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How to Start an Investment Company

How To Start a Hedge Fund

If you’re thinking about starting an investment company, there are a few things you should know about the process. Here’s a brief overview of what you’ll need to do:

10 Steps to Launching a New Investment Business

1. Choose Your Type of Investment Business

The first step in launching an investment business is to identify the type of investment business you want to launch. You might choose from the following types among others:

  • Asset management firm: These companies manage the portfolios of individuals and institutions.
  • Brokerage firm: These firms buy and sell securities on behalf of their clients.
  • Hedge fund: Hedge funds are private investment vehicles that can be very risky, but also offer high returns.
  • Private equity firm: Private equity firms invest in companies that are not publicly traded.
  • Venture capital firm: Venture capital firms invest in early-stage businesses with high growth potential.

 

2. Name Your Investment Business

Give your investment business an identity so people will think of it as a well-known and respected brand. You can take the name of your investment business from your industry, focus on a geographical location, or use your own name among other options.

The main goal for naming your investment business is to make it sound appealing and trustworthy so that clients will want to invest with you.

Read our article about choosing the right business name.

 

3. Determine Your Investment Business Model

There are several possible types of business models for an investment business including:

  • Full-service: This type of business provides a complete suite of services to its clients; including asset management, financial planning, and investment advice.
  • Discount: This type of business offers lower fees than full-service firms, but doesn’t provide the same range of services.
  • Boutique: These businesses focus on a specific niche, such as impact investing or clean energy.
  • Independent: This type of business is owned and operated by its employees rather than being part of a larger corporation.

No matter which model you choose, make sure that it aligns with your business goals and the services you offer.

 

4. Choose a Legal Form for Your Business

By incorporating your investment business, you will limit your liability. You can incorporate as a Limited Liability Company (LLC), a C Corporation (C-Corp), or an S Corporation (S-Corp). Or you can operate as a sole proprietorship.

The business structure you choose for your investment business will determine the amount of taxes you pay and which state or federal tax forms you need to file.

Read our article comparing the most common investment business structures.

 

5. Write an investment Business Plan

All investment business owners should develop a business plan. 

A business plan is a document that outlines the goals, strategies, and operations of a business. It can be used to secure funding from investors or lenders, as well as to guide the day-to-day operations of the business. The business plan should include information on the company’s products or services, market analysis, financial projections, and management team among other things.

When developing your investment business plan and strategy, you should think about the following questions your customers might have:

  • What services does your investment business offer?
  • Who is your target market?
  • Who is your competition?
  • What are your unique selling points?
  • What are the risks and challenges associated with your business?
  • How will you generate revenue?

Read our article about how to write an investment business plan.

Create a winning business plan quickly & easily with Growthink’s Ultimate Business Plan Template. Complete your business plan and financial model in hours.

 

6. Apply for the Necessary Permits and Licenses

There may be required licenses and permits you need to obtain before launching your investment business.

For example, if you will be providing financial advice to clients, you will need to follow regulations and obtain licenses from the Financial Industry Regulatory Authority (FINRA).

You should research the specific licenses and regulations required for your business in your state or local municipality.

You must also register your investment business as a legal entity with the state where you plan to do business. You can simply file an online form through your Secretary of State website.

Registering with the federal government is also essential so you can properly pay taxes for your business. You will also need an Employer Identification Number (EIN), which you can apply for at the IRS website, if you plan to hire employees.

Read our article about obtaining the proper investment business licenses.

 

7. Determine Your Budget & Apply for Funding as Needed

In developing your investment business plan, you will figure out how much funding you need to start and grow your business.

If you have your own funds to invest in your investment business, you may consider taking advantage of that. In addition to your personal funds, other forms of potential funding for your investment business include traditional bank loans, SBA loans, credit cards, angel investors and family and friends.

Read our article about the costs associated with starting an investment business to help you determine if funding is needed. 

 

8. Get the Technology & Software Needed to Run Your Business Efficiently

When you start your investment business, it’s essential to have the right technology in place to maximize efficiency. You definitely need a computer with Internet access, and accounting software for tracking expenses and revenues. 

You may also want to invest in other software to help with items; such as portfolio management, market research, and stock trading.

 

9. Market Your Investment Business to Potential Clients

Before you start selling your services, you have to let the world know you exist. The first step is to create a website so people can learn more about your services and how they benefit them.

After you launch your website, start promoting it through social media channels like Facebook, LinkedIn and Twitter. Also consider networking with other people in the investment industry through social media and blogs so they can help share your business. 

You also need to start gathering the materials needed to execute on your promotions strategy, which is your strategy for attracting new customers. Investment businesses should consider the following promotional strategies for which you should start getting prepared:

  • Develop a strong branding strategy so your target market will know who your company is and what it represents.
  • Create informative and helpful blog posts, articles, guides, infographics, etc. that show your target market how your company can help them.
  • Get involved with speaking engagements and industry events to get in front of potential clients.
  • Develop a paid search campaign and start buying ads on Google, Bing and other search engines.
  • Engage in social media advertising on platforms like LinkedIn, Facebook and Twitter.
  • Promote your business through public relations by sending out press releases to local and industry-specific publications.

Read our article about how to market your investment business for more tips.

 

10. Get New Clients & Grow Your Business

When you promote your services, you’ll start to get interest from potential clients

Make sure you’re ready to serve these clients. Also, be sure to establish systems to ensure consistency and reduce costs. And be sure to find and train the right people to help you grow your investment business.

Read our article about how to effectively grow your investment business to learn more.

Create a winning business plan quickly & easily with Growthink’s Ultimate Business Plan Template. Complete your business plan and financial model in hours.

 

Starting an investment Business FAQs

  • The investment business offers many opportunities for entrepreneurs. 
  • With the right mix of skills and experience, you can start a successful investment business that provides valuable services to clients. 
  • There are numerous reasons why starting an investment business can be a great opportunity.
  • You can be your own boss: When you start an investment business, you’re in charge. You get to make all the decisions about how your business will be run.
  • You can choose your own hours: Investment businesses don’t have to stick to traditional 9-5 office hours. You can work the hours that you want, as long as you’re able to meet the needs of your clients.
  • You can choose your own clients: When you’re starting an investment business, you get to choose clients with whom you’ll work. You can decide what types of clients you want to work with and build a business that caters to them.

Starting an investment business from home is a great way to get started with little overhead cost. You can use your home office as your base of operations and meet with clients virtually or in person, whichever you prefer. 

There are a few key ways to market your investment business online:

  • Develop a strong branding strategy so your target market will know who you are and why your company exists.
  • Create informative and helpful blog posts, articles, guides, infographics, etc. that show your target market how your business can help them.
  • Get involved with speaking engagements and industry events to get in front of potential clients.
  • Develop a paid search campaign and start buying ads on Google, Bing and other search engines.
  • Engage in social media advertising on platforms like LinkedIn, Facebook and Twitter.
  • Promote your business through public relations by sending out press releases to local and industry-specific publications.

Here are a few tips to help you get started:

  1. Choose the right business structure: Investment companies can be structured as  partnerships, limited liability companies (LLCs), or corporations. Each business structure has its own advantages and disadvantages, so it’s important to choose the one that’s right for your company.
  2. Get the necessary licenses and registrations: Investment businesses will need to obtain the proper licenses, secure registrations, and research laws via the SEC and other associations.
  3. Choose a niche: It’s important to choose a niche for your investment company so you can focus on a specific target market.

A simple checklist to use when starting an investment business is as follows:

  1. Choose Your Type of Investment Business: This should be based on what you are best at and how much experience you have. Remember to keep your interests, skills, and experience in mind at all times.
  2. Name Your Investment Business: This should be done with care, as your brand is important for attracting the right customers. A simple, memorable name will go a long way.
  3. Choose a Legal Form for Your Business: Whether you choose to become a sole proprietorship, partnership, LLC, corporation or another option will depend on your business. Ensure that you are aware of all the implications of each type.
  4. Determine Your Investment Business Model: Determine how your business will make money. Will you sell products, services, or a combination of both?
  5. Write an investment Business Plan: Your business plan will also help you determine what your start-up costs will be and will provide a roadmap with which you can launch and grow.
  6. Apply for the Necessary Permits and Licenses: In most locations you will be required to apply for a business license and/or permits before you can begin operations.
  7. Determine Your Budget & Apply for Funding as Needed: You will need to know how much money you have to spend on all of your business-related expenses before opening any doors. If needed, apply for a small business loan or other funding options.
  8. Get the Technology & Software Needed to Run Your Business Efficiently: You need to have the right tools in place to succeed. Implement software that will help you manage your time, contacts, and business operations in general.
  9. Market Your Investment Business to Potential Clients: A solid marketing plan will be crucial to your success. It should focus on attracting the right customers so that you can provide them with the services they truly need. 
  10. Get Clients & Grow Your Business: Once you have a solid marketing plan, it's time to actively pursue and secure those who could benefit the most from your services

 

Summary

Investment companies can be a great way to help people grow their wealth. However, it’s important to keep in mind that starting an investment company is a process that requires careful planning and execution. Use the tips and information provided above to help you get started on the right track.

 

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