Investment or Business: This Is What I Think

Businesses and investments are similar in that both require you to make a financial commitment in anticipation of a future gain or benefit.

The main distinction is that whereas in a company, you actively participate in management, in investing, your position is more passive.

When you start to manage the operations, investment becomes a business; the opposite is also true.

Imagine that you had to decide between becoming a shareholder and operating a firm.

To produce value and sell it to your target market for a profit, you would need to actively participate in the business’s day-to-day operations, manage it, and engage with all stakeholders.

In contrast, if you wanted to buy public equities, you would give your money to a stockbroker, who would then buy a number of stocks on your behalf.

Your shares would provide a return without much of your involvement when they increase in value (capital appreciation) or when the business pays dividends.

There are benefits and drawbacks to both running a business and investing.

Starting a business gives you independence since, in theory, you can choose your own hours and work for yourself.

But running a business will take up a lot of your time, especially in the beginning.

In addition, managing stakeholders, dealing with staff difficulties, and dealing with your competition all add to stress.

Difference between Business and Investment

The main difference between running a business and investing is that running a business or a startup is more of an active income, while investing is passive because, basically, you’re making your money work for you.

When you launch a firm, you take on the role of an entrepreneur and consider all of the requirements for your venture (location, labour, supplies, taxes, etc.).

You manage your business hours and expenses and will have unlimited income.

Although there are dangers involved, most of them are minimal to average given the competitiveness and revenues that come with running a business.

Contrarily, when you invest (particularly in the stock market and cryptocurrencies), your financial situation is determined by the success of the stocks.

When you observe how your money is growing, it acts as passive income, and you wouldn’t even have to do any work.

It is based on your risk appetite, which ranges from conservative to moderately conservative to aggressive.

These investments may be insurance, equities, bonds, or mutual funds.

But both entail money because starting a business requires capital (especially if it’s a micro business using your own money), and starting an investment portfolio just requires putting some of your hard-earned cash on the line.

Read: Big Data for Smart Investment Decisions Leveraging Analytics in 2024-2025

Pros and Cons of Business

Here are some things you should be aware of if you’re considering starting a business.

With the correct marketing methods and some persuasive pitches, creating and operating a business may be rewarding (especially a startup company or a small business)

Pros

In addition to having an unlimited income, you may decide how many products to sell and how much to charge for the goods or services you provide.

It takes longer to lose money with low to average risks than to make it since while demand is high, profit is also high.

In addition, you can start a micro, or small business in Nigeria for as little as about N100,000. When your company is successful, you can truly grow it.

You can start your own business or work for a large corporation that manages a variety of enterprises!

Additionally, as business owners are becoming more prevalent, particularly during the epidemic season, you can choose to own your company as a lone proprietor or in a partnership.

This allows you and your friends (or family) to run it together and be your own boss.

What a cool thing!

Read: Tech Tools for Business Owners: High-Impact Solutions

Cons

So, you believe that managing and operating a business is simple?

Okay, so it’s not.

One is that, especially if you’re creating a new business, you have to put in a lot of work before you can really open your doors, which means you have to spend money before you can make it.

A business requires a tonne of paperwork, including registration documents, contracts, and permits.

More importantly, because people will judge your company when it first opens, you won’t initially start making as much money.

The next issue is competition because, in truth, most people need your talents to start a business, particularly if you’re opening a restaurant.

That’s one industry that is practically a wrestling match.

What is your unique selling proposition? is the aforementioned million-dollar question for everyone starting a business.

This means that you have less than ten to fifteen minutes to think of something that stands out from all the other businesses already operating (kind of like an elevator pitch).

Bills (utilities like electricity and water), and other taxes that you must pay to the DTI and BIR, are the third thing that you must take into account.

This may have an impact on your profit because, in the case of high taxes, it’s likely that you will lose more money than you actually make.

Finally, you need to include others.

This time, we’re talking about business partners instead of employees, particularly if you’re preparing to start a small firm.

In relation to the second point of competition, you should be aware of the type of investors you need because good investors are inquisitive, but bad investors are merely window shoppers.

Read: Financial Planning Tools for Business Owners: Top Choices

Pros and Cons of Investing

With a few clicks and swipes, anyone can invest, whether a student, working professional, small business owner, or powerful CEO.

However, there are a few things you should be aware of before investing online.

Pros

You’re beating inflation.

When inflation is low everywhere you invest, the returns on stocks, bonds, mutual funds, cryptocurrency, and many other stock market investments are higher.

It’s also a good asset to include in your financial portfolio based on the performance of the stocks traded on the stock market, as it puts a positive spin on price fluctuations.

After all, you never know when a good inflation rate might make the pricey items you currently purchase more accessible.

Another is that brokers and fund managers operate on numerous online platforms to handle the stock market (meaning you can invest anywhere from GInvest, Coins.ph, Axie, etc.).

So, for instance, if you purchase stocks from JFC, a fund manager can monitor price changes so that you are aware of market developments.

A qualified fund manager can advise you on when and how much to invest and when to take money out of the market and sell your assets.

Good financial advisors may help you plan your future (and even your retirement and death) if you invest in insurance because by then, you’ll have enough money to survive for several years to come.

They can also inform you when it’s okay to withdraw your money.

Another is that more people acquire stocks from these businesses when stock prices are low (especially during crises) to expand their investment stock portfolio based on the stocks that are bought (and sold later) online!

Finally, you may unwind knowing that investing is an excellent passive income source and that the interest rates are typically higher than those offered by the majority of banks.

This is because compound returns can really be more lucrative, especially if you start investing early. Investing can help you stay competitive and save time.

Cons

Investment risk is usually ordinary to high when owning a business and buying stocks.

For starters, your financial security is at risk because your money is controlling you based on stock prices that will fluctuate in a few years.

Additionally, investing in stocks (as well as bonds and mutual funds) can be risky because you never know for sure whether you are actually investing or not.

In addition to taking a risk with your assets, you need to be familiar with the fundamentals of investing because one mistake can cost you a lot of money if you’re an investor in stocks, bonds, or mutual funds.

However, given the number of businesses that the pandemic and other crises have impacted, there is a good likelihood that your investments have dropped in stock value.

This has resulted in investors losing more money than when you first established a business.

If you intend to invest online, you must ensure that your investment platform is reliable and legitimate. Many online investing platforms require you to take risks, and if you do, your finances could suffer.

Read: Tools for Business Operations: Essential for Streamlining

Conclusion

In conclusion, deciding between running a business and investing depends on your preferences and risk tolerance.

Running a business demands active involvement, offering the potential for high rewards and considerable responsibilities and risks.

You manage operations, deal with competition, and directly impact your financial outcomes.

On the other hand, investing is more passive, with returns generated through stock or asset appreciation with minimal day-to-day management.

Each path offers unique benefits and challenges, so choose based on your desire for engagement and your comfort with risk.

Whether you seek the independence of entrepreneurship or the simplicity of investing, both paths require careful consideration and strategic planning.

Before You Go…

Hey, thank you for reading this blog post to the end. I hope it was helpful. Let me tell you a little bit about Nicholas Idoko Technologies.

We help businesses and companies build an online presence by developing web, mobile, desktop, and blockchain applications.

We also help aspiring software developers and programmers learn the skills they need to have a successful career.

Take your first step to becoming a programming expert by joining our Learn To Code academy today!

Be sure to contact us if you need more information or have any questions! We are readily available.