What can make the New Year even happier? Getting some sweet new equipment in your shop to increase your productivity and your revenue. But here’s the thing: Without the proper preparation and budgeting, new equipment purchases can easily become a burden both financially and in terms of your physical space.
Before you set out to buy new body shop equipment for 2017, take a step back and make sure you’re going about those purchases in the smartest way possible. Here are a few guidelines to help you make the best decisions for your shop:
Plan ahead. Large equipment isn’t cheap, but purchasing that equipment is a fact of life for every shop owner. You know you’re going to need to replace equipment or purchase additional equipment for expansion. You’re never going to get away without it. So be responsible and set money aside for these larger purchases. Many experts suggest setting aside 3 to 5 percent of your monthly sales for future purchases.
Determine how much to borrow. If you’re setting aside 3 to 5 percent of your sales for equipment, you’ll eventually amass enough money to make some purchases outright. But that doesn’t mean you should. Consult your accountant about how much cash to put toward a large equipment purchase and how much you should borrow. You don’t want to deplete your cash reserves entirely. And there could be tax advantages to purchasing equipment with a loan.
Do your research. Look at all your options for the piece of equipment you need. Then compare all of the products and their manufacturers. What do you get for the price of the equipment? Do you trust the company that makes it? Do your due diligence on price, features, benefits and the reputation of the manufacturer before deciding on a specific product to purchase.
Focus on ROI. There are a lot of reasons you may want to buy a particular piece of equipment. If that equipment doesn’t provide a return on your investment, though, there is absolutely no reason you need it. Equipment needs to increase your shop’s productivity and efficiency, because that’s what increases revenue.
Understand your space. There’s an old saying among woodworkers: “Measure twice. Cut once.” And while you’re not doing woodwork in your shop, it’s still good advice when planning for a large equipment purchase. Once you’ve done your research and found a product that makes sense from a price and benefits standpoint, make sure it will fit in your space and won’t hinder your productivity. Even a few inches can make a huge difference when it comes to how easily you can get vehicles into and out of your bays. Don’t buy a piece of equipment that theoretically helps you become more efficient but actually slows things down because of a lack of space. In other words: Measure twice. Buy once.
New equipment vs. used equipment. While used equipment will almost always be more attractive when it comes to the purchase price, there’s more to consider: training and support. Without the right training, a piece of used equipment becomes a serious workplace hazard (or the world’s largest nonoperating paperweight). Depending on the manufacturer, you may still be able to purchase support on a piece of used equipment. But that’s another expense to consider.