Building for the Future
In the real world of commerce, a company purchases a building or buys equipment that solve a problem today AND will keep doing so well into the future. A 24 month ROI or 5 year depreciation schedule are not the genesis for the project. Those are artificial guideposts created by accountants or government bureaucrats and politicians. Japan and Germany overtook Detroit in the 70’s and 80’s for too many reasons to list here. However, one of the key philosophical differences was Detroits near sightedness. Company executives and stockholders were only interested in the current year stock value. People were not rewarded commensurately for working and planning for the future. How well did that strategy work? More and more companies today are starting to regain their long term vision. Geothermal heating can be expensive to install but the long term savings are substantial and it is the right thing to do on several other levels as well.
When you look at a piece of equipment the number one question should be, “Will this make us a better company?” and the “Yes” answer shouldn’t be limited to just the near term. If you can build on the machines positive value well in the future doesn’t your decision become kind of obvious. Sure you must qualify the decision and the numbers should look good.
But remember you are building a business to grow and have long term value. Do not be blinded to sacrifice long term goals for a short term or temporary gain.
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Can you afford to buy the machine you need? Can you afford not to??
Posted on September 29, 2010 by boxadmin
The economy has been pretty tough for many people and companies for too long. (Seems like an understatement.) The anticipated recovery date is still uncertain. For many, buying a new piece of equipment just seems too risky. Is it?
The first part of the answer is really a mental check.. Are you committed to your business? For most of us the answer is a quick yes. Yet in many ways some people are not acting as the leaders, entrepreneurs, and managers they are. A very successful businessman once wrote ” If you are going to wait until everything is just right before you move, you will never get started.” There will always be uncertainty and risk. That’s where the opportunity and reward exist. Recessions don’t alter this fact. Recessions do make the point more loudly and clearly. But if you let the noise keep you from moving decisively in a forward direction you are increasing your risks and lowering your chances of any reward. Your competitors can seize an advantage. A friend recently reminded me that you can’t catch a fish unless your hook is in the water. You must continue investing in your business.
So you’ve decided to buy a new piece of equipment. How? Ask the seller. The two of you have mutual interests and are equally motivated to succeed on the same project. Your short term and long term interests make you ideal partners. Don’t wait for uninterested third parties to help. Perhaps you have a key customer who will help. Then there is the American Reinvestment Act this year that will allow you to write off 100% of the purchase price in the first year. The tax savings can offset a significant part of your out of pocket costs. Remember, you are in this business for the long run. Stretch out the payment term to enable a lower threshold for positive cash flow. Do you have something to trade or barter? Be realistic. If you have money tied up in a non performing asset, get what value you can and move forward.
To recap..Now more than ever you have to be aggressively trying to grow your business. Buy machines you need now. It is a great time to make things happen. Think beyond the standard sources when looking for financing. Partner with your customers and your vendors. My company has several unique solutions and we will listen to anybody else who has an idea to offer.
Contact us today at 817-270-1019 or by email firstname.lastname@example.org