Continuous improvement & ‘Capex investment’ for a small business
Capex investment sounds grandiose, irrelevant for a small business.
What if the same concept was simply described as ‘continuous improvement investment’?
Capex investment refers to the funds a business spends to acquire, upgrade, and maintain itself or its competitive advantages. These investments are typically long-term and essential for the company's growth and operational efficiency.
Where the Money Usually Comes From:
Internal Funds: Profits retained within the company.
External Financing: Loans, bonds
Government Grants: Sometimes available for specific projects or industries.
Equity Financing: where a business raises money by selling shares to investors.
Investors: additional equity injections, or debt financing
Why a Business Does It:
Expansion: To grow the business by increasing capacity or entering new markets.
Efficiency: Upgrading anything at all - tech, process, people - to improve productivity.
Maintenance: Ensuring existing assets remain functional and efficient.
Competitive Advantage: Staying ahead of competitors, protecting a USP, enhancing their playing field
Protection: regulatory Capex is necessary to comply with laws, regulations, and standards set by government agencies or industry bodies such as environmental regulations, health and safety laws, and industry-specific requirements
For a small business, even a company-of-one, these sample principles apply.
Earmark some money from your annual budget and spend it on continuous improvement initiatives.
Don’t hesitate.
And don’t talk yourself out of it once allocated.
You must do this to keep moving forward every year.
Don’t necessarily expect immediate benefit our of doing each one (though some may yield quick and tangible benefit) and keep the cost-benefit analysis snappy and timeboxed. Don’t let not seeing instant and tangible benefit put you off doing them. You may have a mini ‘programme’ where a single improvement may not pay back but a collection of them will.