Why Would You Invest In Your Business?
You may have noticed that the markets do not stand still. Your competitors want customers – and they may be your customers.
Digital Technology, for example, allows for the ultimate – always on – one to one sales and service.
As you know, Uber has successfully challenged the established taxi markets.
Airbnb has successfully bypassed the established travel and accommodation channels.
You can buy music-track-by-track from Amazon MP3 or iTunes.
Even executive education and professional service providers now use the digital economy to sell and service customers.
For many of us though, digital business is still a new challenge. It requires new skill, new software - and often times, new products and services.
At some point, we face an investment decision.
So, how do we decide if the capital cost of investment – and the time - is worth it?
The short answer is cash flow.
When you invest, you want to know there is a return that makes the investment and the risk worth it.
One way to measure this is to predict the new and profitable sales forward over time – sales that otherwise would not exist - and discount the money value back to the present (Net Present Value or NPV for shorthand).
This will give you a number. You want that number to cover the cost of your capital and give you a return on your investment.
So, if you cannot predict a profitable income stream over time, do not invest.
If you want to work out if you should, please call me on +44 (0)7887513369 or firstname.lastname@example.org for a free and confidential chat.