Investment v costs

Posted on 20th December 2023 by Streets Business Support


Image to represent Investment v costs

There are two ways to consider the effects or benefits of business and personal expenditure.

The payment of rates or utility costs are an essential part of our daily expenditure, but it would be difficult to view them as an investment.

Whereas the cost of building a new online sales platform for your business may open up the prospect to win additional sales for your business or additional income for your family finances. But the costs of the build are a real expense.

Any costs that you undertake that will have a direct impact on improving your financial situation should be considered an investment rather than an expense.

Having made this distinction, it makes sense, when you are considering cost cutting or planning your finances, to protect investment costs and see if you can reduce those costs that are not going to have a direct, positive influence in 2024.

In certain cases, the two distinctions may rub shoulders with each other. For example, investing in solar technology, while not impacting your ability to earn more, may help you reduce your ongoing electricity costs.

If we are to recover from the economic challenges of the past few years, we must address a more considered reclassification of our planned outgoings.

Be wary of reducing investment expenditure.

Other aspects of your expenditure that will also need consideration in this exercise could include:

  • Will an investment in a new piece of plant really have a positive impact on your sales or could the expenditure be deferred until trading conditions improve?
  • Do you really need to change your car? It may get you from A to B more comfortably, but it will likely use financial resources that may be more profitably employed in improving productivity and sales/income.

Trimming costs or expenditure that will have little impact on your future financial prospects makes sense.

Trimming “investment” costs that could have a positive impact makes less sense.

We recommend that your take this distinction into your planning for 2024. And if you need help creating plans, pick up the phone. We can help.


No Advice

The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.

Information

The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.


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