Your business depends on equipment to function, but it might seem like you need a crystal ball to figure out what equipment to buy, when to buy it, how to buy it, how to maintain it, and when to dispose of it. Equipment and machinery won’t last forever, so it’s important to understand how to plan for choosing, purchasing, and discarding your business equipment.
That’s where the equipment life cycle comes in. It’s the process that manages the purchase and maintenance of equipment by implementing sound planning at all stages of the equipment lifetime — from acquisition to usage to disposal.
Read on to learn about the equipment life cycle and how to finance equipment purchases to get the best machinery for your business.
Why Is the Equipment Life Cycle Important for Your Business?
There are several benefits to your business having a strong equipment life cycle management program. Below, we offer some tips for implementing an equipment life cycle plan and outline the benefits of doing so.
- Catalogue your equipment and its condition. You can use this information to calculate your equipment’s estimated useful life and total cost of ownership.
- Create and implement a proactive maintenance schedule. Researching the manufacturer’s recommended maintenance for your equipment and using that info to create a maintenance schedule will help you plan for equipment repairs, maintenance, and eventual replacement.
- Ensure all equipment meets regulatory requirements. Depending on the equipment, regulations may change over time, so it’s important to build that into your equipment life cycle plan. This will help your business maintain a safe working environment and comply with applicable quality standards.
- Prioritize equipment and machinery replacements. By staying up-to-date on your equipment’s condition, you can balance your budget by projecting when you’ll need to make new or additional purchases.
Equipment life cycles play a huge role in your business’ operational efficiency and budget. Toward that end, it’s important to make sure that the equipment life cycle plan is communicated to key stakeholders throughout your organization.
What If You Don’t Have an Equipment Life Cycle Plan?
It may seem to make sense to wait for equipment to break down before you decide to repair or replace it, but this mindset could be costly in the long run. If a vital piece of equipment goes down unexpectedly and you have unplanned repair or replacement costs, your business could suffer. Emergency maintenance costs, forced downtime, employee or customer dissatisfaction, and rental costs (depending on the equipment) are just some of the possible expenses and challenges that can result from a lack of planning.
Unplanned expenses can lead to lost revenue and may potentially damage your relationship with your employees and customers. Instead, you should be implementing an equipment life cycle plan to plot the end-to-end stages of your business equipment and how you can incorporate financing into that plan.
Matching Financing With Your Equipment’s Life Cycle
From photocopiers to heavy machinery, purchasing equipment outright can put a huge strain on cash flow. Equipment financing can be the ideal solution — whether you’re looking to keep your company functioning at optimal performance or to expand to meet increasing demand. If you understand roughly how long each piece of equipment will last and how much it will cost to maintain and replace that machinery, you can make informed decisions about how to finance your equipment.
In some cases, depending on the equipment, leasing might make more sense than financing. Whether you decide to lease or finance a purchase, it’s important to understand all of the implications of any transaction you are considering — including the true cost of financing and any special considerations for disposal when your machinery reaches the end of its equipment life cycle.
If you’re not sure which type of equipment financing is right for your business needs, just get in touch with our experts. We’ll speak with you to learn more about your company and your business needs — and then develop a financing strategy that makes sense for you.
Partner With Team Financial Group for Fast, Flexible Financing
At Team Financial Group, we work with clients to identify and customize financing solutions that meet their unique needs. Our commercial equipment financing options can improve your business’ cash flow and overall financial health.
To get fast, flexible financing today, please complete this brief online application.
The content provided here is for informational purposes only. For financial advice, please contact our commercial financing experts.