Controlling your business’ expenses means managing two types of expenses: operational expenses, which are spent regularly on assets that are consumed quickly, and capital expenses, which are spent less frequently on durable assets and improvements. Managing operational expenses is critical for your business’ tactical plan but managing capital expenditures (often abbreviated CapEx) is critical to a successful execution of your strategic plan.
If your business assets include one or more industrial buildings, you need to incorporate industrial roof replacements into your CapEx plan.
Why Your Business Needs a CapEx Plan
Everybody knows that they need to plan for operational expenses. Operational expenses demand your attention, and if you don’t meet them, your business will fail.
However, capital expenses can sneak up on you. Your business has many assets that you just count on being there. You assume that you will be able to use them reliably. However, every capital asset experiences wear with use or will degrade with exposure to the elements or just time. Even with regular maintenance, a major breakdown or failure is inevitable, and when it happens, the expense can be very great, with the potential to overwhelm your operating budget. If you aren’t planning for them, capital expenditures can bankrupt your business.
Nor are capital expenditures just about maintenance. You have to factor in room for capital improvements that can upgrade your business’ capacity, efficiency, and competitiveness. Without a CapEx plan, it’s hard for businesses to balance maintenance expenses and improvement expenses. Businesses often either spend all their capital budget on the shiniest new upgrades and find themselves short of cash when a major maintenance expense arises, or they are spending all their budget on maintenance and never find the cash for the upgrades they need to stay competitive. Having a CapEx plan will help you balance these competing priorities.
Building Your CapEx Plan 
Before you can incorporate roofing into your CapEx plan, you need to build your plan. Here’s a brief guide to building a successful CapEx plan.
- Define Assets: Start by compiling a list of your business’ capital assets with their valuations. The Internal Revenue Service (IRS) defines this category as “tangible property,” regardless of its size, but distinct from “materials and supplies.” For each asset, create a schedule of expected expenses, dividing them into “deductible repairs” and “capital improvements.” Roofing repairs and/or replacement is typically a capital improvement because it relates to the building structure, though minor repairs and maintenance expected to be performed more than once during a 10-year period may be exempt.
- Collect Departmental Input: In the process of defining assets and likely expenses, make sure you’re communicating with people that have direct knowledge of each asset. Connecting with people who work directly with the assets in question will ensure that your schedule of expected expenses is as accurate as possible.
- Implement a Budget Limit: Incorporate capital expenses into your budget. Subtract your operational expenses from your revenue and what you’re left with is the maximum you can afford for your CapEx budget. No room for profits? Maybe not, but hopefully you can build them back in during the next step.
- Prioritize Projects: Once you have all your CapEx defined, divide them into funding tiers. Although people give them different names, they always break down into basically these categories:
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- Need now: These are essential CapEx that you must undertake during the current fiscal period.
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- Need later: These are essential CapEx that are upcoming in future fiscal periods.
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- Nice to haves: These are CapEx that will improve your competitiveness and/or profitability that should be funded as possible.
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- Dubious investments: These are CapEx that are neither necessary nor proven value adds. Don’t fund these until you can prove their value.
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- Profits: Once you have funded all your “Needs,” you can balance your “nice to haves” against potential profits.
- Build a Timetable: Now it’s time to build your budget into a timetable that ensures you are ready to pay for each “Need later” when it becomes a “Need now,” and hopefully add in some of those “Nice to haves” in the coming years.
- Monitor, Review, and Adjust: Keep track of how well your CapEx plan translates into reality and adjust it accordingly. As you dial in the numbers, you will see significant improvement in your business’ financials.
How to Incorporate Roofing into Your CapEx Plan 
As we mentioned earlier, roofing is always a capital expenditure, per the IRS definitions. It also always falls into either the “Need now” or “Need later” category. To successfully incorporate roofing into your CapEx plan, you need to track asset categories separately. Each category needs to reflect the uniqueness of the assets within it but give you uniform, comparable outputs: a combined assessment of risks, costs, and benefits associated with the CapEx in it. Check out our blogs about managing a roofing portfolio, such as this one about prioritizing roof work across multiple industrial properties, to get a good idea of how to express these factors for roofing. Then perform a similar analysis for your other asset categories to get an effectively balanced plan.
How Haselden Commercial Roofing Can Help
Haselden Commercial Roofing can’t help you put together your CapEx plan, but we can make sure that you have accurate data about all the roofs in your portfolio. We can perform thorough commercial roof inspections so that you will know what capital expenditures you can expect for each roof and when. These numbers can help you prioritize roofing against other aspects of your CapEx plan.
We’re committed to becoming your dedicated roofing partner. Building a long-term relationship with a roofing company offers several benefits for your company. You will know that your roofing company understands your properties and your priorities. This will ensure that all work is conducted in accordance with your company’s strategic plans, protecting your cashflow to reserve space in your budget for the rest of your CapEx needs.
Haselden Commercial Roofing is a subsidiary of Haselden Construction, a third-generation family-owned company that’s been serving Denver and the Rocky Mountain Region for over 50 years. They built their reputation on producing exceptional quality builds, and they stake that reputation on every job. Our affiliation with them is not only a promise of quality but also means that we have access to a broad range of expertise so that we can keep all work in-house, which lets us deliver work with faster turnaround times and no difficulties related to tracking down additional contractors. Plus, it lets us offer highly competitive pricing.
Contact us today to schedule a roof assessment by Haselden Commercial Roofing for your warehouses and industrial facilities in Denver or elsewhere in the Rocky Mountain region.
Capital Expenditure Planning for Industrial Roof Replacements: Frequently Asked Questions
What is the difference between operational expenses and capital expenditures?
Operational expenses (OpEx) are regular costs for things that are used up quickly, while capital expenditures (CapEx) are less frequent investments in durable assets and improvements. Managing OpEx supports a business’s short-term, tactical plan. Managing CapEx is essential to carrying out its long-term strategic plan.
Why does a business need a CapEx plan?
A business needs a CapEx plan because every capital asset wears out over time, even with regular maintenance, and major failures can be expensive enough to overwhelm an operating budget. Without planning, these costs can catch a business off guard and threaten its financial health. A CapEx plan also helps balance maintenance spending against capital improvements that increase capacity, efficiency, and competitiveness. Without one, businesses often overspend on upgrades and come up short when major maintenance projects arise or spend everything on maintenance and fall behind competitors.
How do you build a CapEx plan?
Building a CapEx plan involves six steps:
- Define assets: List all capital assets with their valuations and a schedule of expected expenses for each.
- Collect departmental input: Consult the people who work directly with each asset to improve cost estimates.
- Set a budget limit: Subtract operational expenses from revenue to find the maximum available for capital spending.
- Prioritize projects: Sort capital expenses into funding tiers.
- Build a timetable: Schedule funding so each future need is paid for when it becomes current.
- Monitor, review, and adjust: Compare the plan to actual results and refine it over time.
How should capital expenditures be prioritized?
You can prioritize capital expenditures into funding tiers:
- Need now: Essential projects that must happen in the current fiscal period
- Need later: Essential projects due in future fiscal periods
- Nice to haves: Projects that improve competitiveness or profitability, funded when possible
- Dubious investments: Projects with no proven necessity or value, which shouldn’t be funded until their value is shown
Once you fund all needs, you can weigh nice-to-have projects against profit goals.
Is a roof replacement a capital expenditure?
A full industrial roof replacement is generally treated as a capital improvement under IRS tangible property rules, because replacing a roof restores a major component of the building. Smaller roof repairs, such as fixing a leak or replacing a limited section, may qualify as deductible repairs instead. How a specific roofing project is classified depends on its scope and the business’s circumstances, so businesses should confirm treatment with a tax professional.
Where does roofing fit in a CapEx priority list?
Roof replacement belongs in either the “Need now” or “Need later” category of a CapEx plan, because a building’s roof is essential to protecting the facility, its equipment, and its operations. It is never an optional upgrade. The key planning question is when a roof will need replacement, not whether it will.
How do you incorporate industrial roofing into a CapEx plan?
To incorporate industrial roofing into a CapEx plan, track roofing as its own asset category with a combined assessment of each roof’s risks, costs, and benefits. That assessment should reflect each roof’s unique condition but produce comparable outputs, so you can weigh roofing needs against other asset categories. Applying the same kind of analysis to every asset category results in a balanced CapEx plan.
How can roof inspections support CapEx planning?
Professional roof inspections support CapEx planning by providing accurate data on each roof’s condition, expected remaining life, and likely repair or replacement costs. With that information, businesses can predict when each roof will need capital investment and prioritize roofing projects against other capital needs.
What are the benefits of a long-term relationship with a roofing contractor?
A long-term relationship with a roofing contractor means the contractor understands a company’s properties and priorities. This helps ensure roof work is scheduled and carried out in line with the company’s strategic plan, which protects cash flow and leaves room in the budget for other capital needs.
Who provides roof assessments for CapEx planning in Denver and the Rocky Mountain region?
Haselden Commercial Roofing provides commercial roof inspections for warehouses and industrial facilities in Denver and throughout the Rocky Mountain region. We can give businesses the data they need to plan roofing capital expenditures. Haselden Commercial Roofing is a subsidiary of Haselden Construction, a third-generation, family-owned company that has served the region for over 50 years. The affiliation gives Haselden Commercial Roofing access to a broad range of in-house expertise, which supports faster turnaround, no need to coordinate outside contractors, and competitive pricing.
