FIXED ASSET INVESTMENTS IN YOUR NEW COMPANY 

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Estimating investment in fixed assets of a new enterprise

Estimating the investment in fixed assets of a new enterprise is an important component of the enterprise's investment plan. Fixed assets are those assets that are used in the production of goods or services, and are expected to have a useful life of more than one year. These can include equipment, buildings, land and vehicles. Here are some steps that can be followed to estimate the fixed asset investment of a new enterprise:

1. Identify the necessary fixed assets: The first step is to identify the fixed assets necessary for the operation of the business. This may include production equipment, delivery vehicles, office buildings, land and machinery.
2. Establish the cost of fixed assets: Once the required fixed assets have been identified, the cost of each asset should be determined. This may include researching market prices for similar equipment, as well as estimating the costs of building construction and renovation.
3. Assess available funding: it is important to assess the sources of finance available for investment in fixed assets. This may include financing through banks, investors, equity capital, among others.
4. Consider additional costs: it is important to consider the additional costs associated with the investment in fixed assets. This may include the costs of maintenance and repair of fixed assets, as well as insurance costs and other operating expenses.
5. Assess the depreciation period: Each fixed asset has a depreciation period, which is the period of time over which the asset is expected to degrade and lose value. It is important to take the depreciation period into account when estimating the long-term costs of fixed assets.

In general, the estimation of investment in fixed assets is essential to ensure that the enterprise has the necessary resources to start and maintain its operations. This includes identifying the fixed assets needed, establishing the costs of the fixed assets, assessing the available sources of financing, and considering the additional expenses associated with the investment in fixed assets.

Types of asset investments that a new company has

A new enterprise may need to invest in various types of assets to start up and operate the business.

Some of the types of asset investments that a new company may consider include:

1. Fixed assets: Fixed assets are assets that are acquired for long-term use in the enterprise. Examples of fixed assets include land, buildings, office equipment and machinery. Investment in fixed assets can be significant for a new enterprise, as significant capital is required to acquire them.
2. Inventory: A new business may need to invest in inventory in order to have sufficient stock on hand to sell to customers. Inventory may include finished goods or raw materials for manufacturing products.
3. Technology and software: Start-ups may need to invest in technology and software to remain competitive and efficient. This may include the purchase of hardware, productivity software, mobile applications, IT security systems and other technology equipment.
4. Marketing and advertising: Investment in marketing and advertising is important to raise awareness of the company and its products or services to potential customers. This may include designing and developing a website, advertising online and in traditional media, and creating promotional material.
5. Training and staff development: A new business may need to invest in training and staff development to ensure that employees have the necessary skills and knowledge to perform their roles successfully. This may include training in sales, customer service, marketing, finance and management.

In general, investment in assets is necessary for a new company to operate and grow. It is important for the company to identify the types of assets needed for its operation and to estimate the costs of acquiring and maintaining these assets. Careful and realistic financial planning can help ensure that the business has the resources to invest in the assets necessary for its long-term growth and success.

How to differentiate between cost, expenditure and investment?

The terms "cost", "expenditure" and "investment" are important in the financial management of a company.

The following briefly explains the difference between these terms and why it is important to differentiate between them:

• Cost: cost refers to the value of the goods or services consumed to produce a good or service. It is a term used in the production process of a company. For example, if a company manufactures bicycles, the cost would be the value of the parts and components used to produce the bicycle.
• Expenditure: expenditure refers to the outflow of money from the enterprise in a given period. Expenses are necessary to keep the company running and are deductible from taxable income. For example, office rent or employee salaries are examples of business expenses.
• Investment: investment refers to the outflow of money from the enterprise into an asset that is expected to generate income or profit in the long term. Investments can be in fixed assets (such as the purchase of property or equipment) or in intangible assets (such as the creation of a brand or the development of software). Investments are important for the long-term growth and development of the enterprise.

It is important to differentiate between these terms because each has different financial and tax implications. For example, costs and expenses are subtracted from revenues to determine the company's profit, while investments are treated as capital expenditure and depreciated over their useful life. Furthermore, costs and expenses are current expenses, whereas investments have a long-term impact on the company.

Examples of estimating the investment in fixed assets for a new enterprise

Here are some examples of estimating the investment in fixed assets of a new business:

1. Restaurant: A new restaurant will need kitchen equipment, furniture and fixtures, and a point-of-sale (POS) system to operate. For example, investment in kitchen equipment could include ovens, cookers, freezers and other specific food preparation equipment, while investment in furniture and fixtures could include tables, chairs and cutlery. The total cost of fixed assets will depend on the size of the restaurant and the number of diners it can accommodate.
2. Factory: a new factory will need production equipment, machinery and vehicles to operate. For example, investment in production equipment might include specific machinery for the production of goods, while investment in vehicles might include delivery trucks. The total cost of fixed assets will depend on the type and amount of machinery and equipment needed for production.
3. Advertising agency: a new advertising agency will need office equipment, design software and computer hardware to operate. For example, investment in office equipment might include desks, chairs, and other office supplies, while investment in computer hardware might include desktop and laptop computers, and in design software might include graphic design programs. The total cost of fixed assets will depend on the size of the agency and the number of employees it has.

In general, investment in fixed assets will depend on the type of enterprise and the specific needs of the enterprise to operate. It is important to identify and estimate the costs of the required fixed assets and to consider the additional expenses associated with their acquisition and maintenance. Investment are all the resources (+) I need to achieve in order to make my business work in the long term. Assets that I am going to keep for more than one year. They are different from costs, which are resources that I need in the short term for the day-to-day running of my business.

Classify your project's investments from different points of view

There is no single classification, nor is there a single best classification.

There are several, all valid and useful depending on the context.

ACCORDING TO THE TIME HORIZON:

1. Short term: Less than 1 year.
2. Medium term: Between 1 and 3 years.
3. Long term: More than three years.

DEPENDING ON THE ELEMENT IN WHICH IT IS INVESTED:

1. Machinery: Tractors, robots, packaging machines...
2. Raw materials: Metals, food, fuel...
3. Transport elements: Vans, trucks, cars...
4. Buildings: Industrial warehouses, offices, commercial premises...
5. Investment in equity investments in other companies.
6. Investment in research and development (R&D).

ACCORDING TO THE SCOPE OF THE INVESTMENT:

1. Business.
2. Staff.
3. Financial.

ACCORDING TO THE NATURE OF THE INVESTING SUBJECT:

1. Private.
2. Public.

VARIABLES THAT WE MUST ANALYSE IN EACH INVESTMENT OF OUR COMPANY. WHAT WE GAIN, WHAT WE COULD LOSE AND TIME:

1. Performance: return is what we get in return for making the investment. It is usually measured in terms of profit or return, or cost savings or competitive advantage.
2. Risk: refers to uncertainty, nothing is 100% certain and therefore we must always work with acceptable risks in case the investment does not turn out as expected.
3. Recovery period: the time it will take to achieve sufficient benefits or savings.

HOW DO YOU KNOW IF ONE INVESTMENT IS BETTER THAN ANOTHER?

It will depend on the preferences of each entrepreneur, some will consider a return of 50% to be very good and others will settle for 10%. Moreover, we must also take into account risk aversion and one's patience or impatience (time horizon). There are various methods to compare different investments monetarily. For example: Internal Rate of Return (IRR)Pay-Back Net present value (NPV)Discounted cash flow Discounted risk-return ratios Valuation ratios: ROCE, ROE, ROI, PER or BPA.