Has a friend ever asked you to invest in his or her new business venture? If so, you may feel obligated to invest simply because the person is your friend. However, you should never feel obligated to invest your money in an idea just because it belongs to a friend of yours. In order to filter out the bad investments, you must evaluate each investment opportunity to see if it meets with your requirements. Look at five things to consider when evaluating an investment opportunity brought to you by a friend.
Do some research on the competition your friend’s company will face. Are there are a lot businesses making the same or a similar product? If so, what makes your friend’s product different and better than the competition? Naturally, you only want to invest in companies that have something unique and valuable to offer customers.
The Knowledge and Experience of the EntrepreneursThe next consideration is an especially important one. Does your friend have a great deal of knowledge and experience with running a business? A person can have a great idea for a business and not have any concrete idea of how to make it work. When you choose to invest in a new company, you want it to be supported and operated by knowledgeable, experienced individuals. Resources such as Fundrise can help you learn more about the different types of investments.
How Much Money Are You Being Asked For?When it comes to making an investment, your friend may ask you for a certain amount of money. Or, he or she may leave the amount of money up to you. It’s best to feel at ease about the value of the business idea before jumping in with both feet and investing a large amount of money. You can always put in more money once the company begins to grow and flourish.
The Business PlanLooking at a detailed business plan can help you figure out if you want to invest in your friend’s idea. A business plan outlines the type of product the company will sell, who will buy the product, how it will be advertised, the goals of the business and more. Reading through a business plan gives you a clearer picture of exactly what you’d be investing in.
Who is Interested in the Product or Service?Coming up with a product is the first order of business. The second order of business is figuring out who would want to purchase it. In short, is your friend making products that people will want to buy? What sort of demand is there for the product and will the product survive long-term or fade in popularity fairly quickly? These are essential questions to ask yourself as you take the time to evaluate your friend’s business venture.
Finally, checking out Fundrise reviews is one way to decide whether it would be a helpful resource for you as an investor. Knowing the rules of investing and the details of what you’re getting into can help you feel more relaxed about taking part in various investments.