Upgrading equipment is a big decision for a business owner.
Most businesses must evaluate their equipment and technology on a regular basis. This enables them to maintain their competitive edge, improve efficiency and avoid technological obsolescence.
Those efficiencies can lead to better performance and higher profits. Despite those benefits, the decision to upgrade is never easy.
Equipment features and technology are evolving at a fast pace. The biggest drawback in upgrading is the high price of purchasing the latest and greatest.
Choosing your technology investments is a tough task. But sitting on the bench and waiting for technology to prove itself isn’t always the best option.
Craig Kern, vendor relations supervisor at Stearns Bank’s Equipment Finance Division, has first-hand experience in seeing what new equipment can do for a business. Kern specializes in the agriculture and construction industries.
“New equipment is more reliable and dependable and often comes with some sort of warranty, which can reduce any down time or repair expenses,” Kern said. “New equipment will improve efficiency as well as providing live-time service records to keep it running at peak performance.”
Equipment Obsolescence Management
Many business owners are aware of what their competition is doing and the equipment they’re using.
Ellen Boquist, who specializes in the medical industry at Stearns Bank, believes it is more important than ever for medical professionals to know what equipment and technology is used by their peers.
“In the medical world, it’s all about offering the best for patients. The latest equipment can help you deliver great patient care,” Boquist said. “Having well-rounded knowledge of your industry and what services competitors are offering to their patients is vital.
“No matter the industry, if utilized correctly, new equipment can help make gains. The key is to ensure your staff are properly trained in using the equipment while making your customers/patients aware of what it does and how it can improve their situation.”
The Right Financing Fit
Financing an equipment upgrade is key for leveraging the purchase into immediate benefits. Boquist said financing can be broken down to best suit the business owner’s situation.
“Financing doesn’t have to be a five-year term,” Boquist said. “If a business owner has cash to buy equipment, but would like to keep that cash liquid, they should consider shorter term financing, such as 24 or 36 months. This allows cash to be kept but doesn’t obligate a borrower to a full five-year term.”
Choosing the right financing company is critical. With an experienced lender who knows your industry, the equipment finance process can be quick and easy. In addition, the lender can cater to your specific needs and budget considerations.
“You want to make sure your lender understands the ebbs and flows of your industry and business,” Kern said. “Finding that will secure the terms that are best for you. Things such as flexibility with down payment, term length, seasonal payments and many other customized solutions that you may need.”
Where To Start
Before working with an equipment finance lender, business owners should consider the following:
- Will your lender service the duration of the loan and keep you as a customer? (It’s important to know if they will sell your loan to another lender whom you’re not familiar with.)
- What warranty comes with the equipment?
- Is there a dealer in my area I can work with?
- Does the dealer I’m working with provide service and parts in a timely manner?
- Does this equipment and tech match the needs of my customers?
Many prospective buyers find that it’s best to be hands-on with equipment and to demo it before making a purchase. Others find that reading publications specific to their industry are beneficial. No matter what, doing the research and gaining knowledge about the equipment you’re interested in should always be your first step.
“We want to educate customers on the benefits of financing and go more in-depth with things to be aware of,” Boquist said. “That makes all the difference in the world, having real conversations.”