In great big, sluggish, behemoth businesses the term “capital investment” refers to buying great big things, like buildings. The term is “fixed assets” and covers things like buildings, machinery- stuff that’s going to be around for awhile.
The trouble for most personal-sized businesses is that revenue- if you even want to use that word, I just mean what cash comes in– tends to go directly into one of two places: day-to-day things that just need to happen like getting biz cards printed, or the phone bills, or what have you, or it gets shovelled over, sometimes in a panic, to cover personal expenses like the mortgage and the grocery bills.
Would I be speaking from personal experience? Maybe… 😉
The thing is that even teensy weensy small businesses, the kind called “personal-sized,” still need fixed assets. You need a computer. You might need audio equipment. Or a projector for presentations.
Where does that money come from, if you haven’t had an income spike this month? Especially since those purchases aren’t usually planned-for- they just happen. When the hard drive crashes. When the presentation comes up and you need something in a hurry.
Here’s my two questions for you all:
– Do you plan ahead for capital purchases- like computers and other kinds of equipment?
– Do you save money aside in some way to be able to pay for those purchases, without needing to take a big bite out of your day-to-day expenses?
3 Responses
Okay, I do chunk money aside regularly for “business investments” but not in specific funds.
As for my dearly beloved aging iBook that wants replacing, am kind of going with the “please please please stay alive a little longer” strategy.
Hmm, I guess that’s not a strategy.
Maybe will start a “buy me and my duck a new laptop” fund, but that almost seems like admitting out loud that the dear thing’s days are numbered.
Interesting pattern … thanks, Mark.
(Are you going to share *your* strategy too?)
Ummm… sort of?
I’m a gadget geek and lust after Apple products, so I have to be careful and manage myself. I do keep a wish list of things that I actually need and will eventually have to pay for.
For example, I needed a large screen monitor for my work. I just wasn’t as productive as I could be with my tiny 13″ laptop screen. I didn’t have the money for it, but I’m dead-set against using credit cards unless it’s an emergency (no, a 3G iPhone is *not* an emergency).
I promised myself that with the next project I won I would take some of the money and buy my monitor. It didn’t take too long (that’s saying a lot with my impatient streak).
An ancillary benefit is that I pushed myself a little harder to get that new project.
Do I have money set aside for hard drive crashes or the like? Negative, Good Buddy, the cookie jar is empty.
It’s risky and I don’t like where I am with that, but it’s my reality.
And yes, please share.
Hey hey- I get it, you two. It’s not always easy to do. I wrote an article recently on how to pay yourself first- it’s actually Chapter 13 in The Guidebook.
I wrote this article recently: Paying Yourself First When You Can’t Pay Anything. So, I use a more involved system than the one I list in the article, that includes an extra account.
It helps a lot! What do you think of the article and the approach?