Running a successful business means having to make tough financial decisions. ADEMOLA ALAWIYE highlights some guidelines to be considered in making such decisions.
Sometimes it’s hard to predict the outcome of your decisions, more so if you don’t have a great deal of experience in that particular area. Although it is practically impossible for one to be 100 per cent infallible in predicting a good or bad investment, it is possible to narrow down the playing field by following basic principles while investing.
Experts note that this will help beginning or advanced investors to ensure a margin of error when investing their funds for a good return earning. It is therefore important for an investor to adopt the basic principles of making good investment decisions if he wishes to trim his risks and make considerable progress in his venture.
Business professionals say whether it is cheap insurance, good insurance or just plain savings bonds, in today’s unstable economy, one cannot ever be 100 per cent certain in investing. They, however, note that choosing wisely will definitely be an asset in achieving success or avoiding financial disaster and cutting risks. Below are simple tips to making excellent investment decisions in an unstable economy.
Take enough time to think
At the moment, Nigeria’s economy is unstable and harsh to businesses. Businessmen, in separate interviews, often complain of the unfriendly economic policies which they have to contend with in order to survive. As a result, they note that whoever wishes to invest in Nigeria must take enough time to think through what venture he plans to dabble into.
Investing in one’s future is definitely not something to just plunge into without a careful thought and consideration. Experts say the lightening-fast nature of the Internet is conducive and geared towards convincing surfers to make quick and impetuous decisions. Consequently, this fact needs to be on one’s mind continuously before making any investment decision as any error might be regretted. Of course, no one loves to regret in business.
How much risk can you take?
You should know how much risk you are willing to tolerate in whatever business you do. Knowing the difference between an average savings/money market account and investment vehicles which form part of a portfolio is vitally important when making successful investment decisions, experts say. So, as an investor, are you ready to take risks? The Managing Director, Silex Limited, Mr. Steve Obong, says that calculated risks should be taken in business to succeed. According to him, every form of investment has its associated risks, and any investor should be ready to undertake such risks, but shrewdly.
Never give up easily
Do not succumb to pressure in business. You must understand that every business has its own pressure and it is not wise to give up easily after encountering some challenges.
Generally, families, friends and the shoe-shine boy on the street will all offer financial advice. Most of it will not be qualified, expert advice. Most of them will know of a cheap insurance policy, promising stock or a well-performing company that has good future potential. Whatever they may advise or try to push, in order to avoid bad investments, it is crucial for a person not to succumb to outside pressure. Put in your best and be wise.
Undertake detailed research before investing
Experts advise that in today’s highly volatile economic environment, it is necessary to carefully research into a particular financial vehicle which carries out one’s financial goals the most. Meticulously checking out the specific investment offers, competitive offers from other sources and how well the investment is performing is a crucial prerequisite. You should ensure a detailed research before investing in any form of venture.
Also important is to painstakingly research the reputation, integrity and track record of the financial institution offering the investment. Experts say this is just as important as the investment itself. Some of the basic tips for this include taking the time to implement a savings and/or an investment plan with a diversified portfolio; determining how much risk one is willing to assume: research which investments are insured, non-secured and/or low-risk; and never bow to friendly advice if it does not adhere to your short, medium or long-range goals.
Are you adventurous?
The Managing Consultant, Beatrex Consultants, Mrs. Beatrice Okolie, says many of our entrepreneurs want to sit in a place and expect things to work out fine. She notes that you must have a dream and that dream must influence your entrepreneurial vision. She says, “The moment you have that dream, you should understand that it doesn’t come easy, you must drive it. What do I mean by driving it? It is not going to be easy. So, how do you as an entrepreneur identify your priority? Even in the face of making it, when the returns begin to come in, how do you determine your priority? Do you forget where you are coming from? What informs your taste? You have to be adventurous. When people talk of lack of funds, I laugh. You see, when you talk of lack of funds, I see it as the least of all your problems. The idea that you want to develop as an entrepreneur is key and paramount.”
She explains that one needs to diagnose the efficacy, relevance, workability and feasibility of one’s idea. She states that these are the issues that many entrepreneurs tend to push aside and they begin to talk about the issue of funds. “People talk about issues of policy and infrastructure, but these are only essential and secondary, they are not primary,” she adds. She notes that as an entrepreneur, one must have the drive and understand one’s dream and idea.
She says, “Why are you in this business? Can you explain or is it because your brother, sister, or uncle is doing it? No! If you go into business because of that, you have messed up everything and your problem starts from there. So, when you have gotten your idea right, you can now talk of money or funding.”
