Avoid Costly Equipment Buying Blunders

Have you ever bought a new "state-of-the-art" piece of equipment only to discover that you paid dearly for some bells and whistles you didn't really need?

Or maybe you invested in a beat-up bargain-basement asset that wound up being more trouble than it's worth. These buying mistakes can be costly to your business — and they can even be embarrassing if they wind up causing mistakes or slowing down productivity.

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Here's a five-point plan for buying reasonably priced equipment that meets your business needs:

1. Analyze the tasks the equipment must perform. With a "needs analysis," you and your purchasing team can identify exactly what the equipment will be used for and what features are essential. Brainstorm with the people who will actually work with the asset. Don't start shopping until requirements are clear.

2. Compare specifications and prices. Check with professional and industry associations to see whether they conduct tests of business machines. Trade publications are another potentially valuable source of product reviews. Otherwise, manufacturers' websites and representatives should be able to help you set up a useful spreadsheet.

3. Ask for references. If you're making a significant investment, ask the manufacturer or distributor for references from other companies in your line of business. When contacting the references, inquire about the performance and reliability of the equipment and whether the supplier provides maintenance and repair services.

4. Explore used items carefully. There are dealers who sell used equipment for a fraction of the original cost. Many of the castoffs come from companies that went out of business after a short time, so some of the assets may be in good shape. Auctions provide opportunities for picking up lower-priced items, too. As ever and always, however, be cautious about buying used equipment. Look for assurances that any item you're considering has gone through an inspection and, ideally, received some sort of certification.

5. Keep taxes in mind. There are complex tax laws governing asset purchases and depreciation. Be sure to consult your CPA before buying expensive equipment. Your accountant can also help you set a budget and compare buying vs. leasing.

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