Investing the new way?

We’ve all been told that we should buy index funds, invest in the stock market, diversify our portfolio, buy real estate.

Is this REALLY what we should be doing?

At most these vehicles get you around 5-8% per year on average. Real estate often leaves you highly leveraged and in debt.

And worst of all with all these investment vehicles, you have very little control…

So, I’m just thinking out loud here and kinda shooting from the hip… what I’d really like to invest in are my own businesses.

The thing is though, to succeed in business you need to FOCUS (at least that’s one of the major lessons that I’ve learnt).

For example, at the moment my sole focus is building up our new social casino brand MegaRama. I can’t and don’t want to devote attention to other business ventures.

The thing is I’m an entrepreneur (God Darn It!) and there are lots of cool ideas and things I’d like to get off the ground. I LOVE building software products, because these often solve a pressing need and business wise they are great (build it once, keep getting paid). And I love this creative process…

So, lets say that I spy a nice little opportunity in my market.  Let’s say that this is something that might even be able to aid my core business (for example, see the post I wrote about tools which post app store reviews to slack).

I can do the initial validation, hire someone on Upwork to build a prototype and get the ball rolling.  The issue is that the marketing and upkeep seem like a lot of work… which is where I need an able bodied soul to take up the mantle and get the project running.

I could provide some relatively minimal funds to get the business ignited until it starts paying for itself (better be quick!) and then my new-found business partner could continue building up the business.

And with some thumb in the air calculations:

Lets say I invest about $500 to build the initial prototype and provide lets say $1,000 per month budget for a limit of 10k (i.e. 10 months runway).

And lets say that the tool then brings in a steady $2k per month with relatively minimal upkeep, $1k expenses per month including marketing… So I invested about 11k and the company gets about 12k in profit pre-tax, 6k after-tax. And let’s say that we split this 50-50 (3k each), taking it out as a dividend (another 30% or so tax, depending where you are, so each gets about 2k net of tax per year).

So that’s a pretty crappy and dismal business situation, I admit. No one is drawing a salary or anything and no one would hear about us on Techcrunch, but still I would be getting a 2k profit on 11k invested, which is over 18% return AFTER TAX (I’m awful at maths so if I made a mistake let me know…)

It has the added advantage that I control it and have some power to influence the success or failure of the investment.

Now this would only be worthwhile if on my end I had to spend very little time on the project (so that I will not be distracted from my focus on the main business). My partner would foot the sweat equity.

Of course the situation could be different. I might lose everything that I invested. Or the business could take off and make a lot more money.

But… interesting and fun and potentially worth trying out…

So what would I need to make this happen?

I’ve got quite a few ideas, no lack there.

Main issue is having people that I can rely on to execute on my vision…

Ideally this person would be a developer who can execute the project, but not necessarily, since it is quite easy to find good web developers online.

Partnership isn’t easy, I would need to have some sort of ongoing relationship with the person beforehand to know that we would be able to work together…

So anyway, those are my random thoughts on the subject.

If you think you’d be suitable to partner with me on some projects, then reach out to me and lets talk.

 

 

Author: David Janner

David Janner is a former M.D. and the Editor-in-Chief of MAKE APP Magazine. His passion is app development and app marketing. You should follow him on Twitter and Facebook and Google+ in order to get the most important industry related news, hot off the press. If you would like to arrange a 15 minute app marketing session to discuss your App Store Optimization strategy, contact him here.

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