Investing as Entrepreneurship
I came across this article at Money Ning which had me thinking about the role of investing in my situation. I don’t consider myself much of an entrepreneur though I have started a couple businesses in the past (none successful). I believe investing, specifically picking individual companies, fills about the same role. I identify what I perceive to be a growth opportunity (such as a nationally recognized organic food store – Whole Foods) and then provide the financing for them with the hope of profiting if I’m right. I imagine starting a successful company runs along the same lines.
The one line that I remember from my entrepreneurship classes was:
Find a need and fill it.
I enjoy spending lots of time thinking about all the options the world has to offer and picking just the right one to fill a perceived hole in my portfolio. Someone opening a restaurant may spend an equal amount of time pouring over maps and traffic patterns trying to determine where the optimal placement for both business lunches and casual dining. All the tiny choices of the hours of operation, target customer groups, and amount of advertising are looked over again by the investor. Maybe I should invest in this alternate restaurant across the street which uses organic ingredients.
That said, Money Ning brings up several good points and the difference between investing and your own company:
- Keep emotions out of investing but be passionate about your work.
- Be ready to sell at any point when a company no longer meets your objectives but have complete confidence in your own vision of the future.
- Cut your losses and move on but be willing to give your all for your new venture.
While I still believe that investing and starting your own business provide fundamentally the same thing to the entrepreneur, the specific needs of each are polar opposites. I’ve read numerous books on investing over the years and so the specific title I’m about to reference escapes me. It dedicated a portion of every chapter to the concept that investing is only a tool and as soon as an asset is no longer functioning in the way you intend it to, it should be sold, divested, pitched overboard. There was an example of a woman who didn’t wish to sell some stock which didn’t fit into her investing objectives because “it has been in my family for years.” Had she been speaking about a family business, that would have been an understandable, noble, and correct statement.
What are your experiences with this false dichotomy?