Capital investment is a very important factor in the health of the economy. When business owners look to invest in capital, it means they are confident in future plans that can grow their businesses by improving existing productive capacity. But for some businesses, it seems easier said than done. Access to capital is one factor that holds back most businesses. Even businesses with a great idea and strong business plan can be hindered by insufficient capital to stimulate growth. As your business starts to gain balance and enough revenue, you might get overwhelmed with a number of possibilities. Should you start investing in new equipment for your business? Or make improvements to human resources? Really, when it comes down to it, you just need to do in depth research for your investment decisions, and you can’t really go wrong.
When it comes to investing in equipment, the available options can be practically limitless, taking full advantage of new technology or advancements in equipment or machinery can help make a big difference in your short-term profitability as well as long-term potential.
PRIORITISING INVESTMENT IN NICHE EQUIPMENT
Your business might rely on niche equipment to continue operations and when it comes to making decisions on how to invest in niche equipment, you need to think about short-term and long-term goals. When it comes to niche equipment, some businesses can be capital intensive and may need different kinds of equipment, a few examples include:
- An accounting firm may require substantial capital investment in binder machine, laminator machine or other automated machinery.
- A food manufacturing company that needs printing machine for food labels.
- A large manufacturing facility that requires barcode printer or other technical hardware to offer services.
A practical approach you could employ regarding niche equipment is to focus on repairing what’s broken before improving on what already exists. For example if your business involves brochure printing and you’re struggling with an unreliable printer, it would be wise to upgrade that first rather than purchasing a new photocopier so you can add photocopying to your services.
INVESTMENT IN HUMAN CAPITAL
Human capital is an intangible asset and includes things like employee’s experience and skills. Considering the fact that all labor is not equal, the best long-term and short term investment for small business maybe in human capital – this involves hiring valuable skills, training or educating the people you already have on board. The more efficient your team is, the more chances your business has to succeed.
Human capital has been seen to have a strong relationship with economic growth, productivity, and profitability. This relationship can be quantified by how much investment is poured into people’s education. Providing career advancement opportunities for your workers and investing in their development gives them a reason to be focused at work. More than 60 percent of workers expect career development from their employers. In order to maximise the return on your human capital investment, your business has to spend money on improving its workers, so it is of great importance to not overlook this system.
Notwithstanding, every business is unique, with different needs, customers and available amount of money to spend. It’s going to be impossible to give specific advice on purchasing to every business. Instead, you should determine your needs, your wants and what’s going to help make the best long-term impact for your company.
INVESTMENT IN BRAND EQUITY
Brand equity describes a brand’s value and is determined by consumer perception and experiences with the brand. A brand encompasses the name, logo and image that identify a product or service. Investment in brand equity is a long term process with the sole purpose to acquire a lifetime customer that is loyal to your brand. It takes shape in various forms of advertising like building signage, product placement, and banners which are effective ways to drive foot traffic and communicate with customers. It also plays an important role in marketing because consumers’ knowledge about a brand also affects how manufacturers and advertisers market the brand.
For example, if a brand is not popularly known, a higher amount of investment and support will be needed to generate awareness and affinity. When successful, these investments appreciate through economic growth in profit margins, market share, prestige value, and critical associations. When a company has positive brand equity, customers willingly pay a high price for its products, even though they could get the same thing from a competitor for less. If you want to operate a successful retail business that attracts customers and drives sales, then you need to get noticed, and that usually starts by employing the right branding strategies.
INVESTMENT IN BUILDING
Commercial real estate is one of the best investments one can ever make. Owning a commercial property is a decision that should be analysed very carefully, but when done right, the potential rewards can be great. The word “commercial” is applied to any property that has the potential to grow, expand or support your business. It can be general purpose offices or buildings, medical offices, malls, stores and more. You could lease them out to companies and small business owners, who would pay you rent to use the property. Considering these options, there are many reasons to invest in such an opportunity, and this is a chance that shouldn’t be missed to build equity and make your expenses more predictable. It also provides an opportunity to show off your brand and establish the personality of your business for everyone to see. This can lead to greater stability in cash flow, and even protect you when rental rates decline.
Investment in any form of capital comes with some challenges and it can lead to business problems if not handled wisely, so it is crucial to adopt effective growth strategies that will help boost your overall business productivity. By maintaining, customising and improving the quality of your property, your business can attain balance and be strengthened.