Nobody puts their resources into a business, thinking that it will fail, but 90% of new startups fail. 21.5% of new startups fail in the first year, 30 % in the 2nd year, 50% in the 5th year, while 70% go down in the 10th year. To ensure your investment thrives through all the seasons, have short term and long term goals and keep the business evolving. Strive to stay in tune with the market and technology dynamics.
Why do investments fail, and what can you do about it?
Not Taking the Time to Study and Effectively Apply Technology
Technology advancements have drastically changed how investments run today, which means that if you don’t take the time to understand and apply the right technology to your business, its performance will be affected. To stay competitive, relevant and better manage your investments, make sure you invest in the right technology.
For instance, a forex app helps manage your forex investments from any device you choose, and it’s easier to operate. Select a trading app depending on your expertise, financial goals and preference.
Not Taking Time to Understand the Investment
Often, investors delve into a business without investing enough time. Additionally, they don’t understand or even ask themselves whether it’s the right move. Don’t believe what you hear or see without taking the time to dig deep into the investment structure and gain enough knowledge. A marketing campaign will use enticing language to lure you into an investment because its business for them, but without a clear understanding, you may end up failing.
First, realise that there is no investment without risks. Don’t believe in adverts that promise high returns with little input and zero troubles. Weigh the risks involved and the returns. Is it worth it? When it feels, looks and sounds too good to be true, probably it’s not true.
Most people make huge investments without taking the time to understand the business or the risks involved. You cannot make expert decisions while you are a beginner. High and fast returns lure many to put in vast amounts of money when starting a new investment leading to massive losses. The business may be legit and promising, but you will fail or get disappointed if you don’t take baby steps.
To avoid regrettable mistakes, start small and grow your investments gradually as you understand or learn the ropes. It’s better to take five or ten years to build your finances than rush only to lose everything. Draft a strategy that includes short term and long term goals and work progressively to achieve them. Every investment has an option for beginners to start and learn how to manage the business. Don’t skip that part. Some platforms even offer demo trading accounts. Use this to learn how to trade, which significantly reduces the risks of losing your trades as a beginner.
Invest in Your Skills and Knowledge
Too often, investors jump into an investment purely because it promises vast returns, but they don’t take the time to gather enough information or gain the required skills. It would help if you could make sound business decisions and not let your emotions be the driving force. Being overconfident in your abilities may also work against you. You may believe you have what it takes to analyse the money markets, which makes you run the business sorely on your beliefs and not the reality.
To avoid this, talk to financial experts and leaders in the particular investment field and follow them on social media platforms, read their blogs and consult a few in person. Most importantly, have an expert who guides you in every financial decision you make. Although it means paying extra for consultation, you will end up making sound investments decisions and avoid costly mistakes.
Remember that when you go for fee-based financial consultants, they will invest more time and knowledge into your business. They will ask the right questions and walk with you to build profitable investments. Free consultations usually don’t yield much, are temporary and unreliable.
Not Having Money Management Skills
Every investment requires discipline and good management skills. Weigh the risks involved and know how much you are willing to invest. Sometimes borrowing money to fund the business is not the right decision. Instead, grow the business gradually to avoid the pressures of repaying loans and nurturing a new investment.
Also, when you make any profits, plough some back into the business. You will grow faster and not have to look for funds elsewhere when you want to expand. Additionally, be disciplined when managing the investment and don’t over-invest. When you consistently have impressive trades, it’s easy to be overconfident. You are more likely to overinvest, leading to huge losses if the markets take a downturn.
Not Having Exit Strategies
Trades can go wrong, and when it does, you need an exit strategy. When you have all your investments in one place, it’s not easy to close the business when it’s making losses. You will be tempted to hold on, hoping that the markets will change because you don’t have another option. Always have a quick exit strategy when you have bad trades. Understand that exiting the market even when temporary will prevent more losses and safeguard your capital.
To protect yourself, don’t put all your investments into one basket but diversify. If one trade goes wrong, others will still be doing well, which will protect you financially.
Not Learning From Mistakes
It’s okay to make mistakes, but the actual error is not taking lessons with you. You will make mistakes throughout your investment journey, but this should not stop you from growing your investments. An error is a chance to learn something new to apply in the future. Every time you fail, write down the reasons and the lessons and look for opportunities to apply.
Also, don’t go for get-rich-quick scams. There is nothing you can achieve without discipline, hard work and dedication. When you decide to start a particular investment, don’t depend on others to run it but take time to understand and learn everything needed to succeed. Every business needs a lot of nurturing, especially in the initial stages, to make it thrive.