Purchasing equipment is a big decision and an investment. Whether you are adding to your fleet or replacing aging equipment it is important to evaluate the timeframe and ongoing capacity utilization of the machine.
New machinery has a lot of appeal but there are many benefits to buying used. Consider the following when evaluating your next machine purchase:
1. Wide Selection
Many of the most common equipment types such as drills, augers and backhoes are available used. The selection is so extensive that it’s often easier to find exactly what you need when buying used than when purchasing new.
The biggest challenge is identifying all of the factors to evaluate and choosing a reasonable number of evaluation criteria for each piece of equipment. This requires a wide range of knowledge including engineering design, constructability, operations, maintenance, human factors, economics and manufacturing.
The four main outlets for used equipment include auctions, dealers, online marketplaces and private parties. Each has its own pros and cons. For example, a dealer can offer the ability to personally inspect equipment and provide a warranty. However, the selection may be limited to what is in stock. On the other hand, an online marketplace offers a broad selection of equipment to compare and contrast. It also gives a sense of how much the equipment is actually being used and the corresponding level of wear.
2. Limited Depreciation
Equipment depreciation is the decline in value of a piece of equipment throughout its lifespan. It can be used to determine the useful life of a piece of equipment, which can help your company make smart maintenance decisions and stay profitable. Depreciation can also be written off as a business expense, which can lower your company’s taxes.
The most common method of equipment depreciation is straight-line. This method divides the purchase price by the equipment’s useful life, which is an estimate of how long it will last until it needs to be replaced or scrapped. Equipment useful lives vary based on the industry, with some examples being underground storage tanks having a useful life of 10-20 years and forklifts having a useable life of 5-7 years.
Section 179 and Bonus depreciation are both tax deductions that allow businesses to write off a percentage of their equipment costs in the year it is purchased. However, both require that the equipment be put into service in the same year you take advantage of the deductions.
3. Flexibility
Whether it’s a car, a house or a piece of heavy equipment, when you buy something new, you pay for its newness rather than its genuine value. With used equipment, you can spend less money upfront and save cash for other business expenses, like recruiting and training operators.
If you need industrial equipment right away, used machines may be available in shorter lead times than new ones. The quicker turnaround can help you keep your projects on schedule and ensure that your clients are satisfied with their finished product.
Additionally, when purchasing used equipment, you can find machinery that’s compatible with existing technology and controls. This can decrease the time and cost it takes to train your staff on a new machine, thus increasing uptime. This flexibility is important in construction where a competitive edge can make all the difference for your business. A flexible facility, characterized by a high degree of reconfigurability, enables rapid responses to customer product and logistical demands.
4. Convenience
When deciding to buy used equipment, make sure you find a reputable seller who offers a trial period. This will allow you to test the equipment and determine if it is working properly and at its maximum potential. The supplier should be able to provide you with maintenance records and answer all of your questions.
It’s also important to check that the equipment is a good fit for your needs. You will want to consider what your business plans are and what your goals are in the long term. If you’re planning to expand, will the equipment be able to grow with your business?
There are many benefits to buying used equipment, especially for startups. The price tag is much lower, which can save your company a lot of money in the early stages of your venture. The limited depreciation is another major plus, as it helps you save a large amount of capital. And, of course, the selection is vast.
