If you’re looking for ways to drum up cash for your start-up, the most obvious options involve bank loans and seeking out investments from friends and family. Investing your own start-up cash in another venture may seem counterintuitive – after all, wouldn’t it be put to better use in your own business? However, if you’re looking at the short term, there are a number of options that potentially allow you to turn your small wad of cash into a larger sum. These options are not without risk, but they can yield high returns with research and luck. Here are a few choices to consider.
Certificates of Deposits (CDs)
One of the least risky options for a small business is to put extra cash in a Certificate of Deposit, or CD. These are basically just savings accounts, but with a set interest rate and maturity time. At the end of the maturity time, you can withdraw your funds with the added interest. However, keep in mind that there are unexpected expenses for small businesses, so if you need to access this money earlier you may pay a penalty.
Crowdfunding
Have you been tempted by platforms like Kickstarter to fund your own business? Online crowdfunding platforms are now a popular way to allow investors to work directly with businesses, sidestepping the banks in the process. You can buy shares in a business for a relatively small sum, sharing in the new business’s success and using the rewards as a means to fund your own. Be sure that you understand all the risks of this largely unregulated investment type, however. It can help to take some financial planning courses listed on training.com.au if you need help allocating funds and setting your sights on the future.
Treasury Bills
Like CDs, Treasury Bills offer fixed interest rates and maturity periods. This allows you to make a low-risk investment, which is ideal if you have excess cash reserves that otherwise aren’t doing anything for you.
Money Market Mutual Funds
Pool your money with other investors to invest in money market securities and make more in the long run. You’ll be able to access the money when you need it, unlike T-Bills or CD’s, and the investment is less risky than crowdfunding.
Penny Stocks
Are you thinking in the extreme short-term? You may want to invest in penny stocks. These cheapie stocks are usually available for other start-ups, which makes them relatively risky. However, if the company grows quickly the stock could go up rapidly as well. This is a good option if there are already a few other start-ups you have your eye on, either as competition or a potential investment.
Investing your cash reserves in the short term is one strategy to grow your business in the long term. Low-risk investments like CDs and treasury bonds can grow your bottom line, while higher risk options like stocks and crowdfunding can cause cash reserves to grow exponentially. Just be sure to take the current market climate into account and always do your research before investing.
