1. You Can Keep The Underlying Business Going
Your underlying business is ultimately what’s driving your business’s success; its the engine. Each business needs a particular amount of capital in order to keep operating. Some companies take large risks and it pays off while other companies dwindle or go under. It’s incredibly important to prioritize your underlying business, rather than making aggressive investments in the hopes of growing faster or larger.2. You Can Hold Onto Enough Funds
The amount of capital you have is an important factor when understanding what you can afford. People sometimes see an avenue that can produce large returns or lead to a large market share but underestimate the investment it might cost. Here are a few questions worth considering:- Will you be able to weather the storm until you’re profitable?
- What are the costs you’ll have to bear on a monthly basis?
- Can you afford to add X amount of dollars in overhead or costs?
- In addition to the upfront capital or investment costs, is the potential and probability of success worth the investment?
3. You Can Afford The Opportunity Cost
The opportunity cost to grow comes down to what else you can do with those funds. Are they better used to make a different investment? The potential for a large payoff is exciting, but ask yourself these questions:- Is there a particular part of the business that needs to be improved, enhanced, or upgraded?
- Is there a particular investment you’ve been putting off that you need to make?
- Can you afford to put funds elsewhere, or are there places where you need to invest or allocate resources?
