How to Choose Equipment for Your Small Business

Choosing equipment for a small business is about much more than finding the lowest price. The wrong purchase can tie up cash, create maintenance problems and leave you with equipment that does not actually meet the needs of your business.

The right equipment, on the other hand, can save time, improve productivity and make it easier to serve customers consistently.

Whether you are choosing computers for an office, tools for a trade, machinery for a workshop or equipment for a retail business, the basic purchasing questions are surprisingly similar.

Before spending the money, you need to know what the equipment must accomplish, what it will really cost to own and whether the supplier will still be there when something goes wrong.

1. Start With What the Business Actually Needs

Equipment shopping can easily begin with features.

A new machine is faster. A computer has more memory. A software-controlled device has capabilities your existing equipment does not.

But features are not the best place to start.

Start with the business problem.

Ask yourself:

• What task must this equipment perform?
• How frequently will we use it?
• What capacity do we genuinely need?
• Will it replace existing equipment or add a new capability?
• Who will operate it?
• Does the business have enough space, power or other infrastructure for it?
• Will employees require training?
• What happens to the business if the equipment stops working?

These questions help separate essential requirements from attractive extras.

Do Not Pay for Capacity You Are Unlikely to Use

Buying equipment with room for future growth can make sense. Buying far more capacity than you are likely to need can be an expensive mistake.

Think realistically about your expected workload rather than automatically choosing the biggest or most powerful option available.

At the same time, choosing equipment that is already close to its maximum capacity could mean replacing it sooner than expected.

The goal is a reasonable balance between what the business needs today and what it may realistically need in the near future.

2. Look Beyond the Purchase Price

The cheapest piece of equipment is not necessarily the least expensive one to own.

Purchase price is only one part of the cost.

Depending on the type of equipment, additional costs might include:

• Delivery and installation
• Training
• Maintenance and servicing
• Replacement parts and consumables
• Software subscriptions or licenses
• Energy use
• Insurance
• Financing charges
• Repairs
• Disposal or replacement costs

This is sometimes described as looking at the total cost of ownership.

Imagine one machine costs less initially but requires expensive proprietary replacement parts. Another costs more to purchase but is inexpensive to maintain and is expected to remain useful for longer.

The second option could ultimately be the less expensive choice.

Consider the Cost of Downtime

There is another cost that is easy to overlook: what happens when the equipment cannot be used.

If a printer stops working, the inconvenience might be manageable. If a critical machine stops an entire production process, the consequences can be much greater.

Depending on the business, downtime could mean delayed orders, idle employees, missed appointments or lost sales.

That makes reliability, repair times and access to replacement parts important parts of the buying decision.

3. Decide Whether to Buy, Lease or Rent

Purchasing equipment outright is not the only option.

Depending on the equipment and your business circumstances, you may be able to buy, finance, lease or rent it.

Each option has potential advantages and disadvantages.

Buying

Buying can make sense when the equipment will be used regularly for a long time and the business has sufficient cash or suitable financing.

Ownership can provide greater control, but it also means the business carries the risks associated with maintenance, repairs and eventual obsolescence.

Leasing

Leasing may reduce the amount of cash required upfront and can make certain equipment easier to replace or upgrade.

However, the total amount paid over the lease period may be higher than the original purchase price, and contracts may contain conditions relating to term length, usage, maintenance or early termination.

Renting

Renting can be worth considering when equipment is required only occasionally, for a particular project or for a short period.

It can also provide an opportunity to use equipment before deciding whether long-term ownership makes sense.

There is no universally correct choice. Compare the expected period of use, total cost, available cash, flexibility and contractual obligations before deciding.

A large equipment purchase can also affect the cash available for other business expenses. Our guide on
stopping cash leaks in your small business
explains why available cash deserves attention even when a purchase appears affordable on paper.

4. Compare Suppliers, Not Just Products

The original version of this article advised business owners to shop around, and that advice is still worth keeping.

But comparing suppliers should involve more than asking who offers the lowest price.

A supplier can become an important part of your operation, particularly when the equipment is essential to serving customers or producing what you sell.

Compare factors such as:

• Price and payment terms
• Delivery time
• Installation
• Warranty terms
• Availability of replacement parts
• Maintenance and repair services
• Technical support
• Training
• Return or cancellation policies
• The supplier’s experience with the equipment

Ask What Happens After the Sale

A salesperson may be extremely attentive before you purchase.

What matters just as much is what happens six months later when you need assistance.

Before committing to an important purchase, ask who provides technical support, how repairs are handled, typical response times and whether replacement equipment is available during lengthy repairs.

If your business cannot operate without the equipment, those answers may be worth considerably more than a small difference in purchase price.

5. Research Reliability Before You Commit

Recommendations can still be useful, but they should be treated as one source of information rather than the entire decision.

Talk to other business owners who use similar equipment. Look for reviews from people using the product in circumstances similar to yours. Ask suppliers for references when appropriate.

Pay particular attention to repeated complaints about:

• Frequent breakdowns
• Poor technical support
• Difficulty obtaining parts
• Unexpected ongoing fees
• Complicated warranty claims
• Long repair times

One angry review does not necessarily tell you much. A repeated pattern deserves more attention.

Check the Warranty Carefully

Do not assume that a warranty covers every failure.

Find out how long the warranty lasts, what is excluded, who pays transportation or call-out costs and whether repairs must be completed by an authorized provider.

For essential equipment, also ask what happens while a warranty repair is taking place.

6. Test or Demonstrate the Equipment When Possible

Specifications tell you what equipment is designed to do. A demonstration can help you understand how well it may work in practice.

For a significant purchase, ask whether you can see the equipment operating, arrange a demonstration or speak with an existing customer.

Depending on the equipment, consider:

• How easy it is to operate
• How long common tasks take
• Whether employees can use it safely and comfortably
• Noise, size or workspace requirements
• How easily it fits into your existing processes
• Whether it works with equipment or systems you already use

A product can look excellent on paper and still be awkward in the environment where you actually need to use it.

7. Plan for Maintenance Before Something Breaks

Maintenance should not begin when equipment fails.

Before purchasing, find out what routine maintenance is recommended, how frequently it is required and who can perform it.

Determine whether parts are readily available and whether the equipment requires specialist servicing.

For equipment that is critical to your operation, it can also be worth creating a basic contingency plan.

Ask:

• Could another machine temporarily handle the work?
• Could equipment be rented while repairs are completed?
• Is there a local repair provider?
• Which spare parts should reasonably be kept on hand?
• How quickly could a replacement be obtained?

Thinking about failure before it happens can make an unexpected breakdown considerably easier to manage.

Small Business Equipment Buying Checklist

Before signing an agreement or handing over the money, run through this checklist.

If you cannot confidently answer several of those points, you probably need a little more information before committing.

Good Equipment Should Solve a Business Problem

Business equipment is an investment in getting work done.

That is why the best choice is not automatically the cheapest, newest or most sophisticated option.

Start with the job the equipment needs to perform. Calculate what ownership is likely to cost. Compare suppliers carefully. Understand the warranty and support arrangements. Think about what happens if the equipment fails.

Most importantly, give yourself enough time to research the decision rather than waiting until existing equipment breaks and you are forced to buy something quickly.

A careful equipment purchase should help your business operate more efficiently without creating a financial or operational problem somewhere else.

Note: This article provides general business information and is not financial, tax, legal or accounting advice. Financing, leasing, tax treatment, warranties and equipment requirements vary by business and location. Seek appropriate professional advice when necessary.