Strategies for Investing in Small Businesses
With the diversity of businesses that you’ll find on Honeycomb - be it by geography, industry, affinity group, or whatever metric you decide - there are many different strategies that you can take in by investing in them. Here are some of the common strategies that we’ve noticed other small business investors making.
*Disclaimer: this article is intended for educational purposes only and should not be considered investment advice. Investing is inherently risky and investors should be prepared to lose some or all of their investment.
Investing by Location
One of the beautiful things about the Honeycomb model is that it encourages investors to invest in small businesses right in their backyard! This is great because investors can be a part of building up businesses that they can actually support in their communities, and it can be a great way of building up local wealth.
Some investors only invest in small businesses in their city, others by state, and even others by region. Other investors aren’t as picky, and will invest in small businesses located across the country. With over 23 states represented on Honeycomb, there’s a lot to pick from.
Investing by Industry
Another strategy for investing is by picking an industry that you want to support. During the peak periods of coronavirus shutdowns, a really popular industry to invest in was, believe it or not, restaurants! It goes to show that people want to see the restaurants they love stick around, and are willing to put their money where their mouth is.
There are a number of different industries that you can find on Honeycomb, from the food and beverage industry to landscaping and composting to beauty products! So, if you’re a part of one of these industries as your career, or have just always been interested in them, this is your chance to make an impact on the industry of your choice.
Impact investing is investing with an eye to your returns as well as the social and environmental impact you’re making. It could be said that by investing in a small business you’re inherently impact investing because you’re choosing to support local economies over big business, but some investors take it a step further.
Essentially, impact investing is investing by your values. If you value sustainability, you can find green businesses crowdfunding on Honeycomb. If you value empowering marginalized communities, you can find women-owned, Black-owned, LGBTQ+-owned, and immigrant-owned businesses and more. Some investors even specifically tailor their investments, saying they only want to invest in Black-owned businesses and so on, depending on their values.
Investing by Interest Rate
Finally, another strategy you can take is by investing based on the interest rates that are available. There are pros and cons to this strategy. For one, investing by interest rate means that you can build up your portfolio by choosing investments with varied rates of return.
However, high interest rates often correlate with high risk investments - so you could run the risk of picking an investment that defaults on their loan.
Whatever your strategy is, know that you’re doing good with your investment.
Find small businesses crowdfunding on Honeycomb now that you can invest in by browsing our live campaigns!