Capital Investment Decisions
Business owners in growth business have an addition burden placed upon them when deciding where their hard earned profits go. Depending on where they are in personal life financially they must balance between investing in their business to support their growth vs savings to achieve personal financial goals. It's a delicate balance that can only be answered thru a thorough understanding of BOTH the business and the details of the business owners personal needs/goals. However, capital deployment should ALWAYS be highly dependent on what the Return on Investment (ROI) is and the risks (ie risk/return). True things like diversification of assets should and does play a role--an owners should have all his money wrapped in only his business for example in the event something goes wrong. Having said that, if the return of investing in capital equipment in your business is better than a return elsewhere given the same level of risk then thats where capital should be deployed. Only thru the efficient deployment of capital can a business maximize profits. For business owners deciding where to deploy free cash flow that decision has to be taken in context of returns for alternative investments as well. To gain from our insights please contact us or sign up for email updates via https://www.charlotteconsultantservices.com/news-update.