All investing strategies have pros and cons. Take, for example, the stock market: The buying and selling of securities is an established way to make money. But along with the potential quick gains of the stock market comes a lot of risks. Stocks can jump up or take a fast dive in a day. And you, as the investor, have no control over what happens, how it happens or when it happens. It is entirely speculative.

Or, consider real estate: Many fortunes have been made in real estate, and it is a favorite among investors for many reasons. But real estate has its drawbacks. A successful investment in the real estate market requires specific knowledge. Unlike stocks, you cant simply look at the investments history and make an educated guess. You have to know the area, the comparables and the best use. Without this intimate knowledge, investment in real estate becomes a high-risk venture.

And then there are cryptocurrencies, the new frontier. What the future holds for this opportunity is yet to be realized. Weve seen significant advances in cryptocurrency over the past few years, and yet there are already rumors that the market is entering a bubble. As with all other options, theres the potential of making a fantastic return, but theres also a chance of a crash and burn.

With any investment, whether its as old as dirt or new as a snippet of code, the same questions will arise: What is the potential, and what are the risks? This leads us to business opportunities where we ask: Are they a viable investment, and if so, why?

The Business Investment

As a business advisor at a mergers and acquisitions firm, I believe a business opportunity is an often-overlooked investment, but one that can satisfy the unknowns so common to other investment opportunities. The investment in a business is an investment in you.

Buying a business is a way of investing your dollars and your talents. Its investing in your future where you control the variables. A business exists to make money, and it does that actively, by your direct input.

Unlike the stock market, which is mostly speculative, a business has variables that you control. Unlike real estate, a business is not passive, but one in which you actively generate profits. And unlike cryptocurrency, a business has an established system, where proven, specific practices bring favorable results.

When you buy a business, you are buying into yourself. You set the hours, you hire the employees, you create relationships with vendors. You oversee the financials, you make investments in equipment. The success has more to do with your personal innovation, creativity and skill than any other variable.

So how to buy a business that makes a great investment? Here are a few things to keep in mind as you begin your search:

The business must be in demand.

This might seem obvious, but a lot of people run a business because they like doing a particular thing. From my perspective, this is confusing a hobby with a business and is not always a path to success. For a business to be a wise investment, there needs to be a significant demand for its products or services. Yes, find something you like and can pour your heart into, but make sure there is a real and ongoing need for what the business produces.

The business must be improvable or innovative.

You can run a successful business essentially in two ways: improve existing operations or develop an innovative service or product.

Improve: When you buy a business, chances are it will already have things in place to generate profits. But the whole idea of buying a business is to improve it. You take what is currently working and make it better. You might hire some new staff, work deals with vendors, drop one product and start another.

Theres a myriad of things you can do to improve a business. The point is, the improvement is entirely dependent upon you because businesses are about people. Countless people have changed a business operation into something better and generated lots of money in doing so.

Innovate: Developing a new product or service is another way to build a successful business. Anything people want that can be practically produced is a business waiting to happen. Millions of successful businesses have grown out of this basic concept.

What useful product or service needs to be created and sold? How can that be produced efficiently and effectively? The successful Wrigley Company is known for its chewing gum, but that is not how it started. Wrigley sold other products and added a pack of gum as an extra gift. Over time, the owners discovered the popularity of the gum and changed operations to primarily produce gum. It was that decision that turned Wrigley into a household name and a huge success.

The business must be scalable.

Scalability is a phrase thrown around a lot in business circles. Essentially, scalability refers to a businesss ability to grow and then manage that growth. Some businesses are great at being small. They might fit perfectly into a niche market. But for a business investment to make sense, the business must be scalable. If it can be grown, profit will be commensurate with the growth.

If a business buyer plans to grow a business, he or she will want to scale the business over time, expanding into other markets and other regions. This is precisely what makes the investment a sound investment.

Summary

There are many different types of investments, all with pros and cons because of some unforeseen elements. The purchase of a business opportunity, though often overlooked by people planning their financial future, presents a few opportunities to retain control, which makes it an attractive investment. Foremost, however, the business investment is an investment in you as a person. It capitalizes on your direct input to create success. And ultimately, I believe the best investments are always investments in people.

More here:
Why A Business Opportunity Might Be A Wise Investment - Forbes