Whatever business you are operating, you must decide wisely where you spend your capital. Sure, you want the best equipment for your business. But does it make sense to buy the latest model when you are barely making a profit? Doesn’t it make more sense to buy used or secondhand equipment at a fraction of the cost of new equipment?
If you have a construction business, you need excavators for sale. Brand-new excavators cost between $100,000 and $500,000, depending on the brand, model, and features. That leaves a wide range of prices for used models. Secondhand excavators can be sold between $50,000 to $250,000. Again, that depends on the model, brand, and features of the equipment.
The same can be said for your office equipment and furniture. You can save a lot of money if you invest your money in well-maintained secondhand items. Why would you want the latest models for printers and copiers if the older models function just the same?
The number one reason businesses prefer used equipment is their limited budget. Most businesses spend most of their capital on overhead costs such as rent, wages, insurance, and maintenance. The fact that they also have to spend on updating their equipment isn’t lost on them. But it cannot be a priority unless the business has made strides in making profits. That’s why used equipment and furniture are the most practical choices for businesses.
Have you checked out the latest smartphones on the market today? What are the key differences between the last year’s models and this year’s? Not so much, right? Unless there is a huge difference between these models, there is no reason you cannot invest in older equipment. As long as that equipment is well-maintained, you can choose a used one over the latest model.
When you buy a new piece of equipment, your business will take the “hit” on the initial depreciation. The first year of use usually entails double-digit depreciation. It slows down on the second, third, and fourth years. Think of it as buying a car. The car depreciates the moment you drive out of the dealership. By choosing used equipment, you get saved from taking on that initial hit. You get more for a fraction of the cost of new equipment.
The best thing about buying new equipment is that there’s a probability that it’s still under warranty. Do you know that some refrigerators have a 10-year warranty? So if you have one in its third year, you still have a good seven years of free service from the manufacturer. You get more than the value of what you paid for. You also don’t have to worry about major repairs that the equipment might need.
Do your research before you choose what equipment to buy. Weigh the pros and cons of buying new or used equipment. Think about the end goal of your business. Your decision should contribute to reaching these goals.