Imagine a scenario where you are given 10 poker chips worth $100,000 each.

You have to decide how many chips to invest in your business and how many to invest in a mutual fund of your choice. Sorry, you can't take the money to buy a house in Hawaii.

We posed this question to a group of attendees at the annual Inc. 5000 Conference in San Antonio last week. It turns out attendees were far more interested in bolstering their business than storing it in a relatively safe mutual fund.

More than one in three (35 percent) said they would invest all 10 chips ($1 million) in their business. And a combined 71 percent said they would invest at least seven chips ($700,000) in their business.

But when it came to mutual fund investing, just 6 percent said they would invest six chips ($600,000) or more.

Asked to back up their reasoning, the vast majority expect an aggressive return on investment (ROI) of between 20 and 40 percent for their business.

Nearly four of every five surveyed (78 percent) expected that level of return, while another 16 percent hoped for a return of 10 to 20 percent.

That's in sharp contrast to the returns expected "from the mutual fund of my choice," as just 2 percent expected a return in the 20 to 40 percent range.

The attendees also were polled on other issues, including their preference for raising capital.

The leading answer was either through investors or through debt, at 38 percent. Through debt was favored by 29 percent, while 13 percent preferred through investors.

It should be noted that two-thirds of those responding owned their business outright, while the remainder had investors.

In terms of how any money raised would be used, there was no dominant answer.

Growing sales channels was cited most often (28 percent), while making an acquisition was second at 18 percent. Building out the management team and developing new products came next, tied at 16 percent.

About 55 people participated in the survey, with the number of answers received varying slightly, depending upon the question.

So what would you do with your chips and why? Please comment; I am curious to know.

Published on: Oct 26, 2016
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