Hosted by Mark Bradley
Interestingly enough as we look at investing in our company two competing viewpoints are at play.
The Bean Counter or (The Accountant is mostly concerned with Costs and their impact on the Income Statement) The Production Guy is looking at ways to save labour or do the work more easily. The accountant usually looks at costs and determines if something is affordable and the Production guy always believes that he cannot afford to be without said tool? Who is right?
The answer is it depends on Cash flow, Potential increases in Sales and or reduced labour costs. This can of course be tested in a trial budget run.
A great example of this was our recent purchase of a 5K stump grinder. We usually rented one, had to go pick-it up and then return it. We would need to grind a lot of stumps to pay for it. As it turns out now that we own it, we are going out of our way to do stump grinding work and our sales are increasing because we have the equipment. The time savings on the jobs we would not bother to use a stump grinder on because we did not own one, have gone down remarkably and the staff morale has gone up.
It is the, “businessperson” who can bridge the production point of view with the bean counter point of view. Most of the time it is not the purchase price or the monthly fees that will determine if something is a good idea.
What about more expensive pieces of equipment?
We used to purchase Mini-excavators bare bones and haggle like crazy about the price. We would always try to reduce the monthly payments but the question was at what cost?
Let’s look at the big picture and compare $1000/ month for a machine with no thumb and no auger….. Or $1200/ month with a thumb and an auger.
If you need attachments get them. I guarantee the two hundred dollar per month difference will not put you out of business and it will make you way more productive.
If I take this thought process even further and look at Dump Trucks, the cost difference between fully stocked five ton truck compared to a tandem axle truck is probably about 40K. When you look at the cost over 10 years and the increase in production it will give you plus the waste in waiting time it will eliminate I suspect you will no longer look at the expensive price as the determining factor in your purchasing decisions.
In the end it’s all about value.
You just need to understand the difference good value makes over time combined with the opportunities good values can create.
Landscape Management Network gives contractors the tools and systems that enable business owners to make decisions based on logic and numbers instead of emotions and instinct. For more information, visit www.landscapemanagementnetwork.com to see how you can take better control over your contracting business.
