Can you imagine having enough money in your back pocket to be able to buy every single person in the world a Cherry Coke and a Cheese Burger? Warren Buffett can, but even he had to start somewhere. Whether you’re young or old, there’s always time to start investing. Unfortunately, it’s not the easiest thing in the world to understand, and many make poor decisions that result in negative profit. We know that this is definitely not ideal, so we’ve put together this guide of the five mistakes that investors most commonly make.
1. Starting too Late
Many prospective traders and investors know that they want to invest from a young age, but they never do. Instead, they leave it too late, and this means they’re wasting valuable time in which they could be building up their investment assets and therefore their profit. Starting early is clearly a priority if you want to make as much money as you can as quickly as you can.
2. Being Passive
Money doesn’t make its way into your bank account while you sleep. Instead, you have to go and actively seek it out. By being active in this way, you’ll ensure that you take every opportunity you can. This means:
- Talking to potential co-investors
- Watching the news to discover investment opportunities
- Engaging with the local community to see what service/product they require that you could create
- Nurturing your current investment projects so that you know they’re constantly at their best.
3. Investing in Something Easy; Not Something You Love
The best investments you will ever make will be in the areas of life you are passionate about. This is because if you’re not personally and emotionally invested in a certain idea or project, you won’t be able to complete your duties as the investor to the best of your abilities. If you’re passionate about interior décor, don’t invest in FX – invest in property.
4. Relying on Intuition; Not Informing Yourself Enough
A good investment is one that you’ll research and educate yourself on before you become financially invested in it. This can come in a number of different forms – from reading forums, to consumer and business advice from somewhere like the Citizens Advice Bureau to discussing ideas with practicing business professionals.
5. Using an Old Trading Platform
Gone are the days where you ring up your Forex broker and ask them to open and close positions. Instead, now the emphasis is very much on you to do your own work, which you do using an online trading platform such as Alpari’s ecn mt5. These platforms are regularly updated, and so new features are added on an annual basis. This means that it’s crucial to keep updating your trading platform. Without doing so, you’ll fall behind and you might lose your competitive edge.
Ultimately, all brilliant investors had to start somewhere, so avoid the above problems and learn from others’ mistakes. If you do, you’ll find yourself far better equipped for the job.
Well, the end of the first quarter for the new business happened recently, and I finally got some numbers together to look at the results. In fact, the bank representative emailed me yesterday in order to file a report on the new ownership, so it was easy to just send him the spreadsheet. Hopefully, the bank is pleased. Bills are getting paid and payroll is being met at the same time that debt is being eliminated so it should all be good. February was a bit lean, but weather was terrible in January and February. The business was actually totally shut down for 3 days, and we still managed to come out reasonably unscathed.
Comparison to 2013
I won’t share detailed numbers, but I know the sales from last year and divided by 4 to come up with a quarterly average. When I compare to the net receipts after taking out sales taxes, I find that the current number was up by 7%! And that is without anyone doing full time sales. The business had tried to get lean in order to survive and only had 3 workers down from 5 at one point. We have talked about bringing on a 4th part-time in order to get someone out to do more sales and customer interaction. That will probably happen this quarter.
I think one of the issues with the prior management was lack of attention to detail when it came to finances. Looking over the books, I got the sense that there was lack of awareness as to the actual expenses of the business. I got an initial proforma from the prior owner, but went to look back at the past 3 years’ tax returns in order to come up with my own numbers and make some modifications. There have only been a few surprises when comparing expected vs. actual performance.
First, the amount spent on telephone has been double. It could be because we added another cell phone so my wife could have a dedicated business phone since she has been doing a staggering amount of work during these first 3 months to keep things heading in the right direction.
The other surprise has been the expense for health insurance. The prior insurance company pulled out of the market due to ObamaCare and the new policies with a different company ended up being about 30% more expensive for a similar plan but with slightly less favorable deductibles. That is one reason that the next employee will be part-time. No way I want to pay another 25% increase to the benefit column at this time.
The good news is that at the end of the quarter, we were able to show a slight profit after paying all expenses. Hopefully, as spring and summer arrive we will be able to continue the current pace or even grow a bit more.
My wife and I acquired a business out of an article 9 sale and have been quite busy with many of the management duties. She has been meeting with vendors and signing contracts, while I have been spending evenings paying bills and tracking the finances worrying about having enough money every 2 weeks to make payroll.
All told, we are probably spending about 20 hours per week between the two of us. Now it has slowed down a bit recently. January and February were quite busy setting up many of the new systems, dealing with health insurance etc so we were spending even more time (up to 30 hours in a week some weeks). We are hoping that establishing some patterns will free up some time so that it can trim down to about 10 hours. We should start tracking it more closely in April so that we know for sure.
But I can’t help but think of the prior owner and all the extra non-revenue producing activity that had to be spent just to keep a small business with two other employees going. I have a feeling that might be one of the reasons that the business ended up in some financial difficulty. Now that my wife and I are assuming this burden, more time has been freed up for the site manager to go out and solicit business.
I think that is why January was one of the top 10 months for revenue in the past 15 years. February was what seemed like a lot slower, but it was in reality about an average month. We should still be able to keep the doors open with a month like February. And now March has picked up again and new orders in the first 7 business days are 80% of February’s total.
“If You Stop Tracking, You Start Slacking”
This is a quote from my personal trainer. I starting tracking everything I eat and have been shooting for about 2,000 calories per day. Simply watching it so closely has helped me to lose weight already.
The same can be said for finances (or anything in life). Because I am tracking the finances of the business so closely, I can minimize expenses and allow the manager to maximize revenue and sales. I really think that freeing his mind of all the business worries has allowed him to be more productive and have a better attitude in order to feel motivated to make sales. I really doubt that the economy has been that much stronger this year than last.
Well because I have been focused on this business, my blogging has slowed dramatically. I noticed that I didn’t even post a single article for the month of February. Forgive me for that, but I really think that my efforts are better spent elsewhere. This is actually the first time I have had a small block of uninterrupted or unobligated time since I was stranded in Chicago’s Midway Airport in January trying to get out on a golf trip. Now it is snowing again, so my golf season will have to wait a bit longer.
As always, thanks for reading.