August 2020 - 30

MANAGEMENT
EXPENDITURE DECISIONS
DURING TIMES OF UNCERTAINTY, e.g., COVID-19
MAKING CAPITAL
Where and how you decide to invest within your business will determine its success tomorrow.
BY KEVIN SHORT, ADAM VANWINGERDEN AND STEPHEN VANWINGERDEN
I
f you are an owner or manager of a business, you are likely an operator
and an investor. As an investor, you decide what to do with the capital
you have. Should you: 1) keep it in cash, 2) reinvest in your business or
3) return it to shareholders? Alongside day-to-day management, deciding
what to do with the capital available to you drives the success of your
business. Consider this quote from Warren Buffett:
The lack of skill that many CEOs have at capital allocation is no
small matter: After 10 years on the job, a CEO whose company
annually retains earnings equal to 10% of net worth will have been
responsible for the deployment of more than 60% of all the capital
at work in the business.
Your investment decisions today will determine your success tomorrow.
Our goal in writing this article is to begin a discussion on how our industry
can evaluate capital expenditure decisions during times of uncertainty.
UNCERTAINTY
For the past few months we have discussed COVID-19, but before
COVID-19 we had tariffs, healthcare policy, tax policy, the 2016 election
and the upcoming 2020 election all threatening to change the business
environment. The future for business is rarely clear. So, what should you
do when you are not sure what the future holds? How do you decide
whether to go forward with a planned investment when COVID-19 strikes?
30 AUGUST 2020 GPNMAG.COM
We posit three categories to consider before making a capital
expenditure decision during times of uncertainty:
* Technicals: Know your numbers.
* Emotion: Understand yourself.
* Tools: Apply technicals and limit the impact of your emotions.
The two biggest barriers to
good decision making are your ego
and your blind spots. Together,
they make it difficult for you to
objectively see what is true about
you and your circumstances and to
make the best possible decisions by
getting the most out of others.
- Ray Dalio, Founder of Bridgewater Associates

http://www.GPNMAG.COM

August 2020

Table of Contents for the Digital Edition of August 2020

August 2020 - 1
August 2020 - 2
August 2020 - 3
August 2020 - 4
August 2020 - 5
August 2020 - 6
August 2020 - 7
August 2020 - 8
August 2020 - 9
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August 2020 - 52
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https://www.nxtbook.com/greatamericanmediaservices/GPN/big-grower-july-2023
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https://www.nxtbook.com/greatamericanmediaservices/GPN/big-grower-january-2023
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https://www.nxtbook.com/greatamericanmediaservices/GPN/september-2022
https://www.nxtbook.com/greatamericanmediaservices/GPN/august-2022
https://www.nxtbook.com/greatamericanmediaservices/GPN/big-grower-july-2022
https://www.nxtbook.com/greatamericanmediaservices/GPN/july-2022
https://www.nxtbook.com/greatamericanmediaservices/GPN/june-2022
https://www.nxtbook.com/greatamericanmediaservices/GPN/may-2022
https://www.nxtbook.com/greatamericanmediaservices/GPN/big-grower-april-2022
https://www.nxtbook.com/greatamericanmediaservices/GPN/april-2022
https://www.nxtbook.com/greatamericanmediaservices/GPN/march-2022
https://www.nxtbook.com/greatamericanmediaservices/GPN/february-2022
https://www.nxtbook.com/greatamericanmediaservices/GPN/cannabisguide-2022
https://www.nxtbook.com/greatamericanmediaservices/GPN/hempguide-2022
https://www.nxtbook.com/greatamericanmediaservices/GPN/newvarieties-2022
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https://www.nxtbook.com/greatamericanmediaservices/GPN/june-2021
https://www.nxtbook.com/greatamericanmediaservices/GPN/may-2021
https://www.nxtbook.com/greatamericanmediaservices/GPN/april-2021
https://www.nxtbook.com/greatamericanmediaservices/GPN/big-grower-march-2021
https://www.nxtbook.com/greatamericanmediaservices/GPN/march-2021
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https://www.nxtbook.com/greatamericanmediaservices/GPN/july-2020
https://www.nxtbook.com/greatamericanmediaservices/GPN/june-2020
https://www.nxtbook.com/greatamericanmediaservices/GPN/may-2020
https://www.nxtbook.com/greatamericanmediaservices/GPN/april-2020
https://www.nxtbook.com/greatamericanmediaservices/GPN/californiaspringtrials-2020
https://www.nxtbook.com/greatamericanmediaservices/GPN/big-grower-march-2020
https://www.nxtbook.com/greatamericanmediaservices/GPN/march-2020
https://www.nxtbook.com/greatamericanmediaservices/GPN/february-2020
https://www.nxtbook.com/greatamericanmediaservices/GPN/cannabisguide-2020
https://www.nxtbook.com/greatamericanmediaservices/GPN/hempguide-2020
https://www.nxtbook.com/greatamericanmediaservices/GPN/big-grower-january-2020
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