Investment in new equipment is part and parcel of everyday operations for most businesses. Every business will occasionally require a new purchase; upgrades to newer, better technology, or replacements for old equipment that is no longer quite up to the task.
However, for businesses operating in the construction industry, new equipment purchases are all the more important. The reason for this is simple: construction equipment has to work hard, which means that it’s going to be more prone to wear and tear. Furthermore, in an industry that is as fast-paced as construction, the need to stay abreast of the best technology is particularly notable.
If you run a construction firm, then you may frequently find yourself tempted by the idea of a shiny new purchase. However, it’s important to be cautious, especially considering the fact that construction equipment and plant machinery can be extremely expensive— so any investment is one you’re going to have to make wisely. So before you rush out to make a purchase, it’s worth running through the following questions to ensure that what you’re contemplating buying is genuinely beneficial to your business…
Does the company actually need this, or do we just want it?
The first question is also the most simple, and it’s important to be honest about your reply. Does your company really urgently need that new earth mover, or have you just been browsing details about different models and somehow managed to convince yourself of the necessity of investing? It’s one thing to want a new piece of equipment as you like the idea of it, but it’s important to know the difference between “want” and “need”.
That’s not to say that you can’t purchase something just because you want it; it’s just that you need to be aware of the urgency of the purchase.
Can we manage without a new purchase?
The next question is also simple. If your company is able to function at 95% of its target productivity levels without a new piece of equipment, then you’re definitely in “want” rather than “need” territory.
This, however, is a good thing; you have time to think about a purchase. If you’re looking for a new construction trailer, then you can take all the time you need to browse for details, compare prices, and make an informed decision.
If your business can’t operate at 95% of its target productivity without new investment, be very aware that your purchase is more likely to be influenced by “need” than “want”. This might sound preferable — and it certainly makes the purchase justifiable — but it actually means that you’re liable to make poor decisions, and take a bad deal because you just need any deal. Be aware of this throughout the research and purchasing process, and try to only buy equipment that you’re certain you would have eventually bought even if the need for it was not as pressing.
Do we have a secure line of work over the next few months?
The nature of the construction industry means that a constant source of cash flow through the business is far from guaranteed. If you’re going to be making a large purchase investment, then you need to be sure that the next few months — at least — are going to continue to drive revenue through your company. Scan your contracts and check the upcoming work diary before committing to an expensive purchase; such a simple step can save you a huge amount of stress and concern.
Is the business sound enough to afford this expense?
No matter how much you want or need a piece of equipment, you have to be able to justify the cost of it. One of the major dangers that construction business owners tend to struggle with is the feeling that the business’ fortunes can be improved by a single piece of equipment; they convince themselves that everything will be fine if they have the right tools for the job. This sounds sensible, but it’s actually poor business management.
If your business is struggling, then investing in a large piece of machinery — no matter how fast it is, what its high-tech advantages are, or how much quicker it will allow you to complete work — is not a good decision. Get your business back onto an even keel before you take on any further expensive purchases.
If your business is generally sound and doing well, then still be cautious— you’re still going to want to make the effort to ensure you get a great deal on your new investment.
Is there anything we can do to save money on this equipment?
If you have got through the questions above and come to the conclusion that investing in new machinery or equipment is the right decision for your company, then you now have to think about being the most savvy buyer possible.
Few people feel comfortable with negotiation; it makes most of us feel like we’re being rude or presumptuous. However, negotiation is perhaps the most useful tool when considering the purchase of large construction equipment. Learning to negotiate in a way that is both successful and comfortable for you could save you a small fortune.
Outside of negotiation, you’re also going to need to perform as much research as possible regarding the equipment you want to buy. If you ensure that you’re well aware of what you want, and the features you need to be included, then you’re far more likely to be able to handle being on the receiving end of sales techniques. There’s no such thing as too much information when making a large investment in equipment for your company, so read up beforehand and fix in your mind exactly what you want to buy.
Investing in new machinery or equipment for your construction company can be the key to pushing your business to the next level. Improvements in productivity, reliability, and reduced maintenance costs are among the many benefits you can expect to enjoy from your new purchase. However, it’s important to ensure you only make your purchase when you’re absolutely certain that it is the right step for your company— and if you’ve run through, and acted upon, the questions above, you can be confident that you’re doing the right thing.