Buying Equipment? How to Decide Between New and Used
Establishing, and then running a business, requires quite a few crucial business decisions to be made. While it is true that a business is mostly about the cooperation of workers and their skills, it also depends as much on the kinds of equipments and the use of technology that the business is making. In fact, in modern times, it is next to impossible to stay ahead of the competition if one does not have the right equipments to work with and the rivals are sure to zoom past your business. Stagnancy of any kind is a bane to a business, so the equipments should also be upgraded from time to time to give you the best output. While it might seem like an expensive task to constantly buy or upgrade their equipment, when done at the opportune moment, the costs of buying the equipment can be recovered and there are going to be some long lasting profits to be made in the future. The question is, what kind of equipments should one invest in with equipment financing.
A point that deserves mention here is that not all old and used equipments are unfit for use. Some equipments might be old, but if they have been used and maintained frequently, they might still be in perfect working condition. They former owner might have no need for it because maybe he now needs the larger version of the same equipment to meet his production quantity, or simply because he is getting yet another advanced equipment. However, for a new and small business owner, this old equipment can be good as new and more than enough to meet the small scale in which he is currently running his business. Once his business has been successfully launched, and he plans to grow his business in the next couple of years, then he too could buy new equipments with the profits he make.
If money were no constraint, then it is a given that every business would opt for the best equipments that money can buy. However, this is not always the case with small businesses. They have to run on a tight budget and though many good equipment financing options are now available from leading banks and NBFCs like Bajaj Finserv at really low machinery loan interest rate, the availability of the loan still depends on the eligibility and the repayment capacity of the borrower. So the question that SMEs often face is that should they go all out and invest in buying expensive equipments at the very onset, or should they start slow and buy used equipments at first?
Another reason why new businessmen tend to settle for used equipments at the beginning is because they want to make sure that the particular equipment is really needed in their job. What if one invests in a brand new equipment and then finds that it is not really needed for the kind of manufacturing that they are doing? For a new and inexperienced businessman, who is only just setting out and testing waters, this is a good precaution to take and he could buy used equipments at the first stage of setting up his business. Then, the equipment can later be upgraded and replaced with equipment loan depending on the requirements.
The only point to keep in mind before investing in used equipment is to check whether it is still functioning properly. Hire a mechanic who can check the machine for you so that there is no doubt that making an investment for the equipment is not a bad decision- however small the investment might be.