Industry on American Capital Group Blog

Guide to Buying Used Equipment

Tue, 29 Aug 2023 17:28:24 +0000

Many business owners are considering the purchase of used equipment to expand their operation. Since there are risks in purchasing used equipment, we have a few useful tips to help simplify the process as well as head off potential problems before our customers are stuck with a bad investment.

Before you start looking it is best to do a brief cost/benefit analysis.

Consider the following:

Do you need to hire an additional person to operate this machinery? What is their monthly cost?
Are there additional fuel or material costs?
How much more productive will this equipment make your company…does it enable you to complete jobs 30% faster, does it eliminate your short-term rental costs, does it eliminate your cost of hiring an outside company to perform the work?
Get prequalified for a lease or loan on the expected equipment cost…that way you can calculate your estimated payments based on the cost of the equipment. With used equipment moving quickly, securing a pre-approval also allows you to potentially negotiate a better price vs other buyers that don’t have their funding secured.
An ideal cost/benefit ratio is 2 to 1 or better. The additional revenue from the acquired piece should be double the total monthly cost of the machine (lease payments, plus maintenance costs, additional payroll costs, insurance costs). For example, if an additional excavator will cost $2500 a month then it should yield $5000 a month in savings/additional revenue…anything less and you should consider a less expensive piece of equipment to make the ratios work and protect the profitability of your business. There are bonuses for depreciation however the goal of any successful business is increasing cash flow not using depreciation to help make a purchase make financial sense.

Get feedback on different types of equipment.

If you are not familiar about certain types of equipment, then taking some time to do additional research will help you protect your investment. LinkedIn has several great corporate groups/industry groups. The website can be a great resource for asking other small business owners for insight as to what equipment has worked best for them and what challenges they have faced on implementation. Their honest feedback could save you a significant amount of money…this is especially true in the manufacturing sector. Some automation equipment might need additional features to enhance productivity or require a significant investment in power supply/infrastructure to work effectively.

Changes in the new and used vehicle market

Mon, 22 Aug 2022 16:57:17 +0000

The new and used vehicle market has changed dramatically in the last few months.

If you are not aware the interest rates on vehicles has increased dramatically this year. Several of our customers just in the last 30 days are reporting that the interest rates they are seeing on new trucks are 10-11% or higher, and on used trucks some of our customers are reporting rates over 14%. These are clients with strong credit profiles and have been in business for years. The recently released Fed minutes show the Fed is considering another .5% interest rate hike in September which could impact vehicle rates further.

Understanding Your Balance Sheet Part Two – Debt to Equity Ratio

Tue, 07 Jun 2022 22:43:05 +0000

As we continue our series reviewing the balance sheet, the next important ratio to discuss is your company’s debt to equity ratio. This ratio is important as financial institutions review this ratio to determine how risky/over-leveraged your company is. In addition, should you decide to sell your business one day, this is the ratio buyers will look at to determine if it is a fair purchase price.

Let’s clarify some terms:

Understanding Your Balance Sheet Part One – Current Ratio

Thu, 26 May 2022 16:58:23 +0000

Many small business owners think that their balance sheet is confusing and best left to accountants and bankers to understand. However even having a basic understanding of your balance sheet can give your company an edge in positioning your company for long term growth. In addition, a strong balance sheet can also:

Help you weather any short-term downturn in the market.
Make you look stronger financially when you are applying for larger leases or loans for real estate or larger equipment.
Help you achieve top dollar when you are looking to sell your business.

One of the most important ratios to look at is your current ratio. Before diving into what the ratio is, an explanation of current assets and current liabilities is needed.

Don’t Fight the Fed

Mon, 09 May 2022 14:43:37 +0000

Many business owners are concerned about inflation, the recent market sell off, and the increasing cost of funds in this rate rising environment. The Fed’s second rate hike of the year, a half a percent, has affected new loans, variable rate debt, and mortgages. In addition, the Fed is anticipated to implement additional 0.5% rate hikes in June, July and September. There are a few things business owners can do to plan for the balance of the year

4 Tips to Protecting Your Financial Health

Tue, 01 Feb 2022 05:55:13 +0000

The last time the Federal Reserve increased rates was in 2018 and many business owners have forgotten the financial impacts an increased rate raising environment creates. Any debt that is on a variable rate schedule will be impacted….if your business has a line of credit, or your house has a home equity line of credit, the payments on this debt increases when the Fed increases the rate. Here are four tips to help protect your financial health.

Guide to Buying Used Equipment

Tue, 04 Jan 2022 15:07:26 +0000

Supply chain issues and increased costs for new equipment are major concerns for business owners in 2022. This has led many business owners to evaluate the purchase of used equipment to expand their operation. Since there are risks in purchasing used equipment, we have a few useful tips to help simplify the process as well as head off potential problems before our customers are stuck with a bad investment.

Before you start looking it is best to do a brief cost/benefit analysis.

Consider the following:

Consider This Before Paying Cash for Your Equipment

Mon, 01 Nov 2021 18:10:42 +0000

You might be like some business owners we speak with that are considering paying cash for an upcoming equipment acquisition. What many of these owners don’t realize is that by paying cash on items that can be financed or leased, they are giving up a large amount of future profit. The cost of funds to acquire assets has been extremely low, and inflation is forecasted to continue to significantly rise.

WestPack Anaheim 2020

Mon, 09 Mar 2020 20:07:54 +0000

WestPack Anaheim 2020

Another year in Anaheim at WestPack proves that innovation continues! Highly specialized machines, the latest in efficient and clean packaging ensured the trade show floor was ready to impress.

WestPack is held annually at the Anaheim Convention Center in Anaheim California and partners with MD&M West, ATX West, Design & Manufacturing Pacific and Plastic West to put on an event that combines packaging, medtech, automation, design and plastic industries giving attendees the opportunity to find more solutions to their needs and make connections across verticals. Attendees at this year’s expo interacted with business professionals and engineers who passionately detailed out their products and discussed what upcoming trends will soon become the standard.

Nine Types Of Dump Trucks Explained

Tue, 15 Jul 2014 18:00:15 +0000

If you’re looking to add a dump truck to your fleet, you’ve come to the right place! American Capital Group can provide financing for your next new or used dump truck. But what kind of dump truck is right for you? Below we briefly explain 9 types of dump trucks:

Standard dump truck– What you think of when you think dump truck, if it were an ice cream flavor it would be good-old vanilla.

Medical Waste Treatment

Tue, 28 Jan 2014 15:33:53 +0000

One aspect of Waste Management that is expected to expand is medical waste disposal. The increase in hospital business and home medical care is also leading to an increase in medical waste. Despite the increase in demand, the amount of treatment facilities is still low because in most states medical waste can only be disposed of at certain facilities with proper equipment.

That’s where you come in. You can outfit your business to handle medical waste, and position yourself in a niche industry with high growth potential. Although restrictions vary from state to state, some necessary equipment may include a radioactivity detector, autoclave, or a special medical waste incinerator.

Rebuilding The Construction Industry

Mon, 18 Nov 2013 18:02:22 +0000

The construction industry is beginning to make its long awaited comeback, but is this long term growth or is it simply a bubble?

Those in the insurance business, whose job it is to assess risk, are optimistic that the construction industry will continue to grow but not to the heights of its former glory. However, residential construction is seeing steady growth, as well as habitational. According to the US Commerce Department, private residential spending has risen to an annual rate of $334.58 billion, its highest level since 2008.