A lot of money goes into operating a company. Some of the biggest company investments are what make the business operate. These expenses can be different for the same type of company or completely different between industries. These investments can be broken down into different categories, but, again, these categories can change dramatically between industries. However, every company has to make large investments these common items.
Every business, whether it is manufacturer, retailer or service company, must invest a large amount of money in equipment. Even home-based businesses have to invest in computers, fax machines, telephones, office supply and Internet services. Out of all the biggest investments a company will make, the largest during the start-up phase of a company is equipment. Without equipment you will not be able to manufacturer your goods, communicate with your customers, keep track of your inventory or a number other things that assist you in operating your business.
The next largest investment a company will make is employees. Companies require salaries and this can add up quickly. As your company grows, you will begin investing in more help to keep up with the demand. Without employees, even if it is yourself, the company cannot operate.
After investing in equipment and employees, one of the largest investments a company will make is insurance. Every business with at least one employee must maintain worker’s compensation insurance. The company also has to carry liability insurance in case there is an accident. Most companies carry business insurance, fire insurance or some form of damage insurance to protect the company from loss of supplies or machinery. As the company grows, a business will begin to invest in health care insurance for their workers and even life insurance on the business owners.
One other investment that takes a lot of money when a company is growing concerns expansion. As the business starts generating revenue, the need to make more money to keep up with all the expenses will require expansion. This could mean more building space, integrating work scheduler, more equipment, more employees and, of course, more insurance.
No matter how a company looks at investments and what is required to operate the business, these big investment must be made. That is why you need a lot of start-up capital to begin a business and why a lot of companies keep capital on hand in case of any unforeseen investment requirements.