Major Purchases and Projects

From time to time, every business owner wrestles with the question of whether it's time to make a major purchase, or to undertake an expensive, lengthy project. Depending on the size and type of business you own, you might have to decide things like whether to purchase a new car or truck, upgrade your computer system, hire a new employee, redecorate your retail store, undertake a major expansion, or even buy another related or unrelated business.

You can, of course, make this kind of decision based on your gut feeling that the time is right and that it will be "good for business." In some cases, such as when you're replacing essential equipment that is no longer functional, it's probably appropriate to go with your gut-level feeling. But in many other cases, when the purchase or project costs a significant amount of money or will serve you for more than a year, it's worthwhile to take the time to evaluate the costs and benefits of the project, and even do a little number-crunching (perhaps with the aid of your accountant).

• How can you make an objective decision to proceed with your major purchase? We'll show you how to judge the value of your project by considering all the benefits of the project, by considering all the costs, by creating a projected cash flow statement that quantifies costs and benefits and places them in a correct time frame, and by using financial analysis to determine if the project makes sense over the long haul.
• Once you decide to do the project, we'll give you some tips on the best way to accomplish your project, including issues like deciding to buy or lease, or how to finance your project.