Buying business equipment is something the majority of business owners will need to do at some point – unless this business is one that can run with nothing but an internet connection, although that is rare.
Since you are thinking about buying business equipment now (or you wouldn’t be reading this post), we have a few things you can do to ensure that you get it right. You’ll end up with the equipment you need and you won’t burn through your budget – read on to find out what to do.
- Consider Whether You Should Rent (or Borrow) The Equipment Instead
Before you buy any piece of equipment outright, consider whether you should rent or borrow the equipment first. Doing this will give you a better idea of how much you’re truly going to use and need the equipment, and whether you could do without it. Renting for a short period could be cheaper than buying outright if you discover that you don’t actually need this piece of equipment fulltime. If you’re lucky enough to know somebody who could lend you the equipment, you’ll save a fortune to begin with.
2. Set Your Budget For Equipment
Knowing your business equipment budget will help you to ensure your cash flow does not suffer and that you’re not going to run into financial trouble shortly after purchasing your equipment. A budget is essential in business, and knowing what percentage of that budget you’re going to spend on certain things is key. It’ll stop you from overspending and you can come up with a plan to buy what you need to buy. Make sure you come up with your budget carefully and even go over your numbers with a pro if you can.
3. Identify What Needs To Be Outsourced
Identifying what needs to be outsourced will have many benefits. You won’t end up hiring too many people and have too many permanent mouths to feed, and you can cut back on equipment costs.
4. Ensure You Have Accurate Measurements
Assuming you have a business premises, you need to know your measurements before purchasing equipment to ensure everything fits. Carefully measure each area where equipment will be placed and note the ideal dimensions you’ll need. You can use space planning tools to get a better idea of what this will look like and stop you from making expensive mistakes. Don’t cut corners when it comes to finding these numbers or you might regret it.
5. Decide Whether You Need New Or Used Equipment
If you have a limited budget, you’re likely going to benefit from buying used equipment rather than new equipment. This will not only end up better for your budget, but better for the planet. You don’t always need to buy new equipment, and refurbished equipment can be just as good.
6. Prepare To Spend More On Your Essential Items
If an item is truly essential, then you should be willing to fork out for it. Don’t scrimp on items that you know you will use a lot, such as an air cooled chiller for your food and beverage business. If you know something is a must, then buy it without guilt. There’s a big difference between equipment you’re going to use to grow your business each day, and equipment that makes very little difference. Spending a fortune on computer chairs, for example, is not a good idea, but a half decent computer could be a worthwhile purchase!
7. Consider The Tax Implications of Buying Equipment
You are able to claim ‘Annual Investment Allowances’ on capital expenditure on new items of plant or machinery. A capital allowance is a sum of money that can be taken aware from the amount of tax that a business needs to pay. If you purchase an asset through hire purchase, you can claim back the VAT, and there are further capital allowances available. Make sure you research the tax implications of certain purchases in depth.
8. What About Your Growth Plans & Usage?
How well is this machinery going to fit in with your growth plans? Do you have enough work to make sure that the machinery will be used regularly? External economic factors might impact on the demand for your services, so make sure you think about this aspect of things, too. However, outside of that, it is very important that you ensure the purchase will improve the performance of the company and generate increased output to cover the additional financial output the purchase will cause.
9. What Are The Running Costs of The Equipment?
Considering the running costs of equipment is just as important as anything else. There are many aspects to consider, and of course, this will depend on the type of equipment you are buying. Aspects include fuel costs, maintenance costs, repair costs, manpower, and anything else you can think of. Will the benefits of the piece of equipment justify the amount it is going to cost you to buy it and run it?
10. Can You Outline What The Transition Period Looks Like?
Buying equipment should increase your productivity, lower your costs, and increase your profitability. Initially, however, you should expect a slowdown while people get used to the equipment and how it fits in with their everyday work life. You should also have a budget for the training required, so take this into consideration. Many businesses expect an instant increase in productivity, but this is often not the case. If you can plan for what this might look like and what needs to happen in advance, then you won’t come up against any nasty surprises.
Buying business equipment can make or break your business, so use the advice above to make sure you get it right the first time around. Don’t rush into it and make sure you compare and consider your options carefully before you part with your cash. Do you have any advice that helped you to purchase the best possible business equipment? Leave it in the comments below. Thanks for reading and come back soon!