If you’re an investor looking for opportunities to get the most out of your money, then investing locally can be a great choice.
It gives you a better opportunity to scrutinize the businesses that you’re putting money into; it makes it easier for you to support interconnected businesses, building up strong supply and distribution chains; it strengthens the local economy, which can benefit multiple companies in your portfolio; and it can also have a social impact on the area where you live. By increasing employment options and customer choice and attracting customers who bring money into the neighborhood from elsewhere, you can increase local confidence and pride, making it a better place to be.
Allies in local investment
When you’re planning to invest locally, it’s worth finding out what programs exist at a town hall or state level with which you can connect. In some cases, there may also be federal programs. These can include tax relief for investment in certain sectors or in businesses based in particular locations. They may also involve partnerships whereby government invests a certain amount proportionate to what you invest, which helps you by increasing the value of your stock. Small business owners are often naïve about the help that’s out there, and you can enhance their prospects after buying in by helping them connect with free training schemes or subsidies for things such as computer equipment or renewable energy.
Connect with business owners
Whenever you’re investing in a business, one of the first things you should do is interview its senior personnel. This is much simpler to arrange when you’re living nearby. You may also be able to take advantage of your local connections to find out about them from people who know them or have worked with them before, helping you to get a better idea of their drive and capabilities. Many towns and cities run networking events for local business leaders. These can provide you with a great opportunity for scoping out new potential investment opportunities. They can also let you identify individual talent. Some investors specialize in headhunting capable people from struggling businesses and placing them in promising ones.
Get to know a LION
LIONs – Local Investment Opportunities Networks – are organizations that set up regular monthly meetings between investors and business leaders. You don’t need to commit to anything, but they can be a great way to explore potential investment partnerships, getting other people to put their money into the same businesses as you in order to generate the capital that will take them to the next level, with benefits for all. Unlike traditional Angel meetings, LION meetings also allow amateur investors to participate, so there’s a wider potential investment pool.
Develop a local investment fund
Hooking up with other investors can help you establish local investment funds. This will enable you to get your own or your company’s name and branding on it, generating positive publicity for you even when you don’t have sufficient funds free to be actively involved. A fund like this also provides an ongoing local resource, benefiting not only the companies that you’ve invested in directly but also companies that provide resources or services they need. While it could theoretically increase competition, the reality is that usually, when more money flows into businesses in a particular area, everybody gains.
Promote your local area
One way to increase wider investment is, of course, to talk up your local area. This also has the effect of boosting the confidence of the people running the businesses in which you’ve invested. You can discuss ways of doing this with your local tourism authority or you can make it a feature of your ongoing approach to marketing, mentioning it on your website, in interviews and so forth. Linking your branding to your locality and to the businesses that you’re involved with helps to attract custom by boosting the associated sense of importance and professionalism.
Learn how to manage your investments
When you’re investing significant amounts of money, it can be difficult to keep up with everything yourself, especially if they’re spread across lots of different companies or you also have direct business interests to consider. Traditionally, investment management – otherwise the natural solution – hasn’t worked very well for those who like to keep a local focus because most of those in the industry want clients to spread across different areas, and often they have connections with particular companies into which they want you to put your money. This isn’t universally the case, however. Creative Planning profiles each individual investor separately and tailors its services to fit.
Get smart about giving
Charitable giving helps many companies and individuals manage their tax obligations. When you’re investing locally, you can do this and improve on your investments at the same time simply by donating to charities that support local businesses. Even if you don’t gain directly, you’ll benefit from the boost to the local economy.
Local investing is a way to give back to your community and improve your own situation at the same time. What’s not to love?