Planning and managing your capital expenditures (CAPEX) is a challenging task. It can be particularly difficult during a worldwide pandemic. As demand for broadband increases, you may face tough decisions: Do you focus on strategic growth or tactical maintenance? Do you seize opportunities outside your footprint, or secure your current network and customers? How can you balance both, or do you? All of this while funding and ensuring the safety of your employees and customers. Here are a few guidelines to optimize your CAPEX planning:
1. Drop the mentality of “Let’s build/upgrade first and then customers will come”
You need to plan strategically from the start by specifying your business goals. Then focus on ROI when evaluating your CAPEX. Ask yourself, “Will my investments in equipment and technology to support current network maintenance result in higher return? How can I get more value out of unlit or underused network assets? Will this new build project bring more customers, higher revenues, and increased net income?” To answer these questions, include other teams—financial, marketing, sales, etc.— to create a rounded, value-added, and customer-centric plan. It will pay off.
2. Distinguish timeline
Prioritize your projects and create a timeline that lays out those plans. It is important to take into account such factors as: the span of construction season in your markets; effects of Covid safety measures on project timelines; timeframes for getting equipment and other materials from vendors for your network upkeep and build; etc.
3. Secure the capital
Complete a cost-benefit analysis and risk assessment, and identify metrics to track each project. It is a good idea to establish a reserve fund for unexpected projects that come up throughout the year. Prioritize your projects and make each project leader accountable for meeting your set business goals.
4. Document, track, learn
Even with proper planning, things happen: Some projects deliver forecasted business benefits, while others fall short. It is important in a planning stage for the next fiscal year to go back and learn. To do so, document your goals and metrics, track them, and evaluate what was successful and what went wrong, and why. Learn from your mistakes so you don’t repeat them each time.
Although there is a lot involved in evaluating capital expenses, the final payoff will be worth it. By following best practices, you will bring stability to your business while looking forward to new growth opportunities.
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