Category: General

SBA Loan

How to Get an SBA Loan from SmartBiz

An SBA loan is one of the least expensive ways to finance your business, but many small business owners hesitate to apply for one because of the time it can take.

SmartBiz is the fastest way we know of to get an SBA loan. Instead of the 2-3 months it normally takes, SmartBiz has shrunk the process down to less than 1 month for most borrowers. Not only that–SmartBiz also increases your odds of getting approved for an SBA loan. They work directly with preferred SBA lenders and will package your loan for you.

At Fit Small Business, we recommend SmartBiz to many of our readers. We also used SmartBiz ourselves to obtain an SBA loan so we could grow and hire more staff. In this article, we’ll tell you why we trust SmartBiz and how to get an SBA loan with SmartBiz.

SmartBiz Loans

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Why to Use SmartBiz

There are two main reasons to go with SmartBiz if you’re on the market for an SBA loan:

SmarBiz is much faster than the competition.
SmartBiz may increase your odds of getting approved for an SBA loan, even if you’ve been rejected by one or more banks.

SmartBiz is not an SBA lender. They are an online platform that will work with preferred SBA lenders to get your loan funded as quickly as possible. They have a digitized application, underwriting, and document submission system, so the whole process is much faster and more convenient than getting a loan from a bank. No more folders stacked full of documents–everything can be done securely online.

At Fit Small Business, we were denied by several banks for an SBA loan, but SmartBiz was able to help us, and the same is true for many of our readers. How can this be so? SmartBiz understands the requirements of every lender they partner with, so they can help you put your best foot forward. In addition, lenders can use SmartBiz’s technology to get a clear picture of the business faster than they otherwise could. This eliminates the need for things like a business plan which a local bank may require.

How to Get an SBA Loan from SmartBiz: Walk-Through of the Application Process

The SmartBiz loan process is very simple compared to what it usually takes to apply for an SBA loan. For the most prepared applicants, they can complete the process and get their funds in as fast as 7 days after they complete the application. However, most borrowers, including us, take about 1 month to complete all the steps.

There’s a convenient progress bar at the top of your SmartBiz dashboard which will tell you what you’ve already completed and what the next step of the process is. Your application will be automatically saved at each step, so you can come back to the application if you can’t complete all the steps in one sitting.

Video Tutorial from SmartBiz:

SmartBiz:  SBA Loans Made Easy Overview from BetterFinance on Vimeo.

1. Determine How Much Money You Can Borrow.

The first thing you’ll want to do before you apply for a SmartBiz loan is figure out how much money you need to borrow. SmartBiz has a sliding scale on the application page where you can see estimated monthly payments and interest rate for different loan sizes.

Evan Singer, President of SmartBiz, suggests doing two things to make sure you can afford the loan:

Look at the cash in your business bank account at the beginning of the month and the end of the month – Is there enough left at the end to make the estimated monthly payments?
Now add in personal income and personal debt – Can you still afford the loan payment?

If your answer to one or both of these questions is no, then you probably will not get approved for the loan and should try decreasing the loan size.

2. Make Sure You Meet Minimum Eligibility Requirements.

The minimum requirements to qualify for a loan through SmartBiz are as follows:

At least two years in business
U.S. based business owned by US citizen or lawful permanent resident who is at least 21 years old
Personal credit score above 650
Cash flow positive and sufficient revenues to cover loan payments – most businesses that qualify for a SmartBiz loan make between $ 50K and $ 5 Million in annual revenues
No outstanding tax liens and no bankruptcies or foreclosures in the last 3 years
No criminal record other than minor vehicle violations

If you meet these initial requirements, you’re ready to prequalify.

3. Prequalify for a SmartBiz SBA Loan.


Click here to pre-qualify for an SBA loan on SmartBiz’s website. This should take no more than 5 minutes.

You’ll be asked a series of questions about the business and the business owners.

Questions about the business include:

Business name, address, and phone
Number of years in business
Number of employees
Employer Identification Number (EIN)
NAICS Industry Code

Questions about primary business owners (anyone who owns 20 % or more of the business) include:

Name, address, phone number, and email
Social Security Number (SSN)
Do you own or rent your home?
Citizenship status
Driver’s license or passport number

Once you provide this information, SmartBiz will check your personal credit and business credit. This initial credit check is a soft credit pull, which means there will be no decrease to your credit score just to pre-qualify.

If you pre-qualify, you will receive instant notification as well as an email from your dedicated SmartBiz rep who will be your point of contact throughout the rest of the process. Singer says, “Every business that pre-qualifies gets white glove service with a Relationship Manager who works here in the SmartBiz office in San Francisco.”

4. Answer SBA Eligibility Questions and Supply Financial Information to Get Conditionally Approved.

SmartBiz: SBA Eligibility from BetterFinance on Vimeo.

The next step is to answer some SBA-required questions and financial questions about your business. There are about 40 of these questions, but don’t let this intimidate you. This section shouldn’t take more than half an hour to complete.

The SBA eligibility questions are required by the SBA and include questions like the following:

Have you received an SBA loan in the past?
Do you have a criminal background?
What’s the level and scope of management experience for your business’ executives?
What does the business do?

After answering these questions, you will need to e-sign authorizing SmartBiz to get business and personal tax transcripts for the last 3 years. You will also need to input some financial information about your business. For this you will need:

Current year or interim P&L Statement or Income Statement
Most recent Balance Sheet
Personal finance statement detailing any real estate, stock, retirement accounts, or other personal assets that you own and their value.

Singer estimates that answering the SBA-required questions and financial questions might take about 30 minutes. This meshes with our own experience when we applied for an SBA loan. You just need to make sure that you have the financial records handy so it goes as quickly as possible. Once completing this step, you will be conditionally approved.

5. Upload Required Documents.

The SBA and the lender that funds your loan will require certain documentation from you, to verify the information that you’ve provided so far. These documents fall primarily into four categories:

Business-related docs: Certificate of good standing, articles of incorporation, articles of organization, etc.
Location-related docs: Commercial lease or mortgage statement
Insurance-related docs: Property, liability, flood, and other types of insurance
Financial docs: 3 years’ business and personal tax returns (even though you will e-sign for tax transcripts, not everything appears on a tax transcript, so you may be asked to submit complete tax returns)

These documents can be uploaded securely on your SmartBiz online account. You do not need to submit anything via email, snail mail, or fax.

If there are any questions along the way, your dedicated SmartBiz rep is available for help by email and phone.

6. SmartBiz Reviews Everything and Submits Application Package to Lender.

SmartBiz: Application Complete from BetterFinance on Vimeo.

After you upload all the documentation that’s needed, SmartBiz will review everything to make sure it checks out. If everything looks good, SmartBiz will at this point do a hard credit pull and send the application package off the lender. The lender may contact you directly with any additional requests for information and documents, but in general, SmartBiz will act as the intermediary between you and the lender.

7. Sign Loan Agreement.

You’re almost done, but before you receive the funds, you need to sign the official loan agreement. A notary may come to your place of business with the loan paperwork. The paperwork will specify the term of the loan (10 year), the interest rate (currently 6.25 % for loans over 50K and 7.25 % for loans under 50K), and any fees, such as the SBA guarantee fee (for details on loan cost, see the next section of this article). Spouses need to sign only if they are co-owners of the business or are guaranteeing the loan.

8. Money is Wired to Business Owner’s Checking Account.

Upon signing the loan agreement, the money will be wired to your checking account, which normally takes about 1-3 business days. Any fees that you have to pay will be deducted from the proceeds before they are transferred to your bank account.

Congratulations – you have now successfully completed the process of obtaining an SBA loan from SmartBiz!

If you have any questions or issues with the loan once the money is made available to you, you should contact the lender directly who funded your loan.

SmartBiz Loan Terms & Cost

If you are considering getting an SBA loan from SmartBiz, you probably know that SBA loans are one of the most economical ways to fund a small business. But exactly how much does it cost?

Four main things will affect the cost of your SBA loan from SmartBiz:

SBA loan interest rates – The interest rate on loans under $ 50K is currently 7.25 % (variable at Prime + 3.75 %). The interest rate on loans above $ 50K is currently 6.25 % (variable at Prime + 2.75 %). To learn more, click here.
SBA guarantee fee – The SBA charges a 2.25 % one-time guarantee fee on loans above $ 150K.
Closing costs – Average closing costs charged by the bank are $ 317.
Referral and packaging fee – SmartBiz charges a 2 % one-time referral fee and a 2 % one-time packaging fee. This compensates SmartBiz for helping you put together your loan application and sending it to the right lender.

Keep in mind that fees can be rolled into your loan and deducted from the proceeds before the loan funds are wired to your account.

SBA loans through SmartBiz are 10 year loans. You will need to sign a personal guarantee authorizing the lender to seize personal assets to satisfy the loan payments if the business cannot afford to pay back the loan. This is standard procedure and will be required for any SBA loan, even if you do not use SmartBiz.

Typically, additional collateral is not needed for your loan. However, SmartBiz’s lenders will place a lien on your business assets. The value of your assets need not equal the value of the loan, but if the business can’t afford to pay back the loan, the lender can seize any or all of your business assets.

How to Increase Your Odds of Getting Approved through SmartBiz

It probably won’t come as a surprise to you that improving your credit score or increasing your business profits can improve your chances of qualifying for a loan through SmartBiz (or any business loan for that matter).

However, to provide some deeper insight into what business owners can do to put their best foot forward with SmartBiz, we spoke to Evan Singer, President of SmartBiz. Here are some of his tips for small businesses that apply for an SBA loan with SmartBiz:

Apply for the right loan amount – On the apply now screen, before filling out the application, use the slider tool to estimate your monthly payment. Ability to repay is the primary thing that SmartBiz and the lender will be looking for in your application, so making sure you can afford the loan payment ahead of time will prevent your application from being slowed down or rejected.
Having your docs prepared and in order – Not only will this speed up the process, but it will show SmartBiz and the lender that you are an organized, serious loan applicant.
File taxes on time – Filing taxes late,especially if you’re applying for a loan around tax season, can delay your application. Complete your tax filings well before you apply for a loan.
Keep up personal and business credit – Most small business owners understand the importance of good personal credit. Fewer understand or even know that their business also has a credit score. SmartBiz and the lender will check your business credit as part of application and underwriting. To improve your business credit score, start by getting a free D-U-N-S number if you don’t have one already. Click here to learn more about improving business credit.

If you fail to pre-qualify with SmartBiz, they will suggest some ways for you to improve and come back. “This happens all the time,” says Singer. A business initially misses the mark but then makes the necessary changes and qualifies for an SBA loan at a later time.

Bottom Line

If you’re considering an SBA loan to grow your business, SmartBiz is your best bet for the fastest, most convenient process. Even if you have been turned down by other banks, SmartBiz may be able to get you an SBA loan.

Venture Capital

Dividends and Preferences: Should You Take Corporate Venture Capital?

Corporate Venture Capital is seemingly everywhere — from Intel’s venture capital arm ranking as the #1 venture capital firm for funded deals over the last decade, to the massive hoopla surrounding Google forming a 100mm venture capital fund last May to invest in virtually any sector they see fit. In the current economic environment where 1) VC money is tight and 2) the IPO market (although marginally improved) is still quite bad, startups are increasingly taking a serious look at corporate venture capital as a fund raising solution, especially if it is the only money available to them. Anecdotally, over the last six months a large percentage of my VC-style deals have been driven by corporate or strategic VC.


For example, I helped one large “consumer goods” business seed four different high technology start-ups last quarter and also helped a different corporate VC untangle a purchase option its baby company was no longer happy with. Right now, I am working on raising a new $100mm VC fund that is targeting LPs among large companies in a particular sector and that is designed to give these large company strategic LPs a first look at its portfolio companies and their technologies. Below I give more details on the pros and cons of taking corporate venture capital. Large companies are intrigued by the siren call of venture investments. It allows them to “outsource” their R&D efforts without having to get in bed with the innovators they are seeding. They look at the relationship more as a strategic partnership then a financial play. You could say that the focus is on “partnering” rather than “venturing.” The big companies are focused on finding synergies – how can the baby company with the promising technology fill some gap in our product portfolio, or accelerate our time to market? The value to the big company is not calculated purely in terms of hard cash – rather it is also calculated in terms of the overall business proposition. The big company investor will often expect an option on the company it invests in or on the technology the target is developing. However, they typically do not want “control” of the baby companies at the outset. They prefer to make minority investments – and often will couple these with a license right or purchase option. By making a minority investment and not actually acquiring the baby company, the big company may be able to avoid or delay having to consolidate the baby company’s financials with its own – depending on its analysis of FIN 46.That the big company does not want to acquire the baby company outright can be a good thing for the owner’s of the baby company. For one thing, they may get to defer the sale of their company until a later date when, presumably, they will have hit their milestones and will have a much higher valuation. Also, it allows the baby company to have a champion – hopefully, in an industry or sector that the baby company can really use a champion.

Corporate Venture Capital

I have seen this work very successfully in the biotech space and also in certain hardware sectors – knowing that you have someone at big pharma already interested in your company can give you some peace of mind and allow you to focus on your clinical trials. The flip side of this is that you may end up discouraging any other potential partners from coming forward – which will not only seriously chill any auction process for the sale of your company or technology, but might also be an impediment to basic business success. Close ties with one big client can hurt a baby company if the partnership with big company A will prevent you from doing business with their competitor, big company B. Another thing to keep in mind is that the terms of your technology license or purchase option with the big company will typically be locked in at the very beginning. The terms of this arrangement may seem great when all you have is an idea; however, once you have traction and have hit several milestones, you may not like the pre-established price or the terms of the license. Maybe you could do better in the open market? Maybe you don’t want to sell at all anymore and the big company is exercising its purchase option? These are certainly perils. A baby company has few legal options at this point and may end up with the Hobson’s choice of taking the deal that is available or taking none at all – and potentially killing the company. A final thing to consider is that big companies are typically slower than independent VCs in cementing their deals. In a sector where speed to market is very important – such as consumer e-commerce or social media – this is a serious disadvantage. Corporate venture capital is not without its risks, but for the right baby company, can be the right choice.

Retirement Number

Retirement Number Information

A lot of people wonder how old they will need to be to retire successfully. Well, there is no “one size fits all” solution when it comes to how much you should have saved going in to retirement. It really depends; Lifestyle, income and life expectancy are but a few of the determining factors.

There are some ways to determine your progress toward a successful retirement, ways to determine your ‘Retirement Number’ – the age at which you might leave the workforce. It may be the case that your current financial trajectory is not on track with your retirement expectations and goals. Here are a few guidelines for tracking your progress toward saving for retirement:

Retirement plan

When do you want to retire?

We are living longer lives, indeed. This changes the landscape of retirement, employment and our society at large. I overheard my mother, at 61, say “I don’t know when I’ll be able to retire.” It seems to be a voice of the majority. We all chase that number – the age when we can sit back and rest on our life’s work, but that number changes. Things happen. Expenses arise. With some foresight, you can adjust your lifestyle to better proportion your income to savings to meet your retirement date expectations. It is also important to consider whether you are willing to continue working part-time for a period before stepping out of the sphere of employment altogether. Building a nest egg to support yourself entirely for 25 years is much different than a nest egg that aims to supplement part-time income for 10 years and fully support you for an additional 15.

What sort lifestyle do you expect in retirement?

Most of us begin considering retirement as soon as we enter the workforce. “That’ll be the day,” we imagine. Normally there’s a slightly wrinkled version of our current selves on some beachfront property wearing a silly hat and drinking a cocktail as part of that dream. Those visions, whatever they may be, set the stage for the kind of expenses we can expect in retirement. By crunching the numbers that take in to account your goals, be they hobbies, travel or other goals, you will be better suited to determine the amount of income you will need to suit that lifestyle.

What income streams can you rely on?

What types of income can you expect upon retirement? The most fortunate among us can expect a pension. Most of us can expect some social security payments. You may own a rental property or other assets that will generate income. Every retiree will need to develop a plan to support their lifestyle by pulling money from their investment portfolio. If your savings and investments aren’t adding up, you might consider working part time for a period to supplement before going in to full on retirement mode.

Will you have debt?

Debts have a huge effect once you switch from a state of generating new income to relying on existing investments. Heading in to retirement with a debt load will certainly impact your cash flow, and how much you can use for day-to-day, month-to-month needs. In the ideal scenario, retirees succeed at paying off significant debts like mortgages before they transition to retirement. Otherwise, you will have to factor in those debts when determining how much income you need for retirement.


The 4% Rule

The general rule of thumb from financial advisors is that retirees should withdraw no more than 4% from your retirement portfolio each year. So, a $1million portfolio would offer an annual income of $40k. The important factor here is knowing how far that $40k will get you during a year of retirement. This is a function of lifestyle. What is your cost of living? Will you have mortgage / car payments to worry about, still? Compare your debts to reliable income streams. From there, you can gain a better understanding of what you need to have invested in order to make your annual expenses make ends meet with the 4% rule.

Prioritizing retirement lifestyle over current desires is what it often takes to segue in to a successful retirement plan. Your retirement goals determine your need for savings. The earlier you start to prioritize, plan and pursue a savings plan that encompasses the retirement lifestyle you imagine, the better off you’ll be and the sooner you will be able to determine your retirement number. A nest egg that starts early and is able to accumulate decades of interest often means additional retirement income, years off your retirement number and weight off your shoulders at a time when you will need it most.

Real Estate Return

Real Estate Return vs Mutual Fund Return

Real Estate has remained the favorite Investment of Indians across generations.
I work in one of the Indian IT company. The main agenda of everyone is to reach onsite and make money. The money earned at the client location is used to buy real estate. The real estate can be in the form of land, a flat or a commercial property. The more the no of onsite trips, the more the number of real estate properties.
According to me, the only property that you should purchase is the one in which your family lives. Everything cannot be judged or weighted according to the money. This is why we will ignore the money used to buy a home for your family for the purpose of discussion.

Real Estate

Investing in a Second Property

Now, the problem is when people invest in second properties or flats and call them as an Investment. These second properties are very far away from being considered as good investments. I’ll show below all the calculations to prove my point.
In one of our previous articles, we had covered as to why investing in mutual funds is better than real estate. After reading that article, one of my friends was still not convinced. The observations of my friend were as below:
Real Estate is a physical asset which one can see and pass across generations Real Estate can give us Passive Income The first point mentioned above is totally an emotional one. Just because you can see and feel an asset, doesn’t mean it is the best investment. Dividing a physical asset has never been an easy task. Getting a correct price at the correct time is very tough. And if left among the family members or siblings, it is a different story altogether. I am not saying that only negative scenarios happen. But each one of us has heard many stories about disputed properties.

Real Estate as a Passive Income

The second point raised above needs more discussion and with numbers. In cities, a major proportion of the people are investing their hard earned money in buying secondary flats for the purpose of passive income.
The main points put forward by them for their investment decision is as below:
Since IT companies don’t have pension, they will help us to give passive income in the long run They can give their flats to Kids after they get married The second point above is again an emotional one. Also, it is based on too many hypothetical situations to come true for the second point to become valid.
We will discuss more on the first point. Passive Income is important in later stages of life as there would be no job or pension. We need to plan in very early stages of our lives to sort out this important concern. But, many people delay this assuming that they have a lot of time left. We will discuss a case study below to understand the returns from passive income of the real estate.
Case Study 1
I am taking a case of a person who is of age 50. He has Invested Rs 50 lakhs to buy a new flat. The flat is in an average society in one of the Metros of India. For the purpose of calculations, I am taking a period of 25 years.
In this case study, I am going to take the Best case scenario with the below assumptions:
Rent would increase continuously at the rate of 8% every year Property price would increase at the rate of 6% every year(Increase in property price has been calculated by studying the average increase in the price of 10 major cities of India. The period is for the past 5 years.
There would be no maintenance required for the apartment for a period of 25 years No property tax to be paid There would be no month where the flat is vacant Initial Starting rent is Rs 15,000 per month For the purpose of simplicity in calculations, I am assuming that Rent money is paid as a lump sum to the owner.

real estate return

As we can check from the snapshot above, the first year returns are 3.6% of the Invested amount. It would reach a maximum of approx. 6% of the property amount in the 25th year.
Also, at the end of 25 years, you would have a 25-year-old apartment worth Rs 2.02 crore. Now ask yourself one question. Would you ever buy a 25-year-old apartment worth Rs 2.02 crore?
I conclude three points from the above discussion:
Assumptions are too good to be true and there can be a number of external factors which can increase the expenses Maximum return achieved as percentage of property price was 6%And a 25-Year-Old flat in average society. The resell value of the apartment is notional. There is no guarantee that you can find the buyers at the price you want. Case Study 2
Now in this scenario, another 50-year person decides to invest Rs 50 lakhs in Mutual funds. He has heard about a facility known as SWP. SWP stands for Systematic Withdrawal Plan where every month a pre-decided amount would be credited to your account.
In this case study, I am going to take the worst case scenario with the below assumptions:
Money withdrawn per year would increase by 10% YOY The return from Mutual Funds would be 12% YOY Per month withdrawal would be Rs 15000 in the initial year Money left at the end of the year forms the Initial amount for the next year For the purpose of simplicity in calculations, the return credited and the money debited for SWP would take place at the end of the year.

Mutual fund return

mutual fund return

As can be seen from the snapshot above, the person would be having Rs 2.95 crores in liquid money at the end of 25 years. This is because his money was invested into high growing assets of Indian economy.
I conclude 3 points from above discussion:
Money withdrawn at the increasing rate of 10% would easily beat the inflation Return expected from Mutual funds at the rate of 12% is easily achievable by a combination of debt funds, balanced funds, and large cap funds Assets at the end of 25 years is purely liquid and can be easily converted to Cash Analysis: Monthly Money Paid
I would like to do one more comparative analysis on the amount of money credited per month in both the scenarios.

real estate vs mutual fund return

There is a difference of approximately Rs 45 lakhs which were paid extra in the scenario 2.
In a comparison of the Best Case scenario (Real Estate) VS the worst case scenario (Mutual Funds), the MF scenario exceeded the return of real estate by Rs 1.5 crores.


The results are pretty straightforward. Investments in mutual funds over a longer period of time handsomely beat the return of real estate.
The next time you want to buy any real estate, run the required analysis and then make an informed decision.
Buying a real estate should not be an emotional decision but a calculative and a practical decision.

Stock Market Investing

How to Buy Stocks the Right Way

Buying and selling stocks is an easy task – you can find clear instructions on your favorite online stock broker on how to properly use their trading platform. However, if you want to yield higher rewards in the long term, you need to learn all the fundamentals of stock investing – how to pick the right stocks that can generate high profits in the stock market.

In this article, you will find all the necessary information on how to buy stocks. Here’s all that you need to know:

1. Getting to Know How Stocks Make Money

When purchasing a company’s stock, you are buying an ownership share in that particular company. In fact, there are two ways to generate profits from stock investment. First, you can hold onto your shares and benefit from the dividends, which are the portion of the earnings of a company distributed to the different shareholders.

Typically, dividends are distributed quarterly, which makes it a great way to gain a steady stream of profits. Second, you can sell your shares for a higher price than their initial one. For instance, you can purchase 100 shares of a company’s stock at $10 per share. Then, the price rises to $15 per share during the next several months. By that time, you can sell all your shares at a higher price and make $500 of profit on the sale.

How Stocks Make Money

2. Long-term Thinking is the Key to Success

Many investors get into the stock market business in the hopes of gaining high profits within a short period. However, the truth is that generating high revenues in the stock market is a slow process which requires a lot of patience and persistence. That’s why you need to adopt a long-term strategy when investing in individual stocks. It is quite simple: look for great companies to invest in, then hold onto the stocks for longer periods.

3. Look to companies you understand

As long as you are familiar with the company and have a good understanding of how it makes money, you won’t have a hard time determining whether you should buy its stock or not. For instance, if you are more into the technology industry and you have enough knowledge about it, it would be easier to compare two smartphone companies and decide which one you should invest in. But still, you need to do additional researches before buying up shares to further increase your chances of success.

4. Pick Companies with a Competitive Advantage

When it comes to buying individual stocks, you need to pick the right companies. Besides, it tends to be riskier than buying index funds or mutual shares, yet it can generate higher revenues. When looking for potential companies, you should look for some particular components that determine whether a specific company is successful or not.

Competitive advantage is one of these characteristics. It is basically a leg up over similar companies. The more sustainable competitive advantage of a particular company is, the more likely it is to keep growing and generating higher profits in the long term.

For instance, (NASDAQ: AMZN) is one of the most popular companies with a sustainable competitive advantage. Its cost-effective and strategic warehouse setup, as well as its essential relationships with couriers, are the key features that allowed the company to maximize profits and optimize efficiency. Even more, has its army of robots to facilitate the process of fast shipping.

5. Look for Companies with Solid Management

Having a strong management team is a key feature that determines the success and prosperity of the company. They are responsible for making critical decisions that will influence the companies’ values over time. So, it is highly recommended to find companies with excellent and reliable leadership teams. During your search for your next potential companies to invest in, make sure to check if the managers have a strong track record, specific talents, and ample experience.

6. Recognize Growth Avenues

You need to pick the right companies that provide the best growth opportunities if you are willing to invest in the long term. Growth investors are interested in companies that are anticipated to accelerate at a faster rate than their rivals, and that generate above-average profits. However, growth avenues can take different forms and shapes. So, when you are analyzing different companies, make sure to understand where they are going in the near and far future; not just how they are currently doing.

For instance, since its initial launch, has continuously branched out. It started as a web-based bookseller, and it has been evolving ever since. Now it sells all sorts of products, from apparel to groceries. So, it is easy to see how it may continue growing to dominate new corners of the market over the years.

Growth Investing

7. Tune in to Recent Conference Calls

If you want to learn more about the company of your interest, you should tune in to the earnings conference calls. Typically, companies perform conference calls quarterly, usually right after the release of financial information.

You will find valuable information about any particular companies during these conference calls: the latest financials discussed by the management, major factors that influenced the performance, and estimations for the next quarter or year. Besides, you will have a better understanding of how the company’s management copes with the different changes in the performance, for better or worse.

It is quite possible for a specific company to have high profits for one quarter and low profits the next. But still, the way the management handles these changes can have a big influence on the long-term viability and value of the company. Also, in most cases, you can find the conference call schedules on the company’s website, and everyone can listen to it online.

8. Determine the Value of the Stocks

As a stock investor, you need to figure out the value of your different stocks, and whether the trading price is fair. To have a better understanding of the different values of your stocks, there are simple formulas and tools you can use.

Typically, companies are valued based on their revenues and earnings per share (EPS) – which is the portion of the profit of a particular company allocated to each share of common stock.

Alternatively, you can use the price-earnings ratio (P/E ratio) to measure the value of any specific company. It measures the current share price of a company relative to its EPS. As a simple formula, it is calculated by dividing the stock price per share of a particular company by its EPS.

Generally, a company with a high P/E ratio is anticipated to have strong future growth. However, having a high P/E ratio doesn’t necessarily mean that the company is overvalued, and a low P/E ratio doesn’t necessarily mean that the company is undervalued. Besides, the P/E ratio is very helpful when comparing companies of the same industry.

9. Start Small and Diversify

With experience, you will be able to spot very rewarding stocks with high potential for great revenues. But still, every great stock comes with a certain risk level, generally higher risks than any other average-revenue stocks. That’s why you should never put all your money in one individual stock, even if it has 100% chance of success. I believe that you don’t want to lose all your money if anything unexpected happens. Even the highest companies face harsh times from time to time.

Additionally, once you have identified a great company with a potentially high revenue to invest in, it is best to start by purchasing a quite small position of its stock. That would undoubtedly minimize your risks of losing. Moreover, make sure to diversify your portfolio to increase your chances of success further while keeping a low-risk level. Besides, when buying stocks from different industries, you significantly lower the possibility of losing a considerable sum of money when a particular sector fails.

Beginner Investing

10. Keep Track of Your Investments

It is natural to keep track of your investments once you are done with buying your stocks. However, you shouldn’t keep checking them all the time, every day. That would turn you crazy and even lose your temper, especially when you don’t notice any significant changes from day to day.

As long as you are willing to invest in the long term, you don’t necessarily need to follow up on your investments very often and within short periods. Due to many factors, it is totally normal that a stock price fluctuates a lot.

With that being said, checking your investments once a month would be enough to see how they are doing. In addition, make sure to check up on the invested businesses and search for any potential red flags. For instance, if they are planning on changing the manager, and that doesn’t make you feel comfortable, you may want to pull out instead of taking your chances.  

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