a day, there are likely options you can look into that are faster.

    Entrepreneurs have shown their resiliency in spades the past several years. While we may be entering a difficult economic climate, I have no doubt they will continue to overcome these challenges. The more small businesses can do now to shore up their finances — from strategically evaluating their inventory and analyzing sales to understanding the funding sources available and embracing integrated payments, the better positioned they’ll be in to succeed despite looming challenges.

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    Rich Rao

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  • How to Raise Funds for Your Business in an Economic Downturn | Entrepreneur

    How to Raise Funds for Your Business in an Economic Downturn | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Concerns that the U.S. is headed for a recession have been mounting for a while, especially among business owners. One survey found that eight out of 10 small business owners anticipate a recession will happen sometime this year.

    Recessions affect most businesses in two ways — first, revenue takes a hit as consumers start holding onto their cash instead of spending. Second, tightening credit conditions limit the number of financial resources available to help businesses weather economic challenges.

    Some businesses consider taking out a loan or line of credit when economic hardship is on the horizon, but is this the right move for your business?

    Related: How to Fund Your Budding Small Business During a Recession

    Should you get a loan during a recession?

    You may not like the idea of taking on additional debt and wonder if applying for a loan during a recession is a good plan, but there are situations where taking out a loan or line of credit is the smartest option.

    You should start by considering how much cash you have on hand. If you’re heading into an economic downturn with little cash, a business loan can provide a financial buffer. Access to cash will give you options for solving challenges, making staying profitable and committed to growth that much easier.

    This is especially true since no one knows how long a recession will last. You may have enough cash to get you through the next six months, but that won’t help if the downturn lasts two years or more.

    Waiting until you desperately need money can significantly reduce your options. As a downturn approaches, lenders tighten their guidelines, and you may be unable to meet their inflated eligibility requirements amid economic hardship. If you think you may need additional capital, it’s best to act sooner rather than later.

    Lending standards are starting to tighten

    Many companies struggle during recessions as demand falls and uncertainty about the future increases. They’ll start to look for ways to increase capital, like taking out a business loan or line of credit, but this becomes a challenge since most banks will tighten their lending standards during an economic downturn.

    As the economy worsens, banks face a higher risk when lending money. Most banks will only lend money to established businesses with strong credit histories and limited industry exposure to mitigate their risk of financial loss, which inflates eligibility criteria and makes it harder for entrepreneurs to qualify altogether.

    Fortunately, banks and credit unions aren’t the only lending institutions. Non-bank lenders don’t follow the same guidelines as traditional lenders, so they can extend credit to a wide range of businesses, even during a recession.

    Related: Worried About Raising Capital in a Recession? Give Your Company The Edge By Doing What Other Entrepreneurs Often Overlook.

    Consider using a non-bank lender

    A non-bank lender is a financial institution that isn’t a bank or credit union. They lend money like traditional lenders but don’t have a full banking license, and they don’t offer things like checking and savings accounts.

    There are advantages and disadvantages to going the non-bank route. While this type of lender tends to charge higher interest rates than banks or credit unions, they offer numerous quality-of-life improvements and specialized benefits, including online communications, streamlined underwriting processes, fast funding times, alternative financing solutions and more.

    What you lose in the cost of capital is gained through speed and efficiency. For example, you can complete the application in as little as 15 minutes at some institutions, and many lenders provide same-day or next-day funding.

    These loans also come with fewer stipulations about how you can spend the money, and the cost of capital can be offset with revenue-driving opportunities. For example, spending $10,000 on interest charges won’t matter as much if you increase your revenue by $50,000.

    Plus, as you continue to build a relationship with that lender and improve your business credit score, you’ll be eligible for better rates in the future.

    Start looking for business financing now

    After the Silicon Valley Bank collapse in March, some economists lowered their economic growth forecasts for the year. The lending environment was already starting to weaken following numerous prime rate hikes, but the SVB crisis caused many banks to tighten their lending standards even further.

    In particular, small banks have to be more cautious about lending money in an effort to preserve cash. Small to medium-sized banks account for roughly 50% of commercial and industrial lending, so this will impact a number of businesses.

    Federal Reserve documents predicted that the fallout from the banking crisis would likely lead to a recession later this year, and it’s unlikely that we’ll see any significant improvements for at least two years.

    If you anticipate needing funds in the coming year, you should start looking for business financing now. Although you might be apprehensive, a loan or line of credit can tide your business over until the economy improves and give you the capital you need to continue growing.

    Related: 5 Ways to Protect Your Business From a Recession

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    Joseph Camberato

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  • Amidst a Regression, Here’s How Cryptocurrency Will Impact the Financial Sector | Entrepreneur

    Amidst a Regression, Here’s How Cryptocurrency Will Impact the Financial Sector | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    The creation of cryptocurrency has brought a revolution to the financial market. Without any physical equivalent, a huge infrastructure was created in which billions of dollars were invested. Of course, it doesn’t end there. Digital currencies will take their place in economic history more than once.

    There are severe preconditions for that, but they also have weaknesses. Let’s examine if we can expect crypto projects to replace the traditional banking system or if this is just an ever-optimistic vision.

    Current crypto position in global finance

    In most areas, traditional financial tools are still prevalent. Payments with cryptocurrencies are very complicated because there is insufficient infrastructure. Transfers to bank cards are available, but paying for purchases with crypto funds at the store is still impossible. The corporate segment is loosely involved in the crypto market, and people keep using classical bank loans and receiving a salary in the form of fiat money.

    But that is the point of the enormous potential for the development of crypto, especially since it has several undeniable advantages:

    1. Decentralization entails a lack of boundaries for financial operations and customer service, wherever they are. This is the most significant difference between the crypto market and the classic one, where some local restrictions often bind companies.
    2. Crypto operations pass almost instantly, and the cost of billions of dollars in transfer can be cents. And all this without compromising safety!
    3. There is a whole layer of people who already use cryptocurrency as storage for savings. One can keep money in a bank account, but there may be restrictions on its use. Keeping the cash could be a problem when exporting funds to other regions. Cryptocurrencies allow one to hold and manage money wherever the person is located.
    4. It’s not yet possible to completely get rid of anonymity. This is at the same time, a strength and a weakness. A person can make transactions and maintain confidentiality in good order. But it may also be used by organizations raising funds for illegal operations. Conditions will be tightened; companies will be regulated. But there will still be space for actions that are difficult to track.

    Related: 5 Tips for Using Cryptocurrency in Your Small Business

    Such a much-needed regulation

    It took the crypto market ten years to form. While it wasn’t huge, regulators didn’t get much attention. When the market has grown, some concerns have been raised. Almost anyone can create a website, pretend to be a crypto bank, then take all the money and just dissolve.

    Not so long ago, the market suffered a collapse of Luna, Celsius and even FTX. People lost more than $100,000,000,000! Cryptocurrencies stopped being just toys. Therefore, regulators must keep track of assets and balances, how companies use them, and in which countries such services are provided. Сentralized services have legal entities, an understandable product in the territory of a particular region. Decentralized services may exist without a legal entity at all.

    The crypto industry is set to be very much regulated in the next 3-4 years. Some companies will leave the market, and the remaining ones will be even stronger. There will be standards — in the first place — for central banks, various depositaries and requirements for opening an account and mandatory declaration of cryptocurrencies. A lot will happen in the decentralized part of the market, but a little more slowly because this sphere is much smaller in volume.

    As long as it’s currently an unregulated arena, there are so many doubts and prejudices. But companies and people are going to realize in which system of coordinates they live and be legally able to keep, exchange, sell and issue cryptocurrencies.

    Related: 5 Things to Know Before You Invest in Cryptocurrency

    Skepticism and how to beat it

    Most people perceive cryptocurrencies as an instrument to increase revenue — the truth of this may be growing quickly. But the market is much broader than tokens. Speaking of cryptocurrencies, here’s how they can be divided:

    • Stablecoins that are pegged to fiat currencies: euro, dollar, yen, and so on.
    • Cryptocurrencies that are tied to the tokenomics of some products. This is comparable to the release of the company to IPO: when it goes public, the value of shares depends on the company’s financial and production indicators. The better results, the more sales of tokens and the price.
    • Digital assets that are pegged to any real objects. It’s so-called tokenization. Everything may be tokenized: art, metals, properties, etc. This is indeed an opportunity for centralized sales of products that couldn’t be split or sold before.

    The same regulation will help to set aside skepticism about all the crypto mentioned above products. And when people realize that everything is strictly within the law, no funny business, they will begin to trust the market more.

    Related: 5 Bear Market Lessons From a Crypto Entrepreneur

    Expected changes in the coming decade

    Over the next 10-15 years, cryptocurrencies will play a crucial role in most of the world, probably in the following directions:

    • International settlements. Cryptocurrencies have a high level of transaction reliability, primarily through blockchain technology. It has already prevented many adverse events due to the possibility of rolling back operations. There are still many other technologies that are being created for more safety. So, it’s highly expected that transactions will become more convenient, transparent and less expensive.
    • Сreating a CBDC. More than 20 countries already produce central bank digital currencies and follow a path to complete untethering of classic money. Thus, wide-ranging opportunities open up to expand control for states and banks worldwide. Most of them will switch to using CBDC and blockchain in conducting transactions. As for ordinary people, it’s impossible to say unequivocally if it’s good or not.
    • Replacement of traditional banking. The rapid development of crypto technologies ensures the provision of services by companies worldwide and the ability to become financial institutions for many of them. So far, such companies don’t provide services related to lending, deposits, various crypto accounts, and transactions. There are a lot of platforms with millions or even tens of millions of users. But, if we look at total cryptocurrency’s penetration, obviously that it’s a privilege of just 3-4% of the population. Banks will go over to the side of crypto technologies or leave the market.

    The active audience of the crypto market is quickly growing, and there is no button or ‘reverse gear’ that can stop its development. However, you must not expect that regular money will cease to exist several years later. But it is quite real that our children will increasingly use cryptocurrencies in their youth.

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    Vladimir Gorbunov

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  • 3 Ways to Predictably Boost Revenue and Drive Profitability | Entrepreneur

    3 Ways to Predictably Boost Revenue and Drive Profitability | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    If you ask the majority of marketing teams what their main focus is, they will probably tell you it’s to “acquire customers.”

    Getting new people to visit your website and buy your products or services for the first time is definitely one of the most important things a business must focus on. But one mistake I see entrepreneurs make all the time is obsessing about acquiring customers at a profit.

    Here’s what I mean: They will endlessly tweak their ads and landing pages, split test commas in their headlines and keep fiddling with their pricing in the hope that they’ll be able to earn more with the first sale than it cost them to attract that new customer.

    But the truth is, this is a losing game. Very few companies are able to make a profit with their first sale. Instead, they will build their backend sales first, so they can keep advertising and acquiring new customers even at a loss.

    Backend sales — those products and services that are sold to existing customers — are the lifeblood of every business. They will help you increase revenue predictably without spending more on advertising, improve your margins, strengthen your relationship with your customer, build customer loyalty and ultimately give you an edge against your competitors.

    So, how exactly do you build a backend sales infrastructure that can help you grow your business? Here are three ideas that can help you increase your revenue in the next quarter at a higher profit:

    Related: 3 Ways To Boost Sales With Existing Customers

    1. Upselling and cross-selling

    This is one of the quickest ways to start building your backend sales. Upselling and cross-selling are two marketing practices that involve offering additional or complementary products or services to existing customers. The secret to making these effective is to deeply understand what your customers want and identify what can get them closer to their goals.

    For example, we have a range of done-for-you marketing products where my team builds assets like Facebook™ ads, press releases or high-ticket funnels for our customers. Many of those clients ended up liking our work so much that they naturally asked us if we had a more in-depth program where we could follow their growth over a longer period of time. This is how our Accelerator was born — an upsell that allows our existing clients to get 1-1 help from us and grow their business faster.

    As you build your upsells, think about ways you can get your existing customers to achieve their goals faster or more easily. This will give you a good foundation for building your first upsell product.

    2. Loyalty programs

    Think about your local supermarket. Why do you keep going back there? Sure, it might be placed conveniently and you might like its products. But many of them also offer you discounts, gifts and other incentives the more you buy from them.

    This is one of the most effective ways to get your customers to buy from you over and over, and so you increase revenue and profits at the same time.

    However, this comes with a word of warning — don’t overuse discounts and coupons, as that might make your customers start to expect them, making it harder to increase prices later on.

    Related: How Brands Can Turn Short-Term Rewards Into Long-Term Loyalty

    3. Exceptional customer support

    Finally, one of the least discussed ways to keep your customers buying from you is by providing exceptional customer support after the sale is made.

    According to HubSpot, 93% of customers are more likely to be repeat customers at companies with excellent customer service.

    Supporting your existing customers isn’t just a matter of replying to their complaints in time or refunding them when they didn’t like your product or service. It’s going above and beyond to make sure they are satisfied with what they purchased.

    This can be done by sending them additional guides that help them get the best out of your product, providing them with extra coaching to make sure they succeed in your programs and sharing any resource that can help them have an outstanding experience with you.

    Backend sales are a fundamental part of every business’ success. Building one might sometimes feel hard, as you don’t know what exactly you should be offering to your clients. Hopefully, this short guide gave you some ideas on how to keep selling to your existing customers so you can predictably increase revenue, get higher profit margins and put some distance between your business and your competitors.

    Related: 3 Strategies to Improve Your Customer Service Experience

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    Rudy Mawer

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  • 3 Things Founders Need to Know About Liquidity | Entrepreneur

    3 Things Founders Need to Know About Liquidity | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Is it easier or harder to build a successful startup now than in the past? In many ways, it’s so much easier to launch a startup today than in the past; the ecosystem is full of services, access to information is instant, the startup world is now a global industry where so much has been templatized and millions of “how-tos” are available, and a proliferation of venture capital, incubators and accelerators are more available than ever.

    There are newer challenges that founders face today, however. Competition is global, the pace of innovation is constant and ever-accelerating, expectations are higher, and the road to IPO is longer. This last point could be the most interesting one; staying private longer changes the whole entrepreneurial journey and calculation. The clear path to liquidity via IPO or acquisition has changed, and leaders need to adjust.

    Related: 4 Ways an Entrepreneur Can Increase Liquidity

    How did we get here?

    Today, there are around 1200 unicorn companies globally. There have never been this many unicorns or privately owned companies valued over $1 billion USD before. The two biggest reasons a founder takes their company public is to have access to capital and to provide liquidity for shareholders. However, today, the abundance of available venture capital has made it possible for founders to keep increasing valuations and postponing a liquidity event. Plus, there are now other ways shareholders can reach liquidity without necessarily going through an IPO or an acquisition.

    Staying private delays the costly management and regulatory headaches of being publicly traded. Given all of the scrutiny and costly overhead of compliance and reporting required to run a public company, as a founder, you would probably prefer to grow outside of the public market. How does staying private longer affect founders, investors, employees and their company? And how does this change the way you operate?

    A founder’s guide

    Ten years ago, today’s unicorns would have gone public by now. Founders, VCs and employees would have converted their early investments and hard work into material wealth, however, that’s not happening in this market like it was in the past. Today, there are more options for liquidity for all equity stakeholders in companies without necessarily going through an IPO or acquisition. With more options for liquidity and a new entrepreneurial journey, founders should consider the following as they grow their companies.

    To start, if this is your first time starting your own company, get a board member or advisor who is knowledgeable about different stock incentive plans, how to structure them, tax implications, etc. Find members with a broad perspective coupled with deep expertise in your market, and seek out people who are experienced investors.

    Related: How Can Mentors Give Feedback to Founders without Discouraging Them

    The second thing to understand is that balancing employee compensation is a key tool in your growth plan. How much will employees receive in salary vs. what will they receive as equity compensation? For most startups, the biggest expense is salaries. We all want top talent, but sometimes we can’t afford it; this is where equity comes in. Equity gives employees skin in the game. They are part owners, and if the company succeeds, they’ll directly benefit from it. You get better performance out of employees when they feel ownership as well. However, it’s important to adjust the compensation plan as the company grows. These are a few things to consider:

    • Stage of the company: This directly relates to the risk the employee is assuming for taking this job. For both investors and employees willing to take the greater risk, they deserve the higher reward.

    • Job function and level: Higher-level employees might expect higher salary compensation while lower-level employees might be more willing to accept lower industry pay in exchange for greater equity compensation. It’s mostly about the stage in life they are in; as younger employees often have fewer responsibilities, they are more willing to take a lower salary. People with families usually can’t give up as much in salary compensation.

    • Market trends: What are your competitors doing? If you are offering something less interesting than your competitors, they might secure the best talent out there.

    • Keeping top talent incentivized: As the company grows and takes in new funding rounds, but you want to guard your run rate and optimize your cash, issuing new stock options is a great way to retain top talent.

    Keeping team morale high is key in down markets

    The robust growth we’ve seen in the private markets in the last ten years directly affected how and why the private capital secondary market grew. Since 2012, the secondary market has grown to more than five times its previous size, reaching a record $130B in 2021. During this time, online platforms that allow shareholders to buy and sell shares in private companies have surfaced and shown great success.

    We’ve been facing downturns and market instability and witnessing downward pressure on valuations in this market. Leaders steering a winning company must keep a perspective on the longer term, knowing that valuations are cyclical. It’s important to stick to fundamentals and assure shareholders that you see the path through the market’s vicissitudes.

    Related: 3 Simple Strategies to Boost Morale and Get the Best Results From Your Team

    Importantly, leaders need to tend to the people who built the company with them — which takes us to the third piece of advice. When employees have dedicated years to the cause, holding dreams of material wealth, delayed liquidity events threaten the very morale leaders need to keep the company strong. As a founder or leader, you should seriously consider the option for employees to sell shares in the secondary market without adding too much overhead to the cap table.

    Having employees work for extended periods of time with only paper wealth, while industries, competition and technology innovation never slow, can be risky. Giving employees the chance to convert their paper wealth into some tangible wealth could be the morale boost that saves the day.

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    Karim Nurani

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  • 3 Stakeholder Relationships Your Business Needs to Nurture | Entrepreneur

    3 Stakeholder Relationships Your Business Needs to Nurture | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    A startup’s brand — both the company and the founders’ brands — plays an important role in shaping how investors perceive their business and, ultimately, how much they are willing to invest. Building a strong brand for the startup and founder, can help differentiate a company, emphasize its unique benefits and increase its perceived value, leading to a higher valuation in the eyes of investors

    A company’s brand is composed of various persistent actions done online and offline. One component that affects a startup’s brand lies in their relationships. Let’s shed light on this component and present the three types of relationships any startup founder should focus on to increase their growth, brand value and, ultimately, their valuation.

    Related: From Customers to Investors to Employees, Here’s How to Connect With Every Company Stakeholder

    1. Board members and advisers

    Having board members or advisers who are industry experts can provide significant value to a startup’s brand and valuation. Those with the right industry knowledge, connections and reputation can help a startup navigate the competitive landscape, identify new opportunities and open doors to potential customers and investors. In fact, a KPMG study called the “2019 Global CEO Outlook” found that board reputation is the second most important factor considered by investors when evaluating a company. While this may not come as a surprise to many, the truth is that finding and harnessing the right board members or mentors is not easy, as they are usually sought-after people.

    To establish relationships with industry experts for potential board members, it is important to first plan out the ideal composition of expertise, knowledge, connections and reputation that your board needs. For example, one board member could be highly connected within your industry, while another may have a Ph.D. in your area, and another may have advised the President of the United States. Additionally, you may want to define diversity goals for your board, such as having an equal number of women and men. Once you have established the necessary structure and profiles, start brainstorming potential candidates for your board.

    The best way to reach out to such individuals is through warm recommendations and referrals from existing board members, investors, or other industry contacts. Startup founders can also attend industry events, participate in online forums and groups and join industry associations where the right profiles of board members may be present.

    One of my career hacks when it comes to finding board members is to approach the “formers” in your industry, such as “former founder of a Fortune 500 company,” “former dean of Harvard Business School” and so on. These former seniors often have a wealth of knowledge, connections, and reputation, and are looking for their next exciting endeavor, and to be a part of the new generation’s work. If you approach them with passion and resonate with their values, they could be your best-kept secret to help drive your company toward its goals!

    Related: Make Sure Your Business Aligns With Your Stakeholders’ Worldview…And Your Own

    2. Industry investors, founders and leaders

    Establishing a robust network of industry investors, founders and leaders can significantly benefit a startup’s growth and brand and valuation. Such connections can provide access to capital, mentorship and strategic advice, which can prove invaluable. It is essential to build relationships based on trust, mutual interests and authentic friendships. When founders are well-connected and valued in their industry, within their network they can support and recommend one another, which ultimately strengthens their personal brand. Additionally, a national research study by Brand Builders Group reveals that 82% of all Americans agree that companies are more influential if their executives have a personal brand that they know and follow.

    To build relationships with industry investors, founders and leaders, startup founders must be visible both online and offline, even if they prefer to be in the office managing the company. They can attend networking events, participate in accelerator programs, and join relevant online communities. By connecting with industry leaders on social media, and posting engaging content, initiating meetups with other industry leaders or having one-on-one meetings, they can gradually build authentic relationships. The key is to be proactive, authentic and intentional in building these relationships.

    3. Co-founders and team

    Investors focus on the relationship between co-founders specifically, and the company culture when evaluating a startup’s potential. The ability of the startup’s leadership to work together and foster a positive culture is crucial to executing on plans, navigating challenges and driving the company forward. In turn, it impacts the startups’ brand and valuation. Additionally, a distinct workplace culture is believed to be important for business success by 94% of executives and 88% of employees, according to a study on partnerships and relationships in the workplace by Deloitte. Ultimately, investors want to see that the startup’s leadership and team have the ability to work together and create a culture that supports innovation, growth and success.

    To establish good relationships among co-founders, it is recommended to foster open communication and collaboration to build a positive and productive work environment. Startup founders can create a strong company culture by defining their values and mission and promoting an open culture that supports individual growth, offering employee benefits, and encouraging work-life balance. They can also organize team-building events and activities to promote team cohesion and foster a positive work environment, among many other ways.

    Related: 3 Social-Intelligence Methods for Building Strong Stakeholder Relationships

    In conclusion, forming the right relationships with industry experts, investors, founders and leaders, as well as prioritizing the management team and company culture, can significantly impact a startup’s growth, success, brand and valuation. It is advised for startup founders to focus on building a strong personal brand by following the above actionable tips and building strong relationships, among other brand-building components. This can increase their success factors and perceived value and, ultimately, support attracting the funding they need to grow their startup.

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    Lirone Glikman

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  • The Financial Literacy Basics Entrepreneurs Need to Know | Entrepreneur

    The Financial Literacy Basics Entrepreneurs Need to Know | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Like most of you, I grew up with virtually no formal training on money. I learned that we definitely need money to get the things we want and one way or another, we have to work for it. Short of getting my passbook savings account back in the ’80s, I was taught very little about how to be financially literate.

    What happened? I got a job, paid bills, saved a little (but not really) — and then, when I got to college, I went into credit card debt in exchange for a free T-shirt. By not getting the proper education on money, it controlled me instead of the other way around. We all know how that feels! But it doesn’t have to be this way. Financial literacy won’t happen by accident; it happens by design.

    Money, for most of us, can be a double-edged sword. Some days we are in love with making it, some days we dread having to work to get it. As a dad, CFP and fintech entrepreneur, I’ve learned that a high level of financial literacy is key to one’s success. To have a great relationship with money, we must understand what it is, how to use it and how to manage our risks when we use it — so here’s what you need to know.

    Related: ‘Financial Illiteracy’ Cost Americans an Average of $1,819 in 2022 — Here Are The Most Common Mistakes People Make

    Understanding money

    Money is a tool. It helps us accomplish what we want and need in life and business. We all have a relationship with money, and how it manifests itself through our spending is based upon our financial literacy — or lack thereof.

    The first step for increased financial literacy is to understand that money is a tool created out of an idea and need for us to exchange things of value, be it goods, services, etc. You don’t want more money — you want more of what it does for you.

    So how do you understand money? Understand how you spend it by mastering your cash flow. Show me how and where you spend your money and I can tell you if you understand it or not and what’s important to you. Knowing your cash flow helps you understand what you actually do with your money which can be very insightful and helpful on how best to use your money. I didn’t understand money or my cash flow at all after graduating college, but I eventually mastered it by creating and using a simple yet robust cash flow worksheet. This will help you learn how to properly use money.

    Using money

    Money should be thought of as a tool of precision that can help us accomplish whatever it is we want. We earn money by doing or creating something of value. But what are you using your earned money for? Once you understand your current cash flow situation, you can assess some simple yet important things. Are you cash flow positive every month? If not, why? Are you spending (using) money on mainly assets or expenses? Assets ultimately put money in your pocket, while liabilities (expenses) take money out.

    Once you understand your money and where it’s currently going, you can leverage this information into how best to use your money. Instead of spending X dollars a month on coffee every morning, which can easily add up over time, what if you took that money and used it on something that made you money? You could spend it on marketing your business, investing in a savings plan, paying down debt and so on.

    Taking it a step further, you can now determine the ROI on where you’re using your money. If you’re paying down debt faster with your excess cash flow, you’re saving interest — and that’s real money. Investing your excess cash flow into marketing your business and seeing increased sales because of it? Now you have a direct correlation with what happens when you understand and use your money.

    A best practice is to balance how you use your money. There’s nothing wrong with spending some of your money on things that you want, but it also makes sense to deploy your money into things that can work for you. Where will your money work hardest and best for you?

    Related: We Owe it to Consumers to Foster Financial Literacy

    Managing risk with money

    Virtually everything in life has some level of risk. Risk is basically uncertainty about the future. When it comes to our finances, whether it’s personal or business, we have an opportunity to protect ourselves against uncertainty and manage risk. As an entrepreneur, we are prone to and arguably seek out risk since we know it can lead to a lot of rewards, but that doesn’t mean that we should blindly take on risks and just hope for the best. Planning for the worst and hoping for the best is a sound practice to help manage your risk.

    Some simple guidelines to manage risk with your money are:

    • Spend less than you make (positive cash flow).
    • Keep a solid cash cushion liquid in case of emergency; somewhere between 6-12 months of your expenses from your cash flow worksheet.
    • Consider appropriate types of insurance to protect against large but unlikely risks like death, accident, illness, security, etc.
    • Don’t invest all your capital into one thing, and with any investment you do make, ask yourself first, “What happens if I lose every penny of this investment?” If you don’t like or can’t live with the answer, then it’s probably too much risk for you.

    If we know what money is, how to use it and how to manage risk with it, we end up empowering ourselves to be the master of not only our money but — to an extent — our future. Life happens and curveballs will fly, but controlling these variables to the extent we can gives us a much better chance of being successful with our money.

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    Derek Notman

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  • Is Buying Rental Property Worth It in 2023? | Entrepreneur

    Is Buying Rental Property Worth It in 2023? | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Picture this: It’s New Year’s Eve, 2022, and you’ve finally committed to a resolution you really want to keep. In the coming year, you want to buy your first rental property and start investing in real estate. But what will real estate look like in 2023? Will housing prices continue to drop? There seem to be more questions than answers.

    If this scenario sounds like you, you might feel intimidated by the uncertainties of the coming months. Deciding to buy your first rental property can feel like a scary or risky endeavor in any market climate, but doing so during a housing correction may seem even riskier. You might be questioning your decision and wondering, “Is buying rental property worth it?”

    Before you throw out your resolution, however, reconsider what you know about real estate and how to retain and increase its value. This article will hopefully give you some of the tools and resources to invest in any market and demonstrate that 2023 can still be a fruitful time to buy your first property.

    Related: How to Start Investing in Rental Properties — Your Step-by-Step Guide

    What is a housing correction?

    First things first: What is a housing correction?

    A housing correction is a period during which housing prices start to fall in some places after a rapid rise. This fall is usually only by 10% or less, according to U.S. News & World Report. It typically occurs because home prices were unsustainably high in recent years, and the market therefore “corrects” itself to more reasonable prices that match the current supply and demand. Corrections are more gradual than housing market crashes, but they can last anywhere from a few months to a few years.

    Housing corrections are caused by interactions between a variety of factors, including mortgage rates, supply, demand, affordability, inventory and stock market trends. Analysts track these factors over time to look for signs that prices will soon fall. These signs can include a decline in sales, homes selling more slowly and homes selling for significantly less than just a few months prior.

    Many people who own property during a housing correction may worry that their properties aren’t worth as much as they used to be. However, housing corrections aren’t inherently “bad,” nor do they spell the death of your rental business. In fact, they can make home-buying possible for first-time owners or those looking to start their investing journeys without competing with high-capital peers. Corrections are part of the real estate cycle, and knowing what to expect can help you navigate one with confidence.

    What’s happening in 2023?

    Analysts and economists are monitoring the housing market, and many have predicted that a housing market correction has already begun or soon will. Today, the national housing market is up by only about 6% compared to March 2022, which is a relative slowdown in comparison to 15% a few months prior. Experts predict that house prices will continue to fall through 2023, with the markets that grew the fastest in the past year likely to see the starkest decreases (even up to 30% in overpriced cities).

    Why is this happening? Experts cite a few factors. For one, there are fewer people looking to buy expensive homes than there were in previous years. Many Baby Boomers now have fixed incomes and aren’t as interested in buying expensive homes, which is a natural cause of corrections. Meanwhile, young families are looking for starter homes.

    Related: 5 Tips for New Investors Who Want to Make Money With Real Estate

    How and why you can still invest during a housing market correction

    Don’t let decreasing prices discourage you from investing in real estate. A good deal is a good deal, and if you do your research, you have a good chance of securing a lucrative one.

    The key is to stay informed on market trends and be patient. Housing corrections are temporary, and they help transition from a seller’s market to a buyer’s market, so you can actually benefit from this period of low prices. Plus, as experts at BiggerPockets remind us, housing prices do not equal profit. There are a variety of other ways to earn revenue in real estate besides appreciation. Cash flow, value add deals and tax benefits all make real estate worth it even in less-than-ideal markets. It makes sense to be cautious, but don’t let that prevent you from taking advantage of great opportunities when you find them.

    Buying a rental property

    So, you’ve decided to buy a property in 2023: What do you need to know?

    When considering what to know when buying a rental property, one of the most important steps is analyzing the local market. Local data is more useful than national averages any day, as it will provide the clearest insight into the rental marketplace in the specific area you’re targeting.

    Calculating ROI:

    When choosing a property, the best way to get a picture of local demand is to survey local rent rates of comparable properties nearby. For a given property in that area, you’ll be able to estimate approximately how productive that investment will be.

    To do this, you’ll want to calculate ROI, or return on investment. ROI for rental property is the ratio of income you’ll generate to your initial investment or purchase price of the home. To calculate it, divide your expected annual return by the purchase price. If the resulting percentage is 10% or more, it is typically considered a good investment.

    Remember that you can increase your ROI by adding value to your property, then increasing the rental rate. For instance, if you add another bedroom and bathroom to a single-family home, you now have a property worth far more than the one you started with. You may have bought the house at below-market value during a correction, but you’ll soon make up for it in revenue generation and appreciation as the market leaves the correction period.

    Related: 6 Effective Real Estate Investment Strategies

    Legal and administrative tasks:

    You’ll also have some legal and administrative tasks on your checklist for buying a rental property. Namely, you should hire a licensed property inspector to review the property before finalizing the deal. You don’t want to discover that the home has severe infrastructural problems or water damage after you’ve already locked yourself into a price.

    Other important tasks include reading over the property title documents to confirm the seller’s ownership, confirming property tax receipts and writing up a solid property purchase contract. You may have an agent assist with this process. The goal is to clearly define and explain the terms of the sale so that you know exactly what you’re paying for. Many of these steps are also required by lenders to secure a mortgage — your lender has an investment in the property, too, so they also want to ensure you’re making smart choices.

    Becoming a first-time landlord doesn’t come without its challenges. The first step is to find and analyze a great deal that will lead you toward financial freedom. By following these tips, you can be a successful real estate investor in any market season.

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    Dave Spooner

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  • 3 Marketing Moves to Make Your Business Recession-Proof | Entrepreneur

    3 Marketing Moves to Make Your Business Recession-Proof | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    If you’re a business owner, a lot has happened already this year to make you stop and consider the state of your (and your business’s) money.

    Inflation has every dollar shrinking in value, federal rate hikes have made it more costly to borrow, and while recent bank failures may not have impacted your business outright, it certainly caused a justifiable stir.

    With all of this going on, my husband and I decided to meet with a mentor and financial consultant who has managed hundreds of millions of dollars in capital over the last 25 years to review our investments.

    He pointed out that, while we both have various investments, we’ve primarily been putting our money into something that has paid off many times over standard stock market returns — and that something is our respective businesses.

    After that meeting, I concluded it was wisest to invest more into my most reliable asset — my business. Sure, we have a lot of “safe” investments as well, but truly, in the long run, nothing has compared to our businesses in terms of return on investment (ROI).

    The biggest investment I’m making is in my marketing: I’m increasing our annual marketing budget by more than 20% this year to over $7 million.

    I made this decision based on some hard-won experience I gained surviving two economic recessions. The first (2008), I cut my marketing and we barely survived. The second (2020), I refused to cut our marketing and, as a result, growth in the last three years has averaged 20% after averaging only 5% in the decade previous. I learned that marketing is crucial to not only growing a business when times are good, but essential to survival when times get tough.

    If you’re like me and know that your business is your greatest asset, I want to share three marketing principles I have followed and applied in order to strengthen my business and grow revenue despite recessions and economic turbulence.

    Related: Why a Recession Is the Worst Time to Skimp on Brand Marketing

    1. Use the current economic conditions to your advantage to increase market share

    Recessions come and go, and some businesses leave legacies behind that we can learn from. Kellogg is a perfect example of that. In the late 1920s, Kellogg and Post dominated the breakfast cereal market.

    When the Great Depression hit, Post responded in fear, reducing expenses and cutting back on advertising while Kellogg did the opposite. Kellogg moved into radio advertising and heavily promoted a new cereal called Rice Krispies.

    By 1933, the economy was the worst it had ever been, but Kellogg’s profits increased 33%. Kellogg not only survived the economic crisis but became the leading cereal brand afterward — and has remained in that spot more than 80 years later. In 2017, Kellogg had a 30% market share, with General Mills following at 29% and Post at 18%.

    I experienced a similar phenomenon with my business, PostcardMania. In 2008, the recession devastated many businesses. We were heavily affected by the real estate market plummeting since mortgage brokers made up 46% of our clientele. In 2009, an advisor at the time saw how much I spent on marketing every week and said something to the effect of, “We could save a lot of money if we cut back.”

    Against my better judgment, I listened and cut my marketing in hope that we could conserve our resources and increase profits, but that made the situation worse. What was a small revenue decline in 2008 (around $150,000) ballooned into a much bigger loss in 2009 — as much as 15% of revenue and well over $1 million.

    I made a sharp U-turn and brought my marketing back up to speed as soon as possible, and we recovered by 2010. I vowed to never cut my marketing budget again.

    Then in 2020, when the pandemic disabled the economy, I knew exactly which moves to make and maintained my marketing regardless of how rough it got — and it did get rough to the tune of sales being down over 40%.

    But guess what my competitors did? Exactly as I did in 2008 — they froze or reduced their marketing. The difference between 2008 and 2020 was obvious; we grew PostcardMania in 2020, and then business got even better in 2021 and 2022. Since 2019, our revenue has been up 60% (an average of 20% growth per year) after 10 years of averaging 5% growth.

    I know it sounds counterintuitive to invest more in marketing when the economy is poor, but history doesn’t lie, and my own experience backs this up. Keep your marketing strong, and your leads and sales will remain strong as well.

    Related: 6 Recession-Proof Business Marketing Strategies

    2. Choose the marketing channels with the highest ROI to make the most of your budget

    So, which marketing channels should you invest in? The answer is simple — the ones that work.

    If you aren’t already tracking your marketing closely, commit to starting right now. It’s critical that you track what you’re spending and where leads and new customers are coming from so that you know what’s working and what needs improvement.

    Once you know which channels yield the highest ROI, you can invest more there to grow your leads, which in turn yields more sales and revenue (and you can tinker with the lower-performing tactics until they’re in a good range or pare them back to suit your budget needs).

    One of the marketing tactics I find to have a super high return on investment is retargeted mailings. Triggered mail makes the most of every lead by specifically targeting the people who have already shown some kind of interest in your products or services by visiting your website.

    Depending on who you want to target, a postcard is automatically printed, addressed and sent within 24 hours of their website visit. Targeting can be based on the length of time a visitor spends on your site, the web pages they visit, the items they put in their shopping cart or a number of other factors.

    Because you’re only targeting warm prospects and sending a few postcards a day (rather than thousands at a time like traditional direct mail), the upfront cost of a triggered campaign is relatively low — and that means your ROI potential is much higher.

    One of our real estate investment clients, Mark Buys Houses, added retargeted direct mail to their follow-up. They spent $647 to mail just over 100 postcards to his website visitors. As a result, he converted one lead into a sale and made $70,000 in revenue. That’s an ROI of 10,710%!

    If you decide to increase your marketing investment like I did, I suggest starting with tactics focused on improving website conversion or follow-up. You’ve already spent money on the hardest part — taking someone from unaware of your business to actually interested — so take the time to find out if investing a few more dollars per lead will translate into more sales. Just don’t forget to track closely!

    Related: How to Adjust Your Marketing to Survive a Recession

    3. Take advantage of free communication tools to stay in touch with prospects and customers

    Not every marketing tactic costs money; some are 100% free. Leveraging free marketing platforms during tough times not only helps your budget, it also helps you communicate better.

    First, I suggest perfecting and increasing your email marketing. Tools like Constant Contact and Mailchimp let you send emails for free up to a certain amount. Send out promotional emails that include catchy subject lines and enticing deals to increase clicks. Consider creating an email newsletter that your audience would enjoy reading. It could include valuable information about your industry, tips and tricks, recently completed projects or features about your company to keep your customers connected to your brand.

    Second, I recommend freshening up your website with new, SEO-rich content. You can write the content yourself or find a willing team member to help — or even give the latest craze, artificial intelligence (AI), a go. Just provide a prompt, and let AI do the heavy lifting (a.k.a. writing) for you, then go over it afterward and put your own stamp on it using expertise that only you could provide. Blog posts, web pages and other types of articles will not only boost your website in the search engine results on Google, but it will also increase engagement on your website.

    Lastly, get more active on social media. Post creative, informative content that draws people in and fosters engagement, like polls or questions. Facebook and Instagram also allow you to list your products and services for free on a shop page. Even though it takes a bit more time and energy to make posts every day, communicating consistently with customers and prospects is invaluable and could lead to increased revenue and positive brand image in your area of expertise.

    At the end of this economic downturn, at least you can say that you gave it your all and worked hard to build up your business to the best it can be. Invest in the right areas, and you’ll enjoy benefits that last far beyond the most recent crisis.

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    Joy Gendusa

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  • How to Utilize Real Estate in Your Retirement Portfolio | Entrepreneur

    How to Utilize Real Estate in Your Retirement Portfolio | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Owning investment real estate to generate income during retirement can be a valuable addition to your portfolio. There are several ways to utilize real estate in your retirement portfolio. In this article, we explore several ways owning real estate could be incorporated into your current balance sheet and become a major part of your retirement plans.

    We will break down the different options you have and list a few pros and cons as well:

    Related: 5 Reasons Why Real Estate Is a Great Investment

    Supplemental income stream

    The most common way to make real estate a contributing factor in your retirement portfolio is owning rental real estate as a supplemental income stream. Let’s break down the pros and cons of such an endeavor:

    The pros:

    • A stable, potentially rising stream of income

    • An activity to keep you busy in retirement

    • Potential additional tax advantages and deductions

    • Great diversification from stocks and bonds

    The cons:

    • People rarely factor in all the costs such as insurance, taxes, maintenance, bad tenants, etc.

    • A large down payment or cash offer is often required to generate positive monthly cash flow.

    • Mortgage rates are high now compared to recent history, which makes positive cash flow a bit harder to achieve.

    • Potential liability from an unforeseen accident

    Short-term rentals

    There are a lot of great opportunities in the short-term rental space. This does bring on the added responsibility of marketing, generating positive reviews and buzz, as well as an increased need for maintenance and attentiveness. Like any small business where some extra work is required — if done well, it will pay off in the end. We have several clients who have had a lot of success with short-term rentals. There are even websites dedicated to helping you generate supplemental income from your properties.

    Related: 9 Ways to Invest in Real Estate for Retirement

    Publicly traded real estate investments

    Physically owning and maintaining real estate is not the only way to go about benefiting from real estate as an investment. You might want to consider publicly traded real estate investments (REITs or Real Estate Investment Trusts).

    These also come with their own sets of pros and cons:

    The pros:

    • Higher stream of income vs. similar credit quality stocks and bonds

    • An easy way to access specific niches (i.e., targeting warehouses and data centers, housing, offices, medical communities, etc.)

    • Decent diversification from other types of stocks and bonds

    The cons:

    My personal recommendation is, if you own publicly traded real estate, make sure you own it primarily for the income, not for the principal appreciation. Yes, you could potentially make money over time, but you should think of this transaction as an income play.

    Real estate investment trusts (REIT)

    Another option to consider is the private REIT space. A private REIT will give you an investing experience somewhere between owning real estate and owning a publicly traded real estate fund. If you’re interested in the private REIT space, you should work with your advisor to do some due diligence and keep in mind the following:

    • How does the fund’s liquidity work? What is your time commitment?

    • You’re paying fees to a sponsor and a property manager — not entirely different than you would pay when owning other properties.

    • Understand what these costs and fees look like.

    • What do they own, and what do they plan to buy?

    • Have they successfully gone “full cycle” before?

    • How did their funds do during prior periods of real estate distress?

    • Accept the fact that you’re giving up control over these decisions but mitigating the risk of bad decision-making by relying on professionals.

    Related: What You Should Consider Including in Your Retirement Portfolio

    Owning rental real estate can be a rewarding and wealth-building experience. If you’ve never owned rental real estate before, the idea could be daunting. But many experienced real estate investors will tell you that while the first investment property may be the hardest, it will only get easier from there.

    Once you begin, you may experience a bad tenant. It’s bound to happen, and every rental owner should be prepared for the occasional bad apple. Don’t let one or two bad experiences scare you from being a landlord.

    The more you’re willing to roll up your sleeves and get involved, the more likely you’ll succeed — just like with anything else in life. Any type of success in real estate does not happen by accident. Make sure you’re working with your financial planner and your property and casualty specialist to account for potential worst-case scenarios.

    Whether you’re physically owning it with after-tax dollars or diversifying a portion of your retirement accounts into publicly traded real to increase your existing portfolio’s level of income — there are certainly a lot of potential benefits that at least merit a conversation about how you can utilize real estate in your retirement portfolio.

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    Chris Kampitsis

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  • What I Learned By Raising My Pre-Seed Funding in the Downturn | Entrepreneur

    What I Learned By Raising My Pre-Seed Funding in the Downturn | Entrepreneur

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    Disclosure: Our goal is to feature products and services that we think you’ll find interesting and useful. If you purchase them, Entrepreneur may get a small share of the revenue from the sale from our commerce partners.

    Heading into my first pitch for pre-seed funding, I was less nervous than you might expect. I had concerns, of course: was I prepared for the questions I’d be asked? Had I focused on the right selling points? But, as a former corporate consultant, I was used to presenting to executives in high-pressure situations and was confident in my ability to disarm and build rapport within a room.

    Going into that first pitch, I felt lucky to have the opportunity to talk to credible investors, particularly at a time when funding was more scarce. Yet now, with our pre-seed round freshly closed, I’ve come to realize there’s an alternative mindset to embrace. As I reflect on my experience of raising during a downturn, here are three lessons I wish I’d known sooner.

    Related: How to Get Funding: The Dos and Don’ts of Raising Capital From Investors

    Equalize the power

    There’s no arguing investment is harder to come by than it was even a year ago. According to CB Insights, funding for Silicon Valley startups fell by 40% year-over-year in 2022 and the downtrend isn’t slowing.

    The recent collapse of Silicon Valley Bank — America’s 16th largest bank and a favorite among tech startups — is a testament, in part, to the mindset of financial scarcity that has rocked the tech sector amid mass layoffs and rising interest rates.

    Regardless of the economic climate, however, going into a pitch thinking an investor has more to offer you than the opportunity you’re presenting them with, will only hinder your chances of securing funding and finding the right partners.

    In a down economy, it’s easy to adopt a scarcity mindset, but it’s critical you understand your own value. If you don’t believe in yourself and your business, no one else will.

    When I started researching investors for my startup — there was an industry heavyweight at the top of my list. An entrepreneur herself, I knew she would understand the problem we were solving, but I didn’t have a warm intro to her.

    So, I got tickets to a pitch event she was judging and signed up to present. Had I not been confident in my pitch, I likely wouldn’t have mustered the courage to track her down and I certainly wouldn’t have landed a second meeting with her, which eventually led to her investing.

    If confidence is an issue, find a coach, get trained in public speaking and/or surround yourself with a team that hypes you up — having confidence will help equalize the power balance between you and the investors you’re pitching.

    Related: 3 Ways to Raise Capital and Take Your Business to the Next Level

    Build traction first

    There’s no denying, the downturn has changed how investors vet companies. The era of easy money, where any founder with a strong resume and attractive pitch deck can land funding, are gone.

    In this recessionary environment, startups that don’t have a shininess to them — a founding team with big names or an industry that’s trending in the press — but have numbers to back up their business are now attractive to investors.

    With VC funding down 37% in Q3 of 2022 from Q2, EY reported investors with dry powder are favoring entrepreneurs who show customer growth and retention while demonstrating a clear path to profitability. This sobering return to the basics of business may be a stark departure from the glory days of easy money, but it isn’t a bad thing for founders.

    For example, our startup operates in the treasury space — not exactly a captivating industry by mainstream standards — but because we’ve tapped into a double-sided marketplace and fixed inefficiencies on both sides, we’ve been able to generate significant traction.

    Approaching investors when your startup already has traction also allows you to negotiate a fair valuation and favorable terms at a time when investors are more discerning. Not to mention, it can serve as a litmus test for whether or not you’re ready to scale while boosting your confidence in securing the right investors.

    Related: How to Raise VC Funding When the Odds Are Against You

    Ask for feedback

    It can be hard to hear “no,” when you’re pitching your company, particularly when funding is more scarce. Rather than focusing on the rejection, however, try to uncover why an investor has passed on the opportunity.

    Every investor is looking at your company from a unique lens and there are many reasons behind a “no.” For example an investor may be looking at later-stage startups or have a minimum check size that is too large. It could be they don’t have the right expertise for your market or there’s a conflict in their portfolio. The point is you won’t know why an investor has passed on the opportunity unless you ask for feedback.

    After every pitch, I ask investors what resonated and what didn’t. I make it clear I view their candidness as a gesture of kindness, as it allows me to refine my pitch. This has allowed me to improve how I communicate my company’s value proposition. For example, I learned early on that I was too focused on my company’s short-term trajectory and not painting a clear enough picture of our longer-term strategy.

    Getting feedback from investors can also help determine who you want to work with down the road. Just because an investor passes, doesn’t mean they may not be a good partner for your next round.

    I also use feedback as a tool to cross-evaluate investors. If someone takes the time to specifically communicate why they’ve passed on the opportunity, for instance, it’s a good indication of what kind of partner they would be — if they’re putting in the effort to help a startup they’re passing on, imagine what kind of energy they’re giving to their existing portfolio.

    Raising money during a downturn comes with a unique set of challenges, but it’s not all bleak. Founders who focus on building viable businesses and look for investors who add strategic value to their companies will ultimately emerge stronger when the economic headwinds change.

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    Yvette Wu

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  • Free Webinar | May 18: 7 Ways to Raise Money to Launch Your Business | Entrepreneur

    Free Webinar | May 18: 7 Ways to Raise Money to Launch Your Business | Entrepreneur

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    Crowdfunding, equity financing, grants, or debt financing? Which do you choose to raise money for your business?

    Join our webinar, Bianca B. King, Entrepreneur & Marketing Strategist, teaches you 7 methods that you can use to raise money to launch their companies, including the advantages and disadvantages of each type of funding.

    7 Financing Options

    Equity Financing:

    Debt Financing:

    • Small Business Loans

    • Peer-to-Peer Lending

    Alternative Financing:

    Register now to secure your seat!

    About the Speaker:

    Bianca B. King is an entrepreneur and professional matchmaker on a mission to help women accelerate their success. As the CEO & Founder of the exclusive collective Pretty Damn Ambitious™, Bianca matches high-acheiving women with premier vetted and verified coaches so they can finally amplify their ambitions and achieve the personal growth and professional success they desire. Bianca is also the President and Creative Director of Seven5 Seven3 Marketing Group, a digital marketing agency that has served hundreds of entrepreneurs since 2008.

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    Entrepreneur Staff

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  • When Is the Right Time to Seek Investor Funding? | Entrepreneur

    When Is the Right Time to Seek Investor Funding? | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Bootstrapping is difficult. Investor funding, if done incorrectly, can become a time bomb. So, what direction is best?

    Often, businesses start off with the founders funding them completely. Only a handful of startups are funded in the idea stage. Things can get tough along the way, and often, you’d need to choose whether to continue scratching to stay afloat or seek external funding.

    It’s a tough decision to make. On one hand, founders want to maintain substantial control of their projects. They also don’t want the pressure that comes with handling investors’ money. On the other hand, startups need money to survive and grow to their potential. This is what Harvard professor Noam Wasserman termed “The Founder’s Dilemma.”

    As a founder, you need to know when the time is right to seek and collect investors’ money. This article answers that question.

    Related: 8 Things to Consider to Find the Right Funding Option for Your Startup

    1. Figure out a working model first

    It might fascinate you to know that investors are always ready to sign checks whether the idea looks viable or not. However, investors can put you on a very short leash when they know that your idea isn’t practical enough. They do this by requesting ridiculously high equity.

    As an alternative, you need to perform all your preliminary experiments and find the exact business model that works for you before speaking with investors. It’s no news to founders, though, that finding a working model is not a walk in the park and that experiments often require some capital.

    In the earliest stages, you need to self-fund your idea as you take it through refinement. With inadequate capital, you should consider reaching out to family and friends for support. They are bound to believe in you more than total strangers with fat checks. Nearly 40% of founders follow this route.

    2. Create an MVP

    It’s rare for founders to focus completely on one aspect of a startup. Often, they have to oversee business development, product development, finance and every piece of the project simultaneously.

    While figuring out what variation of the business model works best, founders need to also ensure the product development works out successfully. Until then, it’s best to stay away from outside investors.

    However, some products are capital-intensive and will need big checks to fund them. In such cases, it’s advisable for a founder to create a prototype or a highly specific graphical rendering of the product.

    This provides a crystal clear description of how the product works and conveys some level of confidence to outside investors. With a prototype, your chances of landing an outside investor under favorable terms increase significantly.

    Related: Mistakes To Avoid When Seeking Funding

    3. Ensure it’s time to scale your idea

    You may have an MVP and a model that works on paper, but all those don’t matter until you’ve acquired a few real customers that are willing to pay for your product. By “real customers,” I’m not referring to family relatives and friends.

    If you have a few complete strangers paying to use your product, then you most likely have a practical model and valuable product. At this stage, you need to ensure that your business process is well-documented and can be recreated without smack-dab supervision.

    With all that in place, you can seek outside investor funding to hire more hands to recreate the process en masse.

    I often advise founders to look beyond securing investor funds. Founding a startup is one stage of your career, and the way you approach outside investments can have a significant impact on your reputation in the long run.

    Investors prefer to put their money on founders who have proven records of good investor relations and business success. So, if you’re looking to secure your first-ever funding round, be sure to do it at the right time to avoid jeopardizing your entrepreneurial career.

    Related: How to Know If You Need Funding (and How to Get It)

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    Judah Longgrear

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  • Streaming Free: ‘Uncensored Crypto’ Explores the Future of Money | Entrepreneur

    Streaming Free: ‘Uncensored Crypto’ Explores the Future of Money | Entrepreneur

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    This week on EntrepreneurTV, the Uncensored Crypto show gets you up to speed on Web3.

    Blockchain has disrupted everything from how we work, vote, earn, and invest, to how we communicate and play. Yet, most people are unaware of the transformation taking place on a global scale.

    Related: What the Director of ‘Burt’s Buzz’ Learned While Making His Movie About a Reluctant Business Genius

    Uncensored Crypto podcast changes that, delivering viewers straight talk about cryptocurrencies, Web3, blockchain, DeFi, NFTs, and more. On each episode, host Michael Hearne interviews the disruptors at the forefront of the crypto revolution who are shaping our economic, financial, and political future. You’ll hear them chat openly about their successes, failures, and wealth-building strategies. With their help, you can harness the power of crypto and the blockchain to change your life and help transform the world.

    Watch now

    About EntrepreneurTV

    EntrepreneurTV’s original programming is built to inspire, inform and fire up the minds of people like you who are on a mission to launch and grow their dream businesses. Watch new docu-series and insightful interviews streaming now on Entrepreneur, Galaxy TV, FreeCast, and Plex.

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    Entrepreneur Staff

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  • Live Q&A: ‘Uncensored Crypto’ Host Breaks Down Web3 | Entrepreneur

    Live Q&A: ‘Uncensored Crypto’ Host Breaks Down Web3 | Entrepreneur

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    Blockchain is the greatest technological transformation since the advent of the Internet is here, promising to disrupt everything from how we work, vote, earn, invest, communicate, and play. Yet, most people are unaware of the transformation taking place on a global scale. Uncensored Crypto aims to change that. On each episode, host Michael Hearne interviews the disruptors at the forefront of the crypto revolution who are shaping our economic, financial, and political future.

    On Wednesday, 4/19, join EntrepreneurTV’s director of programming Brad Gage as he chats with Uncensored Crypto‘s Michael Hearne about all things crypto — from political impact to wealth-building strategies. Have your mind open and questions ready!

    What time does it start?

    Time: Wednesday, 4/19 at 2:00 pm EST

    Where can I watch?

    Watch and stream: Youtube, and LinkedIn.

    You can watch on your phone, tablet, or computer.

    Who is the guest?

    Michael Hearne is a serial entrepreneur with a history of breaking the boundaries of innovation, taking companies to new heights through digital marketing at scale, and throwing his passion into projects he believes in. His career has run the gamut from being a transformational CEO, to “growth hacking” revenue for 9-figure clients, and bringing innovative media-based business models to Web3. In his current role as founder and CEO of Decentral Publishing, Michael focuses on IMPACT. He started the company out of a passion for making a difference, and solving real problems, in the real world, through Web3 technology. His docuseries Uncensored Crypto shares the hidden story of how Web3 and decentralization will reshape every area of our lives. As Uber did for the taxi industry, Web3 is disrupting centuries-old industries, creating tremendous opportunities for investors and entrepreneurs to grow massive wealth by doing really good things. His mission is to remove the mystery from crypto, so investors can profit and entrepreneurs are inspired.

    About EntrepreneurTV

    EntrepreneurTV’s original programming is built to inspire, inform and fire up the minds of people like you who are on a mission to launch and grow their dream businesses. Watch new docu-series and insightful interviews streaming now on Entrepreneur, Galaxy TV, FreeCast, and Plex.

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    Entrepreneur Staff

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  • Why Entrepreneurs Shouldn’t Worry About Interest Rate Changes | Entrepreneur

    Why Entrepreneurs Shouldn’t Worry About Interest Rate Changes | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    As an entrepreneur, you’re likely keeping a close eye on the Federal Reserve and its efforts to cool inflation. It’s natural for business leaders to watch interest rate hikes closely. But despite uncertain forecasts and any banking turmoil, there’s no need to panic. Here’s why:

    Your business should always come first, regardless of interest rates

    No matter how interest rates go up or down, it’s important to remember that your business comes first. As an entrepreneur, you need to trust in your business and its ability to adapt to changing market conditions. Interest rates may fluctuate, but your business should remain your top priority.

    If you believe in your business, you should be confident in its ability to weather any storm. While rising interest rates can pose challenges, they can also present opportunities for growth and innovation. By staying focused on your business goals and remaining flexible, you can navigate any changes in the market and emerge even stronger.

    It’s important to remember that interest rates are just one factor that can impact your business’s success. By focusing on other areas, such as product development, marketing and customer service, you can ensure that your business remains competitive and profitable, regardless of interest rate fluctuations.

    Related: Inflation Is a Risk for Your Business, But Doesn’t Have to Spell Doom

    Take on debt to invest in your business

    As an entrepreneur, taking on debt is often a necessary part of growing and expanding your business. Interest rates can play a significant role in determining the cost of borrowing, but they should not be the sole factor in your decision-making process. In fact, it is always advantageous to take on a debt no matter what the interest rate levels are.

    But before taking on debt, make sure you understand and tick each point:

    • Make sure you have a solid plan in place for how you will use the borrowed funds: What specific investments do you plan to make? How will those investments help grow your business and increase profitability? By having a clear plan in place, you can make sure that you are using debt strategically to support your long-term goals.

    • Consider the costs and risks associated with borrowing: While interest rates may be low, you will still need to pay interest on the borrowed funds. Additionally, there may be fees and other costs associated with taking on debt. Make sure you carefully evaluate the costs and risks before deciding to borrow.

    • Shop around for the best interest rates and terms: Different lenders may offer different rates and terms, so it’s important to do your research and compare options before deciding where to borrow from.

    • Have a plan in place for how you will repay the borrowed funds: Taking on debt can be a valuable tool for growing your business, but it’s important to make sure that you can repay the debt on schedule.

    How to leverage debt to grow your business during inflationary periods

    If you’re confident in your business model and have a plan for how to use borrowed funds, taking on debt can help you grow your business faster than you would be able to otherwise.

    But when inflation is high, it can be challenging to navigate how to leverage debt to grow your business. Here are some tips to help you make the most of your borrowing during inflationary periods:

    • Take advantage of fixed interest rate: If you can secure a fixed interest rate, it can protect you from rising inflation rates. As inflation goes up, so does the cost of borrowing, but a fixed-rate loan will lock in your interest rate at the time of borrowing.

    • Consider short-term loans: Inflation typically leads to higher interest rates, so opting for a short-term loan can help you avoid paying higher interest rates over an extended period.

    • Be cautious about long-term commitment: Long-term loans and investments can be riskier during periods of high inflation. While it may be tempting to lock in a low-interest rate for a longer period, you may end up paying more in interest over time.

    • Look for opportunities to invest in assets that will appreciate: During inflation, assets like real estate and precious metals tend to appreciate. If you can borrow money to invest in these assets, you may be able to benefit from their increased value over time.

    • Focus on revenue-generating investments: When borrowing during inflation, it’s essential to focus on investments that will generate revenue and help you pay off your debt faster. This could include expanding your business operations or investing in marketing and advertising to attract new customers.

    Related: 4 Ways to Deal With High Interest Rates in Every Part of Your Business

    Make long-term goals your priority

    Rather than worrying about short-term fluctuations in interest rates, it’s important to keep your eyes on the bigger picture. Remember that your goal as an entrepreneur is to build a sustainable, profitable business in the long run. Focus on making smart investments, building a strong team and staying true to your values and mission.

    Stay agile and adaptable

    As an entrepreneur, you’re no stranger to uncertainty and volatility. The best way to weather any storm is to stay agile and adaptable. Keep a close eye on market trends and be willing to pivot your business strategy if necessary. Don’t be afraid to take calculated risks and be creative in finding new growth opportunities.

    As an entrepreneur, you have the skills and mindset needed to navigate these uncertain waters. Focus on leveraging debt, building a sustainable business and staying agile and adaptable. With the right mindset and strategy, you can thrive in any economic climate!

    Related: 3 Strategies for an Inflation-Proof Business

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    Roy Dekel

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  • Why the War Against Digital Currencies is Being Lost | Entrepreneur

    Why the War Against Digital Currencies is Being Lost | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    You don’t have to be a media professional to notice the barrage of commentary in the press regarding digital currencies like Bitcoin and Ethereum. And at least of late, it certainly appears tilted to the negative. It’s human nature to be afraid of change and evolution: We all like to be mollycoddled — warm, undisturbed in our cribs and averse to change and innovation.

    The actual market data in the crypto space, however, suggests that trends are anything but negative, with Bloomberg recently publishing an article postulating a $100,000 Bitcoin valuation as the year progresses.

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    Jonny Caplan

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  • 4 Reasons Why Investing in this Niche Industry Will Make You Money | Entrepreneur

    4 Reasons Why Investing in this Niche Industry Will Make You Money | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Investing in emerging music artists might be the perfect opportunity if you’re looking for an innovative and rewarding move to diversify your portfolio.

    The music industry has always been a lucrative and exciting space for investors. Music can captivate an audience, evoke emotions and inspire us in ways no other art form can. Putting money into emerging musicians is an opportunity to get in on the ground floor and potentially reap large returns, thanks to the power of discovery.

    Whether you’re a music industry veteran, a fan, or just someone looking for a savvy investment, investing in emerging musicians will diversify your financial portfolio and have fun doing so.

    Here are the top benefits you can expect from investing in emerging music artists.

    Related: 3 Key Entrepreneurial Lessons I Learned While Working for P. Diddy and Bad Boy Entertainment

    1. Passive income with unstoppable growth

    Investing in emerging music artists is a great way to generate passive income with unstoppable growth. You may have never thought this way, but every time you hear the most overplayed song, its songwriters and artists get a payout.

    Luckily, the power of the internet and the ever-changing landscape of the music industry has made it easier than ever to find and invest in upcoming music talent. Simultaneously, new artists have more possibilities to reach a larger audience and build a successful career with the rise of streaming services like Spotify. That’s why investing in emerging music artists is such an attractive option.

    Once an artist has established themselves and their music is being streamed or purchased, they can begin to generate revenue — and you’ll get a share of the profits. Music royalties can also bring in a consistent stream of income and potential performance royalties.

    Investing in emerging music artists is your chance to enter the protected asset class in a market known for record-high content creation and exponential growth. The music industry seems to have finally found a technology-based model that works for artists, consumers, and businesses.

    As an investor, you can use your influence to help your favorite artists grow and become successful. For example, you can introduce them to new contacts, help them with their marketing strategies, and generally be a support system—and yield great rewards in return.

    Related: Rise Above The Noise: 5 Tips to Stand Out as an Independent Artist

    2. Larger return on investment

    The music industry is constantly evolving, so investing in emerging music artists can be a great way to stay ahead of the curve and capitalize on new trends. With this approach, you can get in on the ground floor of a potential breakout and enjoy a larger return on your investment than if you had waited until the artist was an established star.

    Investing in an artist early can help them develop their sound and build their fan base while also financing their career. This can result in a much bigger pay-off down the road.

    Emerging music artists often have the potential to become superstars, and when they do, their music sales and streaming figures can skyrocket. Ultimately, the return on your investment could be significantly higher than that of more established artists.

    3. A true sense of fulfillment

    Investing in emerging music artists isn’t just about money. It is an excellent way to support the career of an artist you truly believe in and help them reach their full potential.

    When you invest in emerging music artists, you help create a platform for them to share their music with the world. You give them a chance to be heard and make a real impact in the music industry. You are ultimately enabling them to make a living doing something they love.

    As such, it’s safe to say that investing in music can be an act of true passion and advocacy. The experience can be incredibly rewarding, as you can be part of an artist’s journey and watch them grow and develop their art. It’s a great way to support the arts, help new artists get their start and contribute to shaping the future of the music industry. It will give you a feeling of pride and satisfaction that goes beyond any financial gain.

    Related: The Benefits of Investing in Talent: How It Impacts the Music Industry and Beyond

    4. Portfolio diversification

    With the new wave of digital music streaming and the ever-evolving music industry, more and more individuals and businesses are looking for ways to diversify their investments and maximize returns.

    Investing in emerging music artists offers a unique opportunity to do that. It can provide a great hedge against market volatility, opening the door to interesting diversification opportunities.

    For starters, you can benefit from the financial growth of your chosen artist. As the artist’s visibility and success increase, so does their financial value. This means your investment can grow alongside the musician’s success, generating a steady and reliable income stream.

    More importantly, investing in emerging music artists can provide you with a level of diversification that other investments may not offer. Music is an ever-changing and ever-evolving industry, so the success of any one artist can be unpredictable. By investing in different music artists, you can spread the risk across multiple assets and ensure that if one artist fails, the other investments will provide you with some support.

    The bottom line

    As the music industry continues to expand and evolve, so do the opportunities for investors to benefit from the success of up-and-coming artists.

    Investing in emerging music artists can be a smart move for investors looking to reap the rewards of a growing industry. Not only can investing in music be lucrative, but it can also be a great way to support and empower the artists you believe in.

    In addition to diversifying your portfolio and getting involved in something you are passionate about, you can get in on the ground floor of a potentially lucrative venture.

    That said, successful investment in music talent requires having a good understanding of what’s hot and what’s not, along with a keen eye for potential. Any individual or entity looking to make their first investment in an up-and-coming music artist must perform a risk analysis and determine an ideal time horizon, meaning how much they can safely invest and how long they’ll be willing to get a return.

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    Eric Dalius

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  • How Cognitive Biases Can Impact Your Trading Career | Entrepreneur

    How Cognitive Biases Can Impact Your Trading Career | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Are you a trader looking to improve your trading skills and increase your profits? Did you know that cognitive biases can have a significant impact on your trading decisions? Cognitive biases are inherent thinking errors that occur as humans process information, and they prevent us from accurately understanding reality, even when we are presented with the necessary data and evidence to form a more accurate view.

    Let’s see some of the cognitive biases traders and investors are prone to, and then I’ll tell you what you need to do to limit them.

    Negativity bias: This bias refers to the tendency to give more weight to negative information than positive information.

    Loss aversion bias: This refers to the tendency for traders to prefer avoiding losses to acquiring equivalent gains. In other words, the pain of losing is psychologically about twice as powerful as the pleasure you get from profits. And this bias can cause traders to behave irrationally.

    Gambler’s fallacy: This bias refers to the belief that future events are affected by past events when, in fact, they are independent.

    Confirmation bias: This bias refers to the tendency to seek out information that confirms preexisting beliefs and ignore information that contradicts them.

    Hindsight bias: This bias refers to the tendency to believe that past events were more predictable than they actually were.

    Anchoring bias: This bias refers to the tendency to rely too heavily on the first piece of information encountered when making decisions.

    Bandwagon effect: This bias refers to the tendency to do or believe things because many other people do or believe the same.

    Overconfidence bias: This bias refers to the tendency to overestimate one’s abilities or the accuracy of one’s beliefs and judgments.

    Recency bias: This bias refers to the tendency to weigh recent events more heavily than earlier events.

    Self-serving bias: This bias refers to the tendency to attribute positive events to one’s own character or actions and negative events to external factors.

    There are many more cognitive biases, but those are just some that are relevant in a field like trading. They come into the picture and structure the way we perceive market information, very often in ways that aren’t helpful to our bottom line.

    Related: How to Account for Cognitive Biases as an Entrepreneur

    Why you can’t completely eliminate biases

    Cognitive biases are intrinsic to human thought and perception, and it’s important to remember that just knowing about these biases doesn’t necessarily free you from them. As a trader, your trading approach has to include mechanisms to limit such biases, or else you’re just going to repeatedly shoot yourself in the foot — and you won’t go anywhere in terms of consistency.

    Once again, you cannot just rid yourself of biases. Some people appear to think you can, but to that, I’ll say this: Not seeing your biases is itself a bias (blind spot bias — the tendency to recognize biases in others, while failing to see biases in ourselves)

    Biases dumb down for us the complexity of the world — they’re just how we see the world and think. They’re inevitable. That being said, they can be mitigated. For instance, it is useful to remember that our brains have evolved these biases to deal with information overload.

    The world is a complex place, and we’re constantly bombarded with all kinds of information coming to our five senses. The best estimate I’ve read on this is that there is about 11 million bits per second worth of information available to our senses on a moment-to-moment basis. The research also tells us that our brain has a limited amount of information it can perceive at a conscious level, and that number is about 50 bits per second. That’s a big difference, isn’t it? 11 million are available, and only 50 get in …

    So, unsurprisingly what this means is that there is a huge amount of filtering going on in our brains, and that takes the form of habits in the way we perceive and think about things. We are constantly filtering information and selecting the ones that already fit our worldview.

    And that’s not all. Within that mess of information available to our senses, there’s uncertainty. What do I mean by this? Well, there are many deep and important questions about reality that we don’t know the answers to, and that lack of “knowing” and lack of certainty is confusing; it troubles us, so we fill in the gaps with our own stories and map it all to our existing mental models.

    But some of the information we filter out is actually useful and important, so what does the mind do? Well, it fills in the gap with information it already knows, and sometimes this is good enough, but often it’s not.

    In order to act fast in a world fraught with all sorts of dangers, our brain needs to make split-second decisions that could impact our chances of survival. But quick decisions and reactions are often counter-productive because most of the time they’re rooted in short-term emotional gratification. And short-term emotional gratifications often go against our long-term goals — what we know rationally is better for us.

    Related: 13 Cognitive Biases That Really Screw Things Up For You

    How to limit the effects of cognitive biases

    Now, there are ways to limit the consequences of cognitive biases and improve your trading performance. The keyword here is “limit.” Once again, biases are an inevitable part of human thought and perception, and we can only mitigate the extent to which they impact our results as traders.

    You can use tools like meditation to become more aware of your inherent biases, thoughts and emotions. I’m really big on meditation, given my background as a meditation teacher, and I’ve found it to be very impactful in helping us develop self-awareness and emotional maturity. Living an examined life like that also helps us better accept that we are permanently biased creatures and that despite that, there’s room for improvement. We can get better … not be perfect, but better.

    So, meditation is one way to limit the role of biases in your trading process. Another way is to adopt a rule-based approach to trading. “If X happens, I’ll do Y;” “if Y happens, I’ll do Z.” You don’t need to have hard rules for everything — just for the hard decisions where there’s a lot of uncertainty and potential risk. Examples of hard decisions would be in terms of your position size, stop-loss placement and what you need to do in case of a gap below your stop-loss.

    Soft rules will generally do for all the other lighter decisions, like your profit target or when to trade.

    In conclusion, by understanding the ways in which cognitive biases can impact your trading decisions, you can develop effective strategies to mitigate their effects and improve your bottom line. Just keep in mind that our brains have evolved these biases to deal with information overload and the complexity of the world. But by coupling self-awareness with a rule-based approach to trading, you can make more informed decisions based on objective criteria and increase your chances of success in trading.

    Related: Trading Psychology 101 — How Traders Can Manage Their Emotions and Achieve Success

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    Yvan Byeajee

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  • Top Income Tax-Deduction Tips for Creators, Social Influencers and Gig Workers | Entrepreneur

    Top Income Tax-Deduction Tips for Creators, Social Influencers and Gig Workers | Entrepreneur

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    The workforce is more diversified than ever, so let’s shine a light on the spectrum of allowable deductions.

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    Jaideep Singh

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