No matter what kind of business you’re running, you’re going to have various equipment needs, which will be unique both to your industry and the business itself. Even when two businesses are exceedingly similar, they’re not going to have identical equipment needs. Like anything in business, there’s a right way and a wrong way to go about equipping your company. Here are some of my best tips for it.
Only acquire what you need to
This may sound pretty obvious, but there are still countless business owners who end up squandering their resources on fixed assets and equipment that their business really doesn’t need. Fixed assets, by definition, mean long-term investments. For a lot of businesses, recovering all they’ve spent on a fixed asset is a process that spans a number of months or years.
Unless you happen to have a never-ending well of capital, it’s important to carefully consider every item you’re planning on acquiring, and just how essential it is in the grand scheme of your business. If you can’t say for certain how much it will impact your efficiency, branding or profits, then it’s almost definitely something you should put off!
Put function before form
Making sure that you always focus on the functionality of your equipment rather than the form is also a very smart move to make when it comes to gearing up your business. Again, this one sounds like a no-brainer, but many would-be business owners still manage to neglect it.
For example, your experience with your last day-job may have made you feel like a massive, ornate desk was essential to give the whole company a greater air of professionalism. With a little thought and number-crunching, however, you’d soon discover that the functionality of the desk is a much bigger part of the question.
Of course, making decisions like this is much easier when it comes to more practical equipment. Still, placing form over function when it comes to business equipment is a seriously costly mistake which should always be avoided.
Learn and apply cost-benefit analysis
When a piece of equipment is nice and cheap, then all you really need to consider when choosing to purchase it or not is the need for it within your business model. When it comes to larger asset acquisition though, it’s essential to perform a thorough cost-benefit analysis to determine whether the operational costs and the price of the asset itself can be recovered through the benefits it offers.
When disposing of a non-productive asset, it will be extremely hard to make a profit, so it’s essential to perform this kind of analysis well in advance of the final decision whether or not to purchase the piece of equipment. As you proceed and reach out to suppliers, remember that the cost of acquisitions will always hit your bottom line.
Depending on your profits, a £1 saving in your acquisitions can have the same impact as a £5 increase in sales. The cost-benefit analysis process is essential to practice and become familiar with if you want to buy equipment in the most cost-effective way possible.