Best Investment for an Entrepreneur in 2021

Don’t worry this isn’t a new years post about how the best investment in 2021 is in yourself. Although there may be some truth to that common answer I want to take a more objective view about where is the best place to deploy capital in 2021 for your business. 

• Is it in the stock market… ARK ETFs are booming, TSLA, new SPACs?
• Is it in cryptocurrency?
• Is it in precious metals?
• What about wine, art and trading cards?  

All of the above at/near all time highs in terms of their price.

What I would argue is the best place to look is in an asset class that has…

1. Increased in quality in 2020
2. Reduced in cost in 2020
3. Is Low risk & has High probability of a return

My argument for the best investment in 2021 is people… 2021 the best investment opportunity is building your team. 

Currently, we have 30 team members on the payroll and many more working as freelancers with plans for growth in 2021. 

Why do I argue that the best investment opportunity is human capital?

Lets look in more detail at the dimensions that would make it a good investment… quality, cost and risk/reward. 

Increased in Quality in 2020

With the increase in the unemployment rate and significant movement of employees between sectors we have seen an improvement in the quality of available applicants to job postings. 

Compared to other possible investments I can think of few where their quality increased by the amount the available labor pool did. If the quality of the available candidates is correlated to the unemployment rate (obviously a massive simplification) then the quality of the available labour is up 75% compared to this time 1 year ago. 

Source

Reduced in Cost in 2020

As the unemployment rate went up AND people started looking at alternative lifestyle choices…. Working 70+ hour weeks in the city not seeing their family started to not make as much sense. 

People are re-evaluating their decision between money and lifestyle… if you can meet that need with a fliexible employment offer that values them then total compensation does not need to directly compete with their previous roles.

The labour statistics also point to falling wages… 

“In some countries where they are available, labour statistics point to falling wages. In Australia, nominal average wages of workers aged 50 to 59 years old declined by 3.2% between the week ending March 14, 2020 and the week ending June 13, 2020.”

Source

Low Risk and has a High Probability of a Return

This one becomes a little more debatable/unique to everyones situation…if you pay wages and nothing productive gets built then its a complete loss. 

Everyone needs to make this decision on their own and it is outside the scope of this short article. 

My greatest investments have clearly been getting the right managers on the team. 

However, getting this wrong also leads to some serious pain that isn’t just financial. 

Summary and My Take Away:

As a result of this thought process we are ramping up hiring for a few roles (writers, editors and a business manager). These new team members will be tackling a couple new projects and putting some additional horsepower behind some projects that have gained great traction in Q4.