Repair or replace equipment? Assess, don’t guess
Every business owner experiences that fateful day when an invaluable piece of equipment stops working. They are then faced with a daunting question: Do you repair the broken equipment or replace it? Which will be less expensive? If I invest more into existing equipment, how long will it last? What will my budget afford in a new piece of equipment?
There are many variables that can and should be considered when deciding which solution is best for your business.
According to a survey by Consumer Reports, less electronic or appliance items are breaking requiring repair, but when they do malfunction the problem is significant. In fact, up to 53 percent never return to service after their first break and up to 32 percent perform poorly after that first incident occurs.
So do you attempt to repair or jump to replacement? This can feel like an expensive guess. While there are many factors that must be looked at, there are four key questions to ask that can help you make a good decision.
What is the typical life cycle of the specific equipment?
Take a look at industry norms. What is the usually amount of time this type and brand of equipment is in service? Is it a year? Five years? Ten years? According to depreciation schedules, computer equipment can be expected to last five years, athletic equipment averages 10 years, fencing around 20 years and automobiles are generally around for eight years. So if you are in year four-and-a-half of a computer and you are having issues, average life cycle data indicates a replacement is in order.
What is the cost of materials and labor needed for replacement?
If you are talking about a part that costs a few hundred dollars, this decision is much different than considering an item that costs in the tens of thousands. The same is true for the cost of labor. If you don’t have service available nearby, the cost of repairs and downtime can be much more than if you do. Another important consideration is whether you have qualified service available to you. In other words, are you able to hire someone to work on your equipment that is trained in how to handle it specifically? Or could you be wasting money with someone who is guessing and may do more damage than good?
What is the cost difference between the two options?
If the cost of repair is more expensive than just replacing, the answer is obvious. If not, the rule of thumb here is, don’t spend more than 50 percent of the cost of a new product on repairing an old one. And if an item has broken down before, replacement may make more sense.
What is available in the new technology and are there advantages that can impact my bottom line?
Products are changing all of the time. Look for features that may help offset the cost of a new purchase and consider their impact. Explore the new version of the item. Are there new safety features that could improve your work environment or reduce your insurance costs? Is the new version more energy efficient? Does it have features that can save you time or require less involvement from staff? And on the other side of that, are the features you are lacking costing you the time your employees are not able to accomplish a task?
When replacing equipment vital to business, education on replacement products is the best first step. Take a look at industry norms and consider whether the company stands behind their product. Look for a brand you can purchase that will last longer than the competition. That extra year in service may be well worth paying additional in the beginning. This will help ensure that the chosen replacement can adequately complete the tasks that the older equipment did and hopefully more. Functions of equipment and technology across all industries change so rapidly, it is important to understand your company’s needs and the best replacement solution.
Josh Gibbs is a service manager for Silver State International. For more information, call 775-865-6000 or visit http://www.ssitrucks.com.
Reno-based design firm MBA Architecture and Design is assisting on the $47 million Caesars Entertainment project in downtown Reno.