HBBH Blog
Adding Assets
Before any equipment or furniture is purchased, a needs assessment should be conducted. When purchasing any capital asset you should ask the following question:
How will this save me or make me money?
In business, assets need to either generate revenue or save you revenue. The best way to assess any asset is to do a cost analysis. Doing so addresses the following:
1. Financing. Are we borrowing, leasing or purchasing outright? If financing or leasing, how much are the monthly payments?
2. Overhead. Are there overhead expenditures associated with the purchase? It can include wages, additional supplies, equipment, and software. Remember when you buy a computer, the additional supplies and software can be extremely costly.
3. Training. The asset may be the answer to your dilemmas, but without training it can also be a detriment. Always get training before purchasing, not after.
4. Revenue. The asset must take care of its own debt and produce some form of positive results. Create a time schedule of income, to ensure it pays for itself and eventually shows a profit.
5. Life. With technology, lasting a lifetime doesn't equate to our lifetime. Ability to modify and stay up to date is important in today's business.
Bottom line on any asset/ equipment added: It needs to produce benefits, otherwise what is it doing in your office?
Dick and Andy