Profits and Losses: Keeping Your Business Supplied Without Losing Money
Even if your business is going through a bit of a slump, you have to keep up with your supplies without losing money. Here are some tips to keeping your business supplied with equipment and materials without losing profit:
How To Save Money When Purchasing Equipment
When it comes to buying equipment for your business, every dollar counts and you need to make the most of it. Shopping around for the best deals is the way to start and even when you have come across some bargains there are still more ways to save:
Consider buying used equipment: Check out that it is in good working order and see if there is still a warranty.
Use your negotiation skills: Do some haggling before you sign the contract to make some extra savings.
Check for tax incentives: If these are available, they can also help bring your costs down.
Consider financing: Financing is often available for buying equipment, but consider carefully which type of financing is right for you.
Financing Your Equipment
If you need to purchase large pieces of machinery for your shop, such as electric ovens, how are you going to provide this to keep your business running, without losing money? Before you purchase an individual piece of equipment, consider the overall needs of your business. Do you need this equipment right now, or can you buy it later when your business is succeeding and you’re ready to expand?
On the other hand, your new equipment may enable you to streamline your production process and expand your customer base. If you decide to go ahead with the purchase, consider your financing options:
Purchasing: Purchasing enables you to fully own the equipment and its cost is amortized by your business over the equipment’s lifespan. Sometimes you can even get financing for an amount larger than the purchase price, to cover transportation, installation, and training, for example.
Leasing: This enables you to take possession of and use a piece of equipment for an agreed length of time, which can reduce your payments. You do not own the equipment and if you wish to buy it, you’ll have to wait until your lease expires. If you do decide to buy, the price you pay will typically be lower than the original purchase price would have been. But don’t forget, you have already been making payments on the lease, so it may cost more money than other options in the long run.
Renting: This is sometimes an option for equipment that is very specialized or equipment that quickly becomes obsolete. Equipment that you rent is not considered a fixed asset so you can easily return it or exchange it without incurring a huge cost.
Look For Hidden Ways Where You’re Losing Money
Keep your eyes open for these money drains and if you spot one, put a stop to it right away.
Poor organization: If your business is badly organized, it will decrease your productivity and drain your cash flow very quickly. Plan ahead on a daily, weekly and monthly basis.
Unnoticed service fees: While it’s tempting to try out the latest technology, if you’re not careful you will end up spending large amounts in service fees. Cut these back and only use the services you really need.
Employee turnover: Losing workers and having to hire new ones costs you money, and if it’s happening frequently it will be a significant drain. Start implementing methods to reduce employee turnover.
Maintain Strong Relationships With Your Suppliers
It really does pay to spend time building relationships with your suppliers. You can do this by:
- Meeting your suppliers face-to-face as much as possible.
- Review how they operate their business.
- Keep in close contact with the person who is responsible for managing your account.
- Ask for information on any future plans for development and how this will affect your business.
- Stay in good standing by placing orders promptly and paying on time.
- Keep an eye out for any new opportunities or prospects you can pass their way.
- Make your business valuable to your suppliers and in return, they will provide you good service.
When you’re running a business, particularly if you’re in an industry that relies on large pieces of machinery, you have to keep your business supplied without eating into your profits. With determination and good financial management, you can pull this off without losing money.