A corporate investment plan is a tool for helping you realize all those dreams and goals outlined in your vision and business plan. Sometimes you’ll be putting money back into your business, other times you’ll be investing in the open market, and on occasion you’ll do both. Once your business is established and past its breakeven point, it’s all about figuring out where and how to invest to meet your long-term goals and maintain a competitive edge.
However your investment strategy plays out over time, its principal goals are security, liquidity and a positive yield. Getting there, however, is often quite challenging. At a minimum, successful investing requires consistent monitoring and great flexibility. Understanding that cash flow requirements, your risk tolerance level and the economy dictate when and how your plans must change lays the groundwork for a successful investment strategy. Keep one eye on your long-term goals and vision and the other eye focused on what is happening today.
A statement of purpose and prioritized investment goals are common starting points. Together, these elements describe your reason for investing and identify what you intend to do with investment returns. For example, if internal growth is your reason, you might intend to invest in capital assets, employee training and new product development. A statement of purpose and specific, achievable and measurable investment goals should also align with your vision and business plan. To make the strategy achievable, however, goals should extend to a maximum of about five years.
Addressing risk is important to avoid creating an investment strategy -- or putting yourself in a situation -- that decreases chances for long-term follow-through. Addressing risk is no different for a business than it is for personal investing. In addition to your own personal feelings about risk, insurance coverage, the business's current debt situation and cash-liquidity requirements all factor into determining your risk tolerance level.
The plan should also include a list of pre-approved, primary and contingency investments and investing guidelines. Most strategies prioritize specific investments by type -- internal or external -- and safety, liquidity and return. For example, low- to -mid-risk diversified investments might be the most appropriate if your intent is to purchase real estate in five years without having to take out a mortgage. Finally, a good plan includes benchmarks for performance measurements and a pre-established semi-annual to annual strategy review schedule.