When deciding on what’s best for your business, you need to evaluate the equipment that you currently have and how your fixed asset needs could change in the foreseeable future. Assets with long lives that will occasionally require parts and service like vehicles and equipment are a substantial investment, and lose value over time through regular usage. However, when maintaining your current equipment and figuring out whether you should invest in improvements or new gear, there are several factors you should keep in mind. This is especially true if you need to seek financing.
1. Capacity and Operational efficiency
Sometimes you might need additional equipment to get through busy times of year while your older equipment can handle your average daily customer base just fine. Although, if your business is fairly new, you might not have a good handle yet on predicting slow and busy seasons and must make an educated guess as to the capacity you’ll need.
If your current machinery is able to meet your customers’ needs but is not as fast or accurate as you’d like, you should determine how soon you need to make this new investment if you’re not doing a trade-in or upgrade. If equipment like computers operate too slowly and causes your employees to not work as efficiently as they could, this also needs to be taken into account.
2. Equipment’s Physical Condition
Does the frame look damaged? Is anything leaking? Loose joints, cracked or missing parts? Can you test the systems yourself or do you need an authorized servicer to help you? A skilled equipment technician can also see beyond eye level whether you should keep or discard your equipment.
3. Maintenance and Repair Records
How long has your equipment been in use? Has it frequently needed new parts? If there any valid warranties, how much time is left and did you make modifications that would void the warranty?
Keep detailed maintenance records for your equipment. If you are buying secondhand equipment, ask the seller for this information. Also make sure to ask what kind of operations they used it for, the conditions and terrain (if applicable), the age of the machine, and if any skilled and licensed technicians signed off on the repair records. You don’t want to purchase machinery that was held together with duct tape and only inspected by the seller.
4. Forecasted Repair and Service Cost
The equipment’s history can help you determine if it’s time to scrap it or focus on repairs and improvements, but you should also evaluate ongoing repairs and maintenance. A higher-capacity machine may be a tempting investment, but not wise if it costs twice as much to maintain.
When optimizing your equipment plan, consider both the upfront and ongoing costs, plus what you reasonably expect your capacity to be. Remember that the goal is to enhance business efficiency by speeding up or simplifying business processes. Take careful consideration to the gross cost of your equipment and the benefits to the business to ensure equipment decisions are made in your company’s best benefit.
If you are looking to upgrade, buy used, or replace equipment, American Capital Group can get you the financing you need for purchasing. You can contact your sales rep today at 1 (949) 441 -5739 or apply risk-free online.