Tools: Facing – and Affording – the Tool & Equipment Investment Challenge
The competitiveness of the automotive service industry and rapid, constant advances in vehicle technology mean shop owners and technicians alike are faced with a common challenge: Constantly investing...
The competitiveness of the automotive service industry and rapid, constant advances in vehicle technology mean shop owners and technicians alike are faced with a common challenge: Constantly investing in tools and equipment to keep up with the industry. Though it’s a challenge, keeping your tool chest or shop current won’t necessarily strain your resources if you budget, plan and take advantage of everything your supplier offers to help you accomplish your goals.
There’s no question, tool purchases can add up quickly over the course of a year. Seasoned technicians may have $35,000 or more worth of tools in their tool chests. Your needs list might regularly include several new hand and power tools; a scan tool (or at least updates and additional cartridges to expand the capabilities of your existing scanner) may be a necessary investment; a larger tool storage unit for your expanding tool inventory may be another necessity for which to budget.
If you’re a shop owner, you may already have several hundred thousand dollars worth of diagnostic, lift and other shop equipment in the bays. If you’re focused on running an up-to-date competitive shop with the latest equipment, a high-end wheel alignment system or engine analyzer are good examples of what might be a necessary major new investment.
Know your needs – and your rep
You need to know what you need, and how to afford it. This is where your tool and equipment representatives can help – so develop a close professional relationship with them. (If they’ve been stopping by regularly and you don’t even know their names, something’s amiss.) It’s the job of your representatives to know your name, how much you’ve purchased lately, and, most important, your needs.
It’s your job to think of your reps as more than just sales people. Think of them as consultants in the business of helping you get what you need when you need it. If you’re not purchasing, not only is your representative not making a sale, but you’re also not acquiring the tools and equipment you need to either do your job effectively and productively, or to keep your shop operating profitably and competitively.
The affordability factor
Affordability can have different definitions for technicians and shop owners.
If you’re a technician, you’re probably most concerned with tool costs; weekly or monthly payment amounts; and whether there’s enough money in your bank account in any given week to cover the purchases you need to make as part of your job.
A shop owner needs to be concerned about all of these things plus equipment return on investment. Can you afford that needed new transmission service machine? Yes – if you manage your business efficiently and know how it’s performing financially; and if you effectively sell the services that new transmission machine is designed to help you profit from offering. Know the expected ROI on every piece of equipment in your shop, and all the ways to get your return. They go hand in hand. Your equipment rep will show you the projected numbers and explain how the equipment can make your shop more productive and profitable. It’s your task as a shop owner to put that into practice once the lease is signed and the transmission machine or wheel aligner is in the bay.
(Your budget, of course, should include a “pad” to allow for those inevitable impulse purchases when you see something you just have to have on the spot!) This budgeting and planning is especially important if you’re looking at investing in new equipment for your shop. Think of those survey cards in magazines you sometimes are asked to fill out – the ones that ask whether you’re planning on purchasing a new computer within the next 3-6 months, 6 months to a year, and so on. If you’re on top of your shop’s financial performance, you’ll know when you’ll be in a position to lease or purchase that new lift or engine analyzer and can plan accordingly for the monthly payments.
Use available credit effectively
Does your supplier offer one-stop shopping? You may not even realize all the credit programs that your supplier has to offer to make your tool and equipment purchasing convenient and easy on your bank account. Take advantage of all of them.
If you can lease rather than purchase equipment, consider it. It can help you avoid tying up a large amount of cash you may need down the road.
Pre-approved financing. If your supplier offers financing, your representative should be able to get you pre-approved quickly, with a credit limit and monthly pay ments tailored to your income. In fact, he may have you approved before he calls – so all you need to do to get that new tool storage unit you’ve had your eye on, is sign the sales contract. It’s simply a lot more convenient to have your supplier provide pre-approved purchase financing than having to apply for a separate business or personal loan through your financial institution.
The “add-on” factor. When you’re financing through your supplier, you can often add on to your account at any time (there may be a minimum purchase amount required). This is extremely convenient if you are running a weekly/monthly balance and need to make additional tool purchases.
Preauthorized payment plans. In many ways, this is one of the most painless ways to pay for the tools and equipment you need. If your supplier offers the preauthorized payment option, all you need to do is specify when you want the money to come out of your bank account. You can choose weekly, bi-weekly or monthly deductions. Knowing exactly how much is coming out of your account and when, gives you more financial peace of mind. Most of the time automatic deductions happen painlessly; you don’t really notice them, and you don’t even have to think about them until it’s time to review your monthly bank statement.
Debit and credit card payment. Interac Direct Payment is extremely popular today. If your representative offers Interac payment, it’s a lot easier to make either payments or purchases this way because you don’t have to worry about having cash in your pocket when the tool truck pulls up. Using your Interac card can help you get the tools you need without running up credit card debt and interest. But your supplier probably also offers Visa and MasterCard payment, which is also convenient. You can do as many business and financial advisors suggest – use one card for business expenses, and one for personal expenses. This can help you track and manage your tool purchases.
If you have a tool & equipment strategy and use all available resources to follow it, there’s no reason to feel overwhelmed by the constant need for investment in new tools and equipment – you can afford to be competitive and profitable.
This article was supplied by Snap-on Tools of Canada Ltd.