Should Your Start-Up Invest in New or Refurbished Equipment?
Starting a new business is an exciting time. It marks the first chapter of what will hopefully be a successful adventure. To help ensure that the start-up is successful and survives the first years, the company's finances will play a vital role in accomplishing this goal.
It is reported that 29% of start-ups in the UK fail because they have run out of cash. The reasons for running out of money will vary between companies and what they have invested in. One of the reasons could be the equipment they have purchased. Some might have opted to buy all brand new equipment without considering the option of second-hand.
If your start-up is looking to invest in equipment, you may want to consider if you should purchase new or refurbished equipment.
Value Depreciation
Value depreciation is a term most associated with cars. When you buy a new car, the value of the vehicle depreciates the moment you leave the showroom of the car seller. With equipment, value depreciation also occurs.
Buying new equipment is a personal preference. Many will associate buying new equipment with having the best choice available. Whilst this might be true in some cases, buying second-hand can be the better choice from a business perspective. The upfront costs of second-hand combined with potential repairs will often be lower than buying brand new. For start-ups, these lower costs can be incredibly beneficial for business.
The Choices Available
The second-hand market is inundated with options when looking for equipment to buy. The extensive range can work in your favour, as some dealers might be willing to negotiate on price, enabling you to walk away with a better deal. There might be second-hand equipment that you have wanted but struggle to find.
If you wanted something customised, specifically for your business, it is likely the primary choice you will have is to purchase new.
Consider the Costs
If you have started a construction company, new machinery and equipment costs can be steep. Buying any of these will be an investment the company makes; as such, you want to ensure that they will work and at the standard needed. Choosing second-hand could help the business to save money.
For example, if you want to invest in a forklift, decide if buying a brand new one is the best option. There are businesses, like Multy Lift, that sell refurbished forklifts that operate to the same standard as a new one. The price tag is the difference between a used forklift and a new one. Ensuring that you have the funds to keep the business afloat is crucial as a start-up business.
One thing to remember if buying second-hand is checking the business is a reputable seller. Read the reviews from previous customers to find out more about the quality of the equipment and the machinery. It will help reduce the risk of investing in faulty equipment and spending more money on repairs or finding a replacement.
Deciding whether to buy new or second-hand equipment is ultimately a personal preference. It is worth seeing what your budget is and what you can afford. Second-hand can deliver the same results as brand new. The difference is the price paid for the equipment.
