There are several ways in which you can invest in a business.
The most obvious one is starting the business and then running it as the owner. However, most people find this way to be a little treacherous and unpredictable and thus prefer to invest in already successful businesses via venture capital investing, angel investing, the bond market and of course the stock market.
Among these alternative methods, I find the stock market to be the most popular and also the easiest. Nonetheless, investing in the stock market also entails various financial perils that have contributed to massive financial losses for several investors. In order to be successful, you must be prepared to be patient and, above all, avoid greed. This is pretty much the same concept that has been used by so many successful business people, but the relationships do not end there.
I came across one of the most inspirational stories in entrepreneurship when I read Sam Ovens' success story. Ovens turned failure into success within three years. He has since built a multimillion-dollar business in consulting and after going through some of his lessons for succeeding in business as posted on his website and Twitter handle, I couldn’t help but notice some that could work well for stock market investors.
Capitalize on what works for you
One of the reasons most investors fail in the stock market is because they forget to capitalize fully on what works for them – for instance, by failing to add stakes to their most profitable stocks and selling their holdings early because of fear instead. On the contrary, wise investors tend to invest more in stocks that yield high returns while cutting down on those that are on losing streaks.
I find this to be pretty similar to Ovens’ tips on capitalizing on the compound interest of success. If you do not use it well, then it can work against you. In stocks, failing to add more cash outlay to your most profitable units while maintaining holdings in losing units could result in more losses due to the opportunity lost.
Focus on the basics and ignore the complex
According to my experience, investing in stocks is not as complicated as it is often portrayed. I have come across several materials discussing complicated strategies that claim to be foolproof tips for investors looking to succeed in the stock market. However, after reading some of the books and materials written by the most successful investors in the market such as Warren Buffett (Trades, Portfolio), they all seem to stress mastering the basics.
In the same fashion, trying to complicate things in business does not necessarily result in success unless you get the basics right in the first place.
Evaluate your progress
Again, in both business and the stock market, it is paramount to monitor your progress to ensure that you are on the right track depending on your goals and achievements. For investors, this can be done on a monthly basis, but the realistic time frame and one that seems to fit well with the regulatory schedule is the quarterly review.
Therefore, when preparing your statutory quarterly reports, it would be important that you also do a performance analysis for your business or portfolio to determine what needs improvement as well as which stocks you need to dump and which ones you need to increase in the course of the next three months.
Sharpen your sword when your customers are asleep
I had to pick this as discussed by Sam Ovens, but the idea is that you should work on improving your business when no one is knocking at your door asking for a service. For a business, this could be doing research on how to grow your customer base, developing a client outreach spreadsheet for the following week or month as well as attending online classes for various certifications.
For investors, investing in stocks requires thorough research on a particular stock before buying. You do not do this when the markets are open and then try to buy the stock just before the end of the day. In addition, the stock market is volatile which means that by the time you complete your research during the day the price could have changed significantly thereby changing the picture completely.
The importance of taking breaks
Machines overheat whereas human beings burn out. It is important that we keep our minds fresh in order to avoid making errors due to fatigue. In fact, I have come to understand that it is highly beneficial to take time off our busy offices and indulge in things that help to relax our minds while enjoying the fruits of our success. This could be a good source of motivation in business and in the stock market.
Taking breaks is an important aspect of success while overworking yourself could result in a complete meltdown.
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