Capital Allocation Questions Answered
We've spent years working with Australian businesses on their financial structures. These are the real questions people ask when they're trying to figure out where their money should actually go.
Rhett Pemberton
Portfolio Strategist
Most business owners I meet are juggling too many priorities. The trick isn't having all the answers—it's knowing which questions actually matter for your specific situation. Been doing this since 2018, mostly with mid-sized operations in Queensland.
Isla Carmichael
Allocation Advisor
People often ask me about "best practices" in capital deployment. Honestly? What works for one business might be completely wrong for another. I spend most of my time helping clients understand their actual options rather than following generic advice.
Fletcher Donovan
Financial Consultant
Started in corporate finance, moved to advisory work in 2020. The questions haven't changed much—how do I protect what I've built while still growing? There's no magic formula, but there are frameworks that help clarify things.
Common Questions About Capital Deployment
These come up in nearly every initial conversation we have. Your situation might be different, but the underlying concerns are usually similar.
How do I know if my current allocation makes sense?
Start by looking at what's actually generating returns versus what's just sitting there. We typically review three years of data to spot patterns. Sometimes businesses discover they're over-invested in areas that aren't performing and under-invested where opportunity exists.
What's a reasonable timeline for seeing results?
Depends entirely on what you're trying to achieve. Operational improvements might show up in quarterly reports. Structural changes to capital allocation could take 18-24 months before you see meaningful shifts. Anyone promising quick fixes probably isn't being straight with you.
Should I prioritize growth or stability right now?
That's the question, isn't it? We look at your cash position, market conditions, and what keeps you up at night. Most businesses need some combination of both, but the ratio changes based on dozens of factors specific to your situation.
How much should I keep in reserve?
The old rule was 3-6 months of operating expenses. After 2020, many businesses realized that wasn't enough. We help clients figure out their actual risk exposure and what makes sense for their industry. Manufacturing needs different reserves than professional services.
When should I consider external funding?
When your internal capital can't support the opportunities in front of you, or when leverage makes strategic sense. But external funding comes with strings—governance requirements, reporting obligations, exit expectations. We walk through the trade-offs before you commit.
What if my partners disagree on allocation strategy?
Happens constantly. Usually it's because everyone's working from different assumptions about risk tolerance or growth targets. We facilitate those conversations with actual numbers on the table. Sometimes the disagreement resolves itself once everyone sees the same data.
How do I balance reinvestment with distributions?
Classic tension in growing businesses. Owners want returns, but the business needs capital to expand. We model different scenarios—what happens if you reinvest 70% versus 40%? What does that mean for growth trajectory and personal income over three years?
Are there tax implications I should consider first?
Always. Capital allocation decisions can trigger different tax treatments. We're not tax accountants, but we work closely with them to structure things efficiently. Small changes in timing or structure can make significant differences in after-tax returns.
How often should I review my allocation strategy?
Quarterly at minimum for financial performance. Annual deep reviews for strategy. Major changes when market conditions shift or your business hits inflection points—new products, market entry, acquisition opportunities. It's not set-and-forget.
What data do I actually need to make good decisions?
Cash flow statements, balance sheets, and P&L reports are baseline. But we also want to see project-level returns, customer acquisition costs, and operational metrics. The better your data, the more precise we can be with recommendations. Garbage in, garbage out.
Real Situations We've Worked Through
These aren't case studies in the traditional sense—just examples of how different businesses approached their allocation challenges. Names and specifics changed for confidentiality, but the problems and solutions are real.
Equipment vs. Market Expansion
Brisbane manufacturer was torn between upgrading aging equipment or entering New South Wales market. We ran projections on both paths. Equipment upgrade improved margins but capped growth. Market expansion required more capital but opened larger opportunity. They split the difference—upgraded critical equipment, entered NSW with limited product line in 2024. Reviewing results now in early 2025.
Acquisition Opportunity Decision
Sydney consulting firm had a chance to acquire a smaller competitor in late 2024. Numbers looked good on paper, but integration would consume management attention for 12-18 months. We mapped out resource requirements and impact on existing client service. They passed on the deal, focused on organic growth instead. Sometimes the right allocation decision is saying no.
Store Expansion Timing
Melbourne retailer wanted to open three new locations simultaneously in 2025. Cash flow could technically support it, but barely. We suggested staggered openings—test first location, learn from it, then roll out others in late 2025 and early 2026. Less exciting, but significantly lower risk. They're opening location one next month.