So you’ve made the decision to buy landscaping equipment for your business. Now comes the next question: New or Used? If you had a hefty budget, you’d be happily bookmarking your way through CAT’s Web store. For the majority of landscape businesses, however, shiny new equipment is seen as more of an expense than an investment. In some cases though, it does pay to splurge. In this article, we’ll explore the Pros and Cons of New vs. Used to help you make the best decision for your business.
The Price is Right
Landscape equipment is both essential and expensive so when money’s tight, it pays to purchase far less costly used equipment. If you can find a good deal on reliable equipment at a great price point, your bank account will thank you. Plus, as equipment depreciates in value fastest during its first few years, you won’t be absorbing those depreciation costs.
Protection for Pre-Owned
Used landscaping equipment doesn’t have to mean ‘unreliable’. If you’re concerned about buying a bad piece of equipment, shop from a trusted source. Some suppliers offer certified used equipment that guarantees a thorough inspection, product support and an extended warranty. The extra cost is worth the peace of mind. Check out Caterpillar’s Used Equipment Inventory.
Bigger Fleet for Less Budget
It’s simple: The money you’ll save on equipment will leave room in your budget to buy more. And the more equipment you have that’s reliable, the more landscape work you can take on. Furthermore, properly equipped crews will complete jobs faster and more efficiently so you’ll have even more time to win jobs.
Anyone can sell equipment. There are no credentials, mandatory inspections or certifications, so there’s a good chance used landscaping equipment is going to come with problems. Even if you ask the owner, you really can’t be 100% certain how the equipment was operated, inspected or maintained. Unless you trust the seller, you’re making a significant investment based solely on a handshake.
Outdated Equipment in Poor Condition
Most used landscape equipment is outdated. Unless you luck into an owner going out of business, most of your used options will be older models. Wear and tear due to years of use will affect the condition of your newly purchased used equipment and increase the likelihood for costly repairs–perhaps much earlier than you anticipated.
When you’re purchasing privately from an unknown supplier, chances are you’re ‘taking their word for it’, trusting there’s no hidden damage. The lack of warranty puts your equipment and in some cases, your business, at risk. When purchasing from a dealer, it pays to try and negotiate some level of warranty into your purchase agreement to help protect your investment.
Looks matter! If your trucks and equipment are scratched up, sound like they’re dying and generally look like they belong in the junkyard, imagine the impression people will have of your business. Don’t be surprised when prospective customers judge the quality of your work based on the quality of your equipment…and the job goes to someone else.
The Risk for LOST REVENUE
This biggest disadvantage to purchasing used equipment is the revenue lost when it breaks down. Now put a price on all the unproductive hours while your equipment is in for repair. Transportation to and from the repair facility, the downtime during the repair and the crew’s inefficiency all add up to thousands of dollars in lost revenue—enough to pay the lease on new equipment for several months.
If you decide that purchasing used equipment is your best bet, follow these best practices before you commit.
When you’re buying new, you’re getting the latest and greatest in equipment. It will likely have the most up-to-date features and functionality, enhancing your crew’s productivity. With the improved efficiency afforded by new equipment, jobs will get done faster and you’ll be able to say ‘Yes’ to more work.
The cost of breakdowns can cripple a business. It’s not just the actual repair costs you have to worry about but the costs related to lost productivity, sales opportunities and customer satisfaction. New equipment brings peace of mind.
You really don’t get a second chance to make a first impression. Relatively new, clean and recently painted trucks and equipment are excellent promotion for your company. If you want to win the big jobs, it’s critical that you convey a professional image that builds customer confidence in your brand.
As the first owner of your equipment, you don’t have to wonder about the equipment’s history or its current state. And by purchasing your equipment vs. leasing, you’ll have no agreements, lengthy negotiations or contracts to sign. Plus, you’ll have no mandatory maintenance schedule to follow as TLC will be up to you.
In the construction and landscaping industries, the supply of manufactured power equipment doesn’t always meet the demand. Backordered equipment may mean long wait times. And when you need that new machinery ‘yesterday’, lengthy delays could be costly in terms of productivity and missed sales.
When you buy a new piece of machinery, you’re either paying the full cost up front or taking out a hefty bank loan. Either way, the high cost of new landscape equipment means you may have to hold off on other purchases. Add unexpected expenses and you could have a serious cash flow situation on your hands.
We have built a helpful calculator to estimate the life time cost of equipment, based on interest rate, purchase price, annual fuel costs etc… And with those numbers, an estimated hourly rate/cost based on hours per year usage.
Made the decision to buy new equipment? Before you get distracted by that ‘new equipment smell’, consider these best practices.
In some cases, you may find a gently-used secondhand piece of landscaping equipment that will serve your company well. In other cases, you may realize it’s better to just ‘bite-the-bullet’ and purchase something new. Whether you decide to buy your equipment used or new, make sure you take the time to properly evaluate its impact on your bottom line. Choose wisely: Next to your people, equipment is the biggest investment you’ll make in your business.
Want to dig deeper into the impact of equipment on your business? Read Leverage Landscape Equipment to Boost Your Bottom Line (or not…).
Wishing you luck in making the right equipment decisions for your business,
Mark Bradley is the CEO of LMN. Dedicated to transforming talented landscapers into profitable business owners, LMN provides the business management software and training owners need to grow. To learn more about how you can start transforming your business, FREE, with the LMN software platform, visit www.golmn.com.Interested in attending an LMN workshop? Visit golmn.com/workshops/ to register for a workshop near you.