7Figuring ROI. When you calculate your return on investment for woodworking machinery, some experts suggest comparing it to what an hourly employee would cost in your business. This
isn’t to say the machine will replace
X-number of employees (although that
might be your intent). It’s more about
comparing monthly, weekly, daily, and
hourly costs to labor costs.
Another key factor to consider are
tax implications. Check with your accountant and equipment distributors
about how you can structure a deal to
take maximum advantage of tax incentives potentially available from federal,
state, or even local authorities.
8Clarify all terms. You’re likely to run into trouble if you don’t clarify all terms in advance and get them in
writing. This includes insurance, taxes,
maintenance, who handles what and
how much it will cost.
What’s the procedure for upgrades?
If it’s a lease-purchase, what happens at
the end of the lease term? What happens if you want to return or trade-in
the equipment? Are there any additional costs or payments triggered by
the conclusion of the agreement?
9Get help. In addition to advice from vendors, you should consider obtaining as much independent infor-
mation as possible. One source is the
Equipment Leasing and Finance As-
vantage.org). If you already have a
relationship with a business consultant,
have them weigh in your proposed pur-
chase. Free mentoring and consulting
advice is often available from SCORE
www.score.org), which typically
involves retired successful executives
sharing their business expertise.
Don’t overlook colleagues who
might have already gone down a
similar path. If you are a member of
a trade association such as the CMA,
KCMA, AWI, etc., check with fellow
members about suggestions related to
your proposed equipment purchase
and financing. ✚
Karl D. Forth also contributed to this report.