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Expert Answers to Biz Questions
Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
What Should You Consider When Purchasing Equipment for a Business?
For many businesses, equipment makes or breaks their operations. If you run a business in which you rely on a particular piece of equipment, knowing how to shop for and purchase it is half the issue.
Why Equipment Purchases Matter
If your business uses equipment – particularly heavy machinery – as part of its regular operations, you have a responsibility to maintain and manage it in a disciplined and forward-thinking manner. Part of this means being prepared to replace existing equipment or purchase new equipment before the current machinery breaks down or becomes obsolete.
Having the right equipment in the proper working order is more important than most people realize. It has an impact, whether direct or indirect, on numerous areas of your business, including:
- Supply chain efficiency
- Quality of products
- Profitability and cash flow
- Brand reputation and customer satisfaction
- Employee safety
The list could go on. Depending on what line of business you’re in and how you use a particular piece of equipment, you may rely on it to an even greater degree.
The point is, there’s too much on the line to take an equipment purchase lightly. You need to do your due diligence, look at the decision from all angles, and make a selection that’s going to benefit your business both now and in the future. A scope that’s too narrow will hurt in the years to come, while a scope that’s too wide may affect your operations in the present.
How to Make a Smart Purchase
In industries where equipment and heavy machinery last for years at a time, the process of buying new equipment is often foreign and unfamiliar. If you find yourself in a situation like this, the following tips may prove useful:
1. Start With a List of Needs
Don’t do anything until you’ve developed a list of your equipment needs and wants. There’s obviously a difference between the former and latter, so be sure to differentiate between the two. Start your shopping/search process by looking for equipment that satisfies all of your needs. Then refine your search based on the wants.
2. Set a Budget
While many businesses set a budget from the start, it’s better to wait until after you’ve started the search process to zero in on a price range. This allows you to see what’s on the market, how much the features and options you need really cost, and what sort of flexibility there is.
3. Find a Vendor You Can Trust
It’s not just the equipment you’re buying. In essence, you’re also buying the vendor selling the equipment. If you want dependability, you must be able to trust the vendor.
When searching for a vendor you can trust, look for companies that understand what they bring to the table. Take Dalmec, an Italian supplier of industrial manipulators and lifting equipment, as an example. Part of their guarantee to customers has to do with their years of experience in the industry, high-quality standards, and desire to work closely with each client to ensure customized results.
Find a vendor who can offer you benefits and value-adds like this.
4. Consider Used vs. New
One of the big debates you’ll come across is whether to buy used or new. Each option has advantages and disadvantages. Used equipment is obviously lower in cost, depreciates at a lower rate, and provides you with more options. However, it can also be less reliable and more difficult to find (especially if you have a specific set of requirements).
New equipment tends to have more warranties and guarantees, is in tip-top shape, and lasts for a longer period of time. However, it’s also more expensive and likely loses a lot of value in the first few years.
5. Think About Payment Options
How are you going to pay for the equipment? There are numerous options, including cash, equipment leasing, leasing with the option to buy, equipment financing, etc. If you’re open to various options but aren’t quite sure of how to proceed, you may find it helpful to sit down with an equipment financing expert to talk through the pros and cons of each.
Adding it All Up
Never take an equipment purchase lightly. At the risk of sounding overly dramatic, the future of your business could depend on it. From efficiency, quality, and profitability to brand reputation and employee safety, how and what you purchase will have a direct impact on every facet of your company. Take your time, weigh your options, and make a smart choice.
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