I continue to be amazed at how many companies, especially startups, have no idea of their costs, profit margins, etc. Equipment can be confusing since it has a cost but how does one allocate it to different cost centers? Please consult with a qualified accountant/tax expert in your area since these basic observations are to get you to think but cannot take into account your particular situation.

 

1. Do I purchase or lease? For some major expenses such as vehicles or very complex pieces of equipment (yes, there are automatic riding machines that costs three times my first car) that are simply beyond cutting a check. The decision you make on this particular question is based on your cash reserves, credit limits and other factors. You do not want to spend your last dime on a machine that might not live up to its promise. I, personally, prefer to buy outright (or even make payments towards ownership) in most cases. The argument for leasing is that subject to the terms of the lease (wear/tear, etc.) you can walk away from the equipment or purchase it for a predetermined price.

2. Do you buy one brand or vary the type of equipment? My advice is to go slowly on this decision. It is very important that you purchase the best value (price, longevity, maintenance, support, ease of use, safety, etc.) before committing to a line of equipment. There are many find manufacturers to choose from so look closely at the local support especially as loaners and parts. Everything will eventually need servicing and the pennies you saved up front may be lost many times over for lack of parts or local support.

 

Although you may “feel” like you are making money, you need to know what your true profit is after all your related expenses are captured. 

 

Your comments and questions are important. I hope to hear from you soon. Until then, keep it clean…

 

Mickey Crowe has been involved in the industry for over 35 years. He is a trainer, speaker and consultant. You can reach Mickey at 678-314-2171 or CTCG50@comcast.net.


posted on 9/12/2014