Making Money Moves in the Midst of the Pandemic: To Start a Business or Invest?


Making Money Moves in the Midst of the Pandemic: To Start a Business or Invest?

Sunday, October 11, 2020

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Feeling uncertain about what to do with your money is a pretty common side effect of the pandemic. In fact, you may have been feeling this way ahead of the pandemic and with everything that has happened your apprehension has intensified. It's okay to feel uncertain before launching ahead into a new business venture or investing. But remember businesses such as Airbnb, Netflix , Uber and Venmo all sprung out of the 2008 crisis. Moving forward will simply call for a bit of analysis and understanding exactly what the pandemic has done to the state of the economy. So to invest or start a business? Those are the questions. Let's discuss.

Starting A Business in the Pandemic

Pre-pandemic most businesses never had to consider how they would survive if the entire world stopped for a week, or a month, let alone what is now turning into a year-long crisis. Additionally, many businesses never considered a reality in which they would be forced to work remotely — many just assumed physical workplaces would always be a necessity. They simply did not stress test the business. There are those entities that are regulatory required to stress test their business but all too often entrepreneurs simply go day to day hunting profit and never stress test their business. This new situation has revealed several businesses and industries that might not be relevant to the future. That being said the most important thing to consider when opening a business during this time is whether your new business is solving problems that are relevant today. It's imperative you consider the longevity of whatever industry you're tapping into. While you're at it here are some other things to consider:

• What does your product or service offer customers, and who is going to buy it?

• What's the compelling story here for someone to want to buy this product or service — and why now?

• Are you confident you can solve this specific problem, or deliver this specific service, better than anyone else and stand out against the competition?

• Do you have the right team to help you succeed?

• Can you operate at a high level of success remotely?

Thinking along these lines will help you to consider the importance of relevance over timing when you ask yourself, “Is now a good time to start a business?” I also encourage those of you with existing businesses to consider pivoting if your venture is no longer viable. There are six different types of business pivots — operational pivot, platform pivot, customer pivot, collaborative pivot, complete business pivot and asset pivot. Depending on what industry you decide to launch into, certain financial institutions can offer timely guidance and financial support to help your venture get a head start and have a higher chance of success. Consider speaking to a financial advisor before moving ahead.

The key to investments in COVID-19

Trying to find investments that will bring you the right returns can seem daunting. While market performance has changed over the past few months, there's definitely a good case to be made for buying stocks now. My approach would be the same as starting a business — focus on the relevance of the investment. The best an investor can do is to always be on the lookout for a high-quality investment trading at a good price relative to its long-term prospects. Here are some other things to consider:

• Be prepared and willing to endure volatility and hold for the long haul

• Set aside your emergency fund FIRST. Invest any spare cash you have after you have done this.

• Avoid investing everything in the stock of one company instead speak to your advisor about a diversified investment portfolio.

• Bear in mind that it's simply impossible to time the market; the recent turmoil caused by the pandemic and the subsequent sharp rebound have made this lesson particularly salient.

• If you are younger, I recommend speaking to your financial advisor about equities. If you are a little more mature, I would recommend asking your advisor less about equities and more about capital preservation and income.

Now is as good a time as any to keep an eye out for good investments; especially with companies that have proven they have the staying power to perform during and after a crisis. You might be able to purchase stocks at a lower price than four months ago. Now is a great time to get even closer to your financial advisor so you don't miss out on the next big return on investment.

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