To Buy or Not To Buy?

Capital budgeting doesn’t have to be an agonizing chore.These three easy steps can help retailers evaluate the financial impact of capital purchases.   

How do you decide whether or not to spend a lot of money? Not on the kind of things that translate easily into profits, such as inventory, but on other things necessary to your business such as new registers, a computer, a delivery vehicle?  The immediate benefits are clear, but how do you measure the financial advisability of making that purchase—or when to make it? 

The items mentioned above, and others like them, are called Fixed Assets. They can range from desks and data-processing equipment to entire buildings, and can cost any amount.

Obviously, purchasing fixed assets is not a matter to be taken lightly. It represents a commitment of your company’s resources that may reduce financial flexibility and profitability.

Imprudent decisions can quickly become the root of a troubled business. But, as with most anything, there is much you can do to increase the odds of making a better decision!

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