Each time I locate someone, they explain that their advisor recommends against investing in small businesses, even one as established as mine. Others contend that the $100K I seek is way too small to deal with.
Seems to me that being able to look an owner in the eye and having some influence is much better than owning 0.00001% of a giant conglomorate and having no control at all.
So, you advisors out there… why do you dislike small local business so much?
OK, so you invest $1 million in stock, and realize a return of 12%. In contrast, you invest $100K in a small business and realize a return of 17%. Yes, the net amount of cash is lower but the return is higher. How can it not be worth the time?
SmarterGroup update - Adam Arnold gives his thoughts on Entrepreneurship at ceo.smartergroup.biz
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on Mar 5th, 2009 at 12:44 am
I think the only logical argument against investing in small business is two-fold:
one, the vast majority of small businesses fail. Many investment advisors play the odds, and odds are you will lose your investment. Certainly, it sounds like you’re an exception, but from a strictly numbers standpoint, the odds are stacked against small business.
secondly, the potential for gain in a small business is relatively small. Growth happens, in successful businesses, but is still small in comparison to big business. Again, it sounds like you are an exception, but keep in mind that most investment advisors take great strides to keep personal feelings out of their advice and stick strictly with probabilities.
I’m sure that is not what you were looking for, but hopefully I’ve given you some ideas of the types of thinking you will have to overcome.
Best of luck to you!
on Mar 8th, 2009 at 10:36 am
It is just not work the effort for the potentential reward.
on Mar 10th, 2009 at 7:42 am
A fire cannot destroy Mcdonald’s.
Even if you have insurance it would take a while to get the check from the insurance company.
the Yakuza cannot destroy General Motors.
Even if you have insurance it would take a while to get the check from the insurance company.
You could die.
And what are we going to do?
Hire someone with 26 years of experience? (Those employees are too expensive)
What about a strike?
The list goes on and on.
A Small business is too much of a hassle.
on Mar 10th, 2009 at 1:51 pm
The risk of failure of businesses is inversely proportional to their size. Thousands of small businesses fail in America every year, but not many Enrons.
It is all about the balance of risk and reward. Further more, presumably you will be the senior and controlling partner and the investor will be entirely at your mercy. Sorry, but if it were me, I would not invest one cent.