Factors Determining Fixed Capital Requirements

Not all fixed capital budgets are the same nor are they all fitted squarely into any particular frame where one budget fits all. There are several factors that play a defining role in the eventual fixed capital required for any endeavor. The following are some of the factor that may contribute in some way to the amounts required within the fixed capital frame: The nature of the business entity is one of the dictating factors that will affect the fixed capital. Within the platform there are several smaller considerations to be taken into account such as the size of the business entity, the products it will be dealing in, the type of production processes and may other defining elements that constitute the smooth running of the business entity. The size and commitment towards the business idea is also something that will be formed based on the fixed capital available. For some this is not really a major issue as there would be room for expansion considerations when the business eventually makes good percentages of profits. While for others having too small a fixed capital budget, would not make the business entity something viable and worth considering. Therefore the fixed capital very much dictates the eventual positioning of the business entity. The stages the business progresses and the corresponding speed involved are also dictated by the fixed capital involved. This also applies to the business entity that is focused very much on expansions that will bring in the added revenue to the company which needs a lesser fixed capital when compared to a company that is just starting out its business endeavors. Ideally the fixed capital should be able to accommodate all phases of the business entity without having to make compromises which may eventually affect the overall performance and projections first drawn up.