Private investors

need to know what to look for in an investment, and also what should definitely be avoided. Here’s a quick run through of the dos and don’ts of investment.

DO look for an investment that has potential for growth. Without growth you can’t hope for any form of profit, and as such your return is out of the window. It’s your money that you’re investing, so make sure it’s going to be worth it.

DO find a business partner who has a clear understanding of finances and the business market as a whole. Of course, as a private investor you’ll already be well versed in the area, but you’re not there to babysit your business partner. While you can offer advice and guidance, they need to have an idea of what it’s all about too, especially as they’ll be spending your money. You need to trust that they’ll be spending it wisely.

DO look for a business plan that shows everything you need to see. If it’s not spelled out for you, or if it’s strategically hidden, it could be that the investment isn’t going to offer everything that you need it to. As a private investor, you’ll have the pick of the best plans available, so wait until you’ve got one that ticks all the boxes.

DON’T be put off by a business idea that seems risky. Often, it can be the riskiest ideas that turn out to be the most profitable, as they’re usually the most unique and bring something new to the market. It could even be the next big craze to hit the streets, so make sure that you’re the private investor who gets in first.

DON’T accept an investment where you’re not getting the share that you want or you can’t see the exit strategy that you need. Private investors put their own money on the line, and if you’re not getting the return that you’re looking for or in the best time then it isn’t going to be worth your while.

DON’T accept a business investment until you’re absolutely sure that it covers everything that you need it to. Private investors should always be on the lookout for the next big opportunity, but at the same time don’t jump into an investment without all the details. Make sure that it offers you the best return, is a unique idea and one that can grow considerably. Also, make sure that you can get on with your business partners, as not doing so has the potential to destroy the business.

Private investors should always keep in mind these dos and don’ts. If you do, you’ll be able to make the best investment decision possible.

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1. 7 tips to getting investment
2. How can I get a Private Investor interested in my business?
3. Will venture capitalists be interested in my business?