When is the right time to upgrade your equipment?
Timing is important when it comes to upgrading your equipment. Machinery is expensive, and the cost of new gear needs to be weighed against the expense of maintaining older equipment.
The cost of maintenance and repairs only increases with the age of a machine. This is especially so with specialised equipment – it may take longer to source parts and to undertake maintenance work. This means more downtime, which you may or may not have time for. Consider this against a new machine, which usually comes with a warranty to cover repairs, as well as quick and easy servicing.
Winning a new contract is often a good time to upgrade gear, especially if the contract specifies that you must use later model machinery (some contracts even specify an age band for the equipment). However, you need to consider the length of the contract and whether the new job will cover the repayments on the new machine. When that contract finishes, how will you continue to service the loan – do you have another job lined up for the machine?
Another thing to consider, is that new machinery makes it easier to attract and retain staff. If your business is growing, having new equipment may help you get and keep better operators. Like most people, your staff want to drive new gear – it’s more comfortable, has all the bells and whistles, has better ergonomics, and it’s easier to operate.
But while it is great to have new machinery, if the maths doesn’t add up, it may be better to continue with your existing gear and wait until a time when you’re better able to cover your repayments before committing to the expense of a new piece of kit.
Talk to your business partner at Finance New Zealand for more information around asset funding to help assess whether now is a good time to upgrade your gear.