Why Investing Beats Saving for Entrepreneurs

Why investing beats saving for entrepreneurs

Investing Beats Saving when it comes to Entrepreneurship

First I will put out the disclaimer that you may actually need to save money to keep in operations. I am not advocating that you never save. However I am advocating that you should invest in yourself and opportunities that will increase your earning potential. Entrepreneurs must take risks in order to grow. The bigger the risk, the bigger the opportunity for growth. While there is the opportunity to lose or fail, that is ok. Successful entrepreneurs fail on their journey to success. It is through their trials and errors that they learn and through their persistence that they eventually succeed.

As Wayne Gretzky once said,

“You will miss every shot you don’t take.” So don’t sit on the sidelines and watch potential opportunities go by. Be brave, be bold and take action.” – Wayne Gretsky

Below are some examples of why investing beats saving when it comes to entrepreneurship.

1) Student & the ROI of College

A student elects not to go to college because they don’t want to acquire student loans of over $50K. In the short term they avoid going into temporary debt. They end up working a job at $40K per year while their friend who did get a loan to go to college ends up earning $60K per year. After three years the friend has paid off the loan and is making an extra $20K per month for the rest of their working years.

2) Entrepreneur & Advanced Education

In another example an entrepreneur is interested in going to an annual conference but the conference costs $3K so the entrepreneur decides to save the money for now and will go at another time when they have more money. After missing five of the annual conferences the entrepreneur finally saved enough to attend the event. The information gained in the conference provided information that the entrepreneur leveraged to increase her earning potential and after six months she is earning an extra $2K per month. By not investing in gaining this knowledge five years earlier she missed the opportunity to earn approximately $100K extra revenue.

3) Business & Marketing

In our final example we have a business who is struggling a bit because they don’t have any customers. They need to acquire customers but they don’t want to spend money to professionally market their business. After three years of struggling they are burnt out and no longer able to keep their business in operation. Had they invested in marketing their business they could have acquired customers and earned the business to pay off the investment and grow their business.

Isn’t investing risky?

What if you invest and the investments doesn’t provide a positive return? Then you will have learned something. Successful entrepreneurs invest in opportunities all of the time and they don’t always provide a positive return. Sometimes it is a loss. But they continue to invest and learn from each loss. Investing and learning from the process will provide results in the long run.

Here are three questions to consider if you’re deciding to invest in an opportunity or not:

  1. Does the investment increase your earning potential?
    If you are investing in earning potential, the sooner you do it the sooner you can begin to increase your earning.
  2. Does the investment provide value long term or only a one time deal?
    If the investment will only provide a short term value, it may be valuable but perhaps not as good of an opportunity as an investment that has a long term value.
  3. Could you recover if the investment did not work out?
    If the investment didn’t work out and you couldn’t recover from it, perhaps the risk is too steep. Taking a hit or a loss is one thing but risking everything is not always necessary.

How do you rate yourself when it comes to investing or saving. Do you invest in yourself?

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