Capital investments to grow your business
Investing in property and technology is key for small business success.
To grow your small businesses, you will likely need to make capital investments to buy fixed assets such as real estate or machinery. Capital investments are not designed to cover your business's operational expenses but to further its long-term objectives.
Capital investment #1: Your property
With lower interest rates and rising rental costs, now is the perfect time for you to invest in property and real estate, says Kurt Westfield, co-founder and managing director of WC Equity Group in Tampa, Florida.
"Investing in real estate is an opportunistic asset," Westfield says. "The property itself has the capacity to grow as the business grows, or sustain as the business becomes stagnant."
Consider your available capital, ability to leverage lenders, and national economic indicators before making a property investment decision.
Capital investment #2: Your technology or operations
Investing in technology or operations can increase efficiency and output.
"Technology today is a game changer," says Mark Sobczak, partner-in-charge of professional services firm Sikich's Milwaukee office. "It's something every business needs to look at from the standpoint of not only serving customers in the best way possible, but also doing that in the most cost-effective way by making their internal systems as efficient as possible."
Manufacturing, distribution, and retail businesses can benefit from operational upgrades, whether it's new machinery and robotics, or software and scanning systems. Investing in new technologies can streamline your operations without hiring additional staff.
Boosting your product or service
Smart capital investments can lay the groundwork for improvements. If your business has stagnated, enhance your product or service by investing in additional research and development or extending into a new market. When you understand your business's financials and are aware of what you have and haven't done well in the past, you can benchmark your company against the industry.
This understanding of your finances can help you make more informed decisions about your approach to sales, marketing, and customer service.
Making and financing your investments
Having a clear business plan and understanding what returns an investment might provide is key to making capital investment decisions. Understand your business's financial history and build a good relationship with your local bank early on, ideally one to two years before you plan to make any major investments, Sobczak says.
Financing your capital investments and improvements depends largely on the size of your business and your industry. You can choose from several comprehensive options, including banks and other financial institutions, as well as microlending, angel investing, and crowdfunding, which tend to work well for smaller "mom-and-pop" businesses.
Lay the groundwork for your business's long-term success by building a strong relationship with your local bank and making smart investments in your property and technology, as well as in your and product or service.