There are different criteria for purchasing equipment, including price, quality, performance, production capacity and many others. It is important to properly assess your production requirements and to purchase the equipment you need to help your business grow. Equipment that only works at 10% of its capacity will impair your working capital and could lead you into bankruptcy. Avoid impulse buying because the consequences could jeopardize your business’ growth.
Business development advisor
DE – CLDG
“Determine the useful life of your equipment, particularly when you decide to finance it, because the duration of a loan should never exceed its useful life. If you do not have the funds you need for the financing, you could consider a financial lease.”
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New or used
In some cases, it is worth considering the purchase of used equipment, which has a lower cost of acquisition. A good analysis of your requirements will help you make an informed decision.
Purchase price is not the only variable to consider when looking at expenditures. Other costs could inflate the bill, such as transportation, customs, installation, training, set-up, electricity, etc.
Bearing capacity and infrastructures
You have to make sure that your building can accommodate the equipment you want. Measure the dimensions of the equipment, and measure the spaces it will have to get through, check its weight and the load bearing capacity of your floors, check the water and electrical supply requirements and availability, etc.
Buying equipment is one thing, getting it to work is another. You will probably have to train your employees and allow for a breaking-in period.
The equipment you want to acquire must comply with the applicable municipal by-laws. Check with one of the municipal service centres.
Tax credits and tax measures
Various tax credits and tax measures may apply when you purchase equipment. Discuss them with your accountant.
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