Author Description

By starting a small business, you are investing money and time in the riskiest investment ever created. No other investment, such as stocks, bonds, real estate, mutual funds, and precious metals, comes even close to the high risk of losing your money than small business ownership. I wrote this book to teach you to think like an investor as you plan your small business venture. One particular type of investor you should emulate is the angel investor. Angel investors are typically wealthy retired people who invest their own money in high risk start-up companies. Angel investors typically prefer a high rate of return between 20% to 40% per year. Angel investors often use the Net Present Value (NPV) of an investment opportunity to make prudent investment decisions. I see no reason why you can't use the NPV just like an angel investor. After all, you will be both the small business owner and the angel investor. The NPV (covered in Chapter 7, Financial Risk) will help you determine whether your small business idea is a great investment opportunity with a high rate of return (at least 20% per year for five years) or a mediocre investment opportunity with a low rate of return (less than 20% per year for five years).