Small Business Investments

Small Business Investments should be included in the business plan.  Find a good accountant in your city to help you with business planning. 

The small business investments can include the following:

	A temporary haven for excess cash such as term deposits
	Long-term investments such as stocks, bonds, real estate, etc.
	Loans to customers and employees

The small business owner has to carefully evaluate the benefits and risks of any investment.  The liquidity of the investment should be clear in the event the company needs to convert it to cash quickly.

The tax treatment of any gain on the investment has to be determined in advance in order to plan for the minimization of tax. For example, the frequency and magnitude of stock transactions can affect the portion of the gain which is taxed.

There may be a greater return on your investment dollar to assist your good customers who in turn will be able to increase their purchases from you, not to mention the goodwill created.

Excess cash on hand might be well spent on reducing debt if interest rates are rising.

There are a multitude of options for excess cash on hand for a small business, thus it is well advised to take the necessary time to assess all the factors before you make that investment. All major investments should be discussed with your accountant, lawyer and banker before a final decision is reached.