As you make your business plan and determine how much money you need to start your business, it is important to take into consideration the cost of all the equipment you will need. Budgeting for equipment purchases and installation can be a large expenditure for small businesses. Knowing what you need can help you structure your loan request and operating budget in a way that accommodates that expense without unpleasant, expensive surprises.
While every business needs equipment, equipment needs vary greatly between industries. Equipment for retail shops will be very different than that of manufacturers and service providers, but each business needs the right equipment to operate profitably. The first step in creating your equipment budget is determining what you really need and for the most part, you are on your own to decide what equipment, tools, furnishings and other equipment you will need to get going.
One way to figure out what you need is researching trade publications and associations. These can be terrific resources for helping you better understand intent needed to open and run your business. Another good way to assess your equipment needs is by visiting competitors to see what they have and actually use on a regular basis. As you start your business and get things off the ground, it is wise to not invest in unnecessary equipment so while you can borrow from other businesses and their equipment set up, before you buy any equipment you should ask yourself if it’s right for you and your business.
In fact, that question is the most important when assessing your equipment needs. As you get started, it is crucial to your bottom line to not tie up money in equipment that you do not need. Equipment is considered a fixed asset and represents a long term investment of capital. Put simply, this means it will likely take your a few years to recoup the cost of equipment, so purchase wisely and purchase only what you need.
Another important factor to consider when buying equipment is putting function over form. While you want your business to be welcoming and inviting, consider carefully whether you really need the top of the line, newest, shiniest equipment or if you can buy a lower cost model that performs the same function but may not be as ornate, elaborate or high end. Save where you can and buy only what you need and you will be well on your way to a fiscally responsible equipment budget.
For very expensive equipment or equipment you are on the fence about purchasing, a cost-benefit analysis can help clarify your needs and help you make an informed decision. Performing a cost-benefits help you determine if the cost of the equipment will be recouped through increased earnings or long term savings over the course of the lifespan of the equipment. It is extremely important to buy only what you need in terms of equipment because it is next to impossible to recoup all your expenses if you end up reselling your equipment when you find it is not needed.
Investing in equipment for your business be a huge expenditure, and it will benefit your bottom line and increase your chances for success if you buy only what you need at the lowest cost possible. Be strategic when budgeting for equipment, shop smart and avoid overbuying that can end up costing you big in the long run.