Archive for February, 2013
There is a popular saying that goes ” If you don’t know where you are going, any road will take you there.” This saying applies to many aspects of our lives, especially our business lives. As managers, owners, directors of businesses what is our roadmap to success? Where are we going? How will we get there? A key element of the answers to these question will include plans for capital purchases.
There are several benefits to a strategic plan to replace your equipment. Decreased taxes, increased productivity, decreased utility costs, better qualilty, better image are a few worth noting. Over the last several years the federal government has tried to spur the economy by allowing accelerated depreciation of capital assets like laundry or dry cleaning equipment. In some years so-called bonus depreciation has been in play. Section 179 depreciation for the purchase of equipment will mean less taxable income for you. Ask your accountant for details. Newer equipment uses less water, less gas and produces more goods per hour than your older equipment. This means less cost per unit and/or more revenue and profit for you . Today’s equipment with its energy saving features uses is better for the environment ,too, which enhances your Brand image in your community.
Keeping in mind all these benefits we also realize there are economic constraints to what we can afford. Here is where the plan comes in. Although your equipment may be relatively new there will come a time when it is impractical to repair it or your business has grown to the point where you need more capacity to keep up with the demand. Hence a new washer in year one, a dryer in year three, a new water heater in year five could be the outline of a strategic replacement plan. Remember Proper Planning Prevents Poor Performance. Control your future with a well thought out plan
Every so often a customer wants to upgrade their equipment but can’t because of a clause in their lease or financing documents or other contracts. Some common clauses that catch people by surprise are automatic renewals in multi-housing contracts, renewal options on real estate leases, or blanket liens on new equipment by lending institutions. Automatic renewals …