Starting a business

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   thirdmilleniumposted 12 years ago

   A dear friend has plans to invest in a MANUFACTURING  business in which he can keep investing around 36,00 dollars every month for 5 years. So, second month will see 7, 200 and so on. He can start only with 3600, please remember, and can add the same amount every month. He wants to start immediately.
   
   The problem is he does not know anything about business, having been in the army all his life. Nor do I. No online, forex etc
   
   Can some good soul suggest something that is less risky but does not necessarily mean less adventurous. And, of course, profitable.
   
   Thank you

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   1. 73

      LeanManposted 12 years agoin reply to this

      Profitable generally means that you have to take a risk. No business is free of risk in today's age.
      If you want safe stick it in a bond or something with a low return but high security.. (Is that still safe - not sure anymore..)
      
      If he wants to take a risk and potentially make some real money go to the local universities and find out if there are any spin out companies that are looking for funding. Students will often come up with some great ideas for products and services; I spent a few years helping companies around cambridge university in the UK source funding through grants and Angels and some of those are now very successful companies - and others have died a death!
      
      Whatever he does; spend months investigating and learning first...

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         thirdmilleniumposted 12 years agoin reply to this

         Thanks Lean. Will keep your advice in mind

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   2. 76

      aguasilverposted 12 years agoin reply to this

      Due Diligence...
      
      He has to do some serious due diligence, and learn about business.
      
      Without more info, nobody can decide to invest in anything, and (hopefully) none of us who are in business would advise him to proceed on the limited info you have been able to provide.
      
      Why does the business NEED investors?
      What do their last five years accounts show?
      What security is offered for the investment?
      Does he get shares in return, and if so, what % for each tranche of investment, and what % of the overall shareholding would that represent.
      What's the ROI (return on investment)?
      What exit strategy exists to recoup his investment?
      
      Those are just a few starter questions I would want answered before I looked at any proposal.
      
      After 40 years trading, I can 'smell' if something is worth looking at, but it cost me a whole heap of 'investment' to learn how to do that, and if he is freshly retired from the military, he is unlikely to have that ability, nor the time to acquire it before he gets stung.
      
      If he wants to ask more info, I will willingly answer his questions, just tell him to contact me via my profile page, or email me at:
      
      aguasilver at gmail dot com.
      
      Speaking personally, I would never take an investor that was not 'experienced', and nobody should invest more than 5% of their nett wealth in any 'risk' venture, unless they are controlling the business themselves.
      
      Edit: Be VERY wary of anyone who offers what you ask for in the question, less risk, adventurous and profitable are strange bedfellows for any investor to find together.

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         thirdmilleniumposted 12 years agoin reply to this

         Thanks v much Silver
         Will contact you

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      2. 83

         Robert Erichposted 12 years agoin reply to this

         Aguasilver is very right. You will need to take on risk for adventure and profit. However, there are many smart options to dip your toes in the water.
         
         Remember, only 1 out of 5 business make it past one year. and about 1 in 20 past five years. And of those, how many are actually profitable? That's hard to tell.
         
         The MOST IMPORTANT thing he can do, and this will help determine how realistic making a profit will be, is to CREATE A BUSINESS PLAN.
         
         I wrote a hub about that a while back: http://roberterich.hubpages.com/hub/How … iness-Plan
         
         This is essential. I can speak from experience. And often times, in the process of creating a business plan, someone will discover that the idea was not as good as was first imagined.
         
         But this is key - develop a plan. Who is the customer? Where is the customer? How will the customer find you? Why will the customer choose you over the competition? Who is the competition? How much will it cost to start? How much do you need to make before you start making money? How long will it take to start making money?
         
         These questions are all very annoying. But very helpful. Another article I have written is about asking the right questions:
         
         http://roberterich.hubpages.com/hub/Que … a-Business
         
         I tell everyone starting a business to ask questions like crazy! If you are too afraid to ask questions, or if you get annoyed by the questions that others ask, that's probably a sign that things will not work out for you. However, if you can deeply think about these questions and give solid answers, than you will be much better prepared for the struggles that lay ahead (and there are many).
         
         Entrepreneurship is amazing! Being your own boss and setting your own hours can be great. The key is just to make sure that it will actually give you the lifestyle that you want, and not simply become a new master that pays less and works you harder.
         
         Wish your friend luck for me!

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   3. 74

      TIMETRAVELER2posted 12 years agoin reply to this

      Your friend apparently doesn't know that just investing a set amount of money every month into a random business will not make it a worthwhile venture.
      
      He's talking about investing $216,000 over five years into a product he can't even define at this point.
      
      He might better put the money into some sort of long term, stable investment and get a job...He'd be better off.

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      1. 60

         thirdmilleniumposted 12 years agoin reply to this

         Hello TimeTraveler
         Nice of you to have taken the trouble to reply in such details. I had gone thru both your articles. Good ones, thank you

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