Buying secondhand can be a savvy financial move.
The allure of shiny new machines and technologies is always tempting, but there are compelling benefits of buying used. Every dollar saved can be a dollar earned, and a decision to buy pre-owned can keep paying off long after the initial purchase. Let’s explore why purchasing pre-owned equipment for your business can be a savvy financial move, what to be cautious of, and how to embark on your journey of cost-effective procurement.
More for Less
The most obvious advantage of pre-owned equipment is the lower price tag. Channeling savings into other areas of the business can fuel growth. However, a lower initial purchase price isn’t the only benefit. Others include:
- Depreciation mitigation. Used equipment is already depreciated to some extent. Whereas new equipment depreciates annually within the first five years of ownership, buying used can preserve more of your capital and potentially even enable recouping your investment later. “Newer” pieces of pre-owned equipment tend to hold a higher value on the used market. If you’re lucky enough to find one, this can help save a little more on current retail and further preserve your cash flow.
- Immediate availability. If time is money, putting needed equipment into action promptly can make a big difference to the bottom line. New equipment may require lead times for manufacturing and delivery, and most vendors rarely carry a full stock. Manufacturers or vendors generally inventory the most popular items, leaving less frequently ordered items with longer lead times.
- Proven (and maybe new-to-you) technology. Pre-owned gear comes with less risk. Its reliability can be gaged through user reviews, maintenance records, and historical performance in real-world settings. At the same time, buying used can help you afford high-quality gear or technologies that might otherwise be out of your budget range. The old saying “buy nice or buy twice” rings true in almost any equipment-based business. Perhaps now is the time to see whether buying a premium brand can improve product quality or otherwise provide a competitive edge. You can buy anything brand new, but what could you buy if you head-hunted it on the pre-owned marketplace?
Due Diligence
While purchasing pre-owned equipment offers significant financial advantages, it’s essential to be vigilant and consider potential pitfalls. To ensure due diligence, focus on the following:
- Do your research. Understanding the benefits of different makes and models will give you an idea of what to expect without the hassle of a salesperson trying to hard-close you. Check out the brands’ websites, user forums, industry forums, reviews, and colleague recommendations to ensure you’re making an informed decision. Consider not only whether the equipment meets your needs, but also whether it is compatible with your existing infrastructure and workflow – and with future growth. For example, a machine wired for both single- and three-phase power could be a shrewd investment.
- Research the seller. Also give some thought to where you buy used gear. Check out online marketplaces, auctions, classified ads, and specialized dealers. Read reviews, seek recommendations, and verify the seller’s track record to avoid scams or misrepresented products. Compare prices, conditions, services and warranties, and talk directly to sellers to ensure the best possible outcome.
- Pay attention to the fine print. When purchasing Seller to Buyer, ensure your funds can be held until you receive your shipment, or verify if your funds will go into an escrow account for safe-keeping. Also, seller-to-buyer transactions can create liabilities that neither party is willing to absorb, which is where finding a reputable service for pre-owned equipment helps provide the right kinds of insurance for a smooth transaction. Most used equipment dealers have some form of security in place to hold your funds safely throughout the transaction process for a seamless and safe purchase.
- Conduct an inspection. Prior to signing any papers, make sure to thoroughly inspect the equipment, or have a qualified company do so, to ensure it’s in working order. Many pre-owned equipment services will verify condition, operations and serials for you. Specialized dealers usually have a good reputation due to their ability to perform operational inspections and verify equipment resale value for fair market and reliability. Still, always inspect equipment in-person if possible, or request detail photos and documentation. Don’t hesitate to ask the seller questions about the equipment’s history, maintenance, and performance.
- Treat it like new. More often than not, pre-owned equipment does not come with a transferable manufacturer’s warranty. However, the seller might offer support or guarantees. Some services include an extended warranty on parts and perhaps even labor. Regardless, once the equipment is on the floor, treat it like it’s new. Establish monthly, quarterly and annual maintenance schedules to optimize your productions capabilities and continue to run your pre-loved equipment with longevity.
In conclusion, purchasing pre-owned equipment for your business can be a shrewd financial decision. It offers substantial cost savings, mitigates depreciation, and provides access to proven technology. Pay attention to potential pitfalls and reach out to a specialized dealer to see how their services can positively impact your purchase and thereafter. By navigating the pre-owned equipment market thoughtfully, you can strengthen your bottom line and set your business on a path to success without breaking the bank.
