In the manufacturing industry, there is nothing more important than high quality equipment. But, manufacturing equipment is extremely expensive, which makes it even more important to ensure that you’re making a wise purchasing decision. Buying the wrong equipment could not only impact your business’ success, it could also increase the risk of personal damage or a lower quality product.
While there aren’t too many easy ways to save money on manufacturing equipment, there are some things you can do to minimize the cost so that you have access to the equipment you need without breaking your budget.
Here are 5 tips you’ll want to know when it’s time to start planning for new manufacturing equipment.
1. Have a Purpose
Obviously no business owner goes out and buys manufacturing equipment just because. Are you starting a new business? Is existing equipment starting to age? Do you want to increase productivity? Is the equipment needed to put your company ahead of the competition?
Before purchasing manufacturing equipment, you want to be sure you have a sound reason for purchasing it. If you have a solid reason for buying such expensive equipment, you can have the confidence that what you buy, despite the price tag, is a worthwhile investment. Purchasing equipment for the right reason can add value and purpose to your company.
Knowing why you need new manufacturing equipment also helps with determining what type of equipment you need and whether or not you should purchase brand new or save money on used machinery.
2. Buy vs. Lease vs. Rent
When it comes time to obtain manufacturing equipment, you have several different options available to you. If you’re a larger established company with a decent budget, you can likely afford to purchase the equipment outright. As the owner of the equipment, you’re solely responsible for all repair and maintenance that you may incur. Similarly to most other types of machinery, expect manufacturing equipment to lose value over the years.
Another option for getting access to the equipment you need is leasing. By leasing manufacturing equipment, you’ll have lower payments. With leasing, you generally aren’t responsible for repair and maintainance needs. There’s also a bit more flexibility as to how long you have access to the equipment.
A final option is equipment renting. If you only need access to manufacturing equipment temporarily or just need a short-term fix, this is the best option.
3. Determine a Payment Method
Even if you own a pretty large company, you may not have the available cash flow to outright pay for manufacturing equipment. If you’re wondering how you will pay for such an expensive purchase without impacting your company’s budget too much, you’ll be glad to know that there are various options to consider including:
- Business credit card
- Business loan
- Line of credit
You could even work with an investor who may be able to help finance your equipment purchase. Knowing how you plan to pay for the manufacturing equipment makes it much easier to work such large numbers into your fiscal year budget.
4. Consult an Expert
Unless you know everything there is to know about manufacturing equipment, chances are you’ll want to talk to an expert about what your exact needs are. By making such a large purchase, you not only want to consult with an equipment expert, it may also be helpful to seek help from a consultant.
With an external point of view, you can have someone else assess your needs to determine what type of equipment you need. Typically a consultant will help with a cost-benefit analysis which makes it much easier to justify your purchase. You’ll also want to consider other factors such as current resources, employee usage, and capacity.
5. Consider New vs. Used
One of the easiest ways to save money when purchasing manufacturing equipment is to buy used versus new. Brand new manufacturing equipment can cost tens of thousands of dollars. On the other hand, if you’re able to find used manufacturing equipment that’s been properly maintained and taken care of over the years, chances are you’ll be able to save thousands of dollars.
Before purchasing manufacturing equipment, be sure to do some research on the item you plan to purchase. While buying used is a bit more affordable, you’re still spending thousands of dollars. Take the time to check the repair and maintenance records along with the overall condition of the machinery to ensure it’s in good shape and has been well maintained.
New manufacturing equipment is likely to be one of the largest business purchases that you’ll ever make. Using these tips you can buy the equipment you need while also staying within your budget constraints.
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