Naturally, you have ambitious goals for your business as the year unfolds. Depending on the industry you’re in—retail, restaurant, salon, auto repair, etc.—your business equipment may play an essential role in your productivity and profitability. In this case, is the equipment that runs your business up to the task?
When should you consider taking out business loans for inventory and when should you make do with what you’re using right now? In addition, once you’ve got the funding, should you buy brand new equipment or consider using thrift-savvy techniques like repairing equipment, buying used equipment or buying refurbished equipment?
The best way to answer these and other questions you might have about equipment is to get a big picture perspective of your situation. Once you can analyze your current equipment needs, you’ll know what to do to fulfill them.
With that in mind, let’s review 6 questions you can ask to stimulate new ideas and a better understanding of your current equipment inventory:
1. What is the production capacity of your current equipment?
If your current equipment works as good as new, then you may not need to do anything. On the other hand, there may be newer equipment on the market that offers functions that were not available when you made your earlier purchase. In this case, you might be able to increase your business’s production capacity by using something that works better, faster, and more cost-effectively.
Alternatively, if your critical business equipment is not as productive as before, you may need to replace it. Talk to the equipment dealer to figure out what can be done. Perhaps you just need repairs as some essential parts may have worn down. Perhaps it’s not worth fixing it and you’d be better off getting a newer model that works more efficiently. If the price of what consumers are paying you since you first got into business has increased and the cost of using more modern equipment has decreased, it might be more profitable in the long run to make the switch.
2. How has your energy cost changed since you first purchased your equipment?
Generally speaking, your energy costs may have remained the same or risen. It’s unlikely that they will have dropped. If you are using the equipment more because of a rise in orders or if the equipment is not working as efficiently as before, your energy costs may be higher.
One way to slash this high equipment related expense is to research what is now available in the market. There may be newer models that offer a huge savings in energy consumption. If this is the case, it might be well worth getting an upgrade.
3. Has technology advanced without you realizing it?
While you may be quite satisfied with the way your equipment runs and think your energy rates fair, what you don’t know could be hurting your business.
What if there is a new machine out there that can do more?
For instance, what if this equipment can do some of the following things:
- It can produce a higher volume of work each hour.
- It has new features that increase accuracy and efficiency.
- It can double your throughput and produce a higher quality finished product.
- It takes fewer people to use the equipment.
- It is far more cost-effective.
- It can run longer, which means a decrease in downtime.
- It will break down less and so lower your maintenance time and costs.
In other words, not using the more modern piece of equipment may actually be costing you money in lost opportunities. You might be able to pay less and do more with the latest technological advances.
4. Will better business equipment reduce labor costs?
There may be things that your people are manually doing now that could be replaced by some of the features of a more modern machine. Another possible benefit is that employees may experience high job morale and more job satisfaction if they are now able to do their jobs better and faster win a more modern a machine.
5. Will a newer machine increase the quality of products or services that your business offers?
The answer to this question depends on what you do in your business. If you run a construction or repair business, you might be able to offer a wider range of things your company can build or fix. If you run a restaurant business, you might be able to create more recipes to add to your menu. If you run a medical business, you might be able to do medical tests in the clinic that you previously had to send patients to get done.
6. What about less critical equipment?
While we have been talking about machines that play an essential role in your business, there may be other supportive equipment that would enhance your business, too. If you upgraded your telephone system, would it make inter-office communication and customer support easier? If you added a video surveillance camera, would it make your premises more secure? If you improved your cash register process — for example, added a handheld POS device that your staff could walk around with — would it make it quicker and easier for customers to check out?
Finally, while you might be inclined to think in terms of habits of productivity to improve profitability, upgrading your current equipment might make it much easier to follow through on any managerial initiatives you are promoting in your company.