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Does a baler fit into your end of year capital expenditures?
10 NoVEMBER, 2021
When the economy starts to show signs of weakness or uncertainty, businesses and consumers tend to react by constricting or pulling back. That is especially true of capital expenditures, like equipment such as balers or compactors. But let’s consider how this “new” economy could lead to new opportunities.
Large purchases in this economy
As 2021 comes to a close, let's take a look at a few different economic points of view, with parallels that could be useful for any business considering recycling and waste management equipment. After all, sustainability is all about efficiency - doing more with less.
To illustrate our first viewpoint, let's consider a couple who recently contemplated buying a house after leasing for a year in a new state. Their needs had changed, and the house they were in was not meeting all their desires and needs. Besides that, the rent was being raised. As they started the process of looking, they engaged the services of an experienced realtor. Her wisdom would eventually tip them in favor of buying, but let’s look at what they faced and how equipment buyers may be facing similar pressures.
As they searched, they noticed a few things that were becoming a burden to them. First, was the low supply of houses on the market, which meant limited options. Second, the prices were escalating. All of the materials that were going into a new house were rising and existing houses were being sold well over asking price. And third, the economy was uncertain.
The couple became discouraged and debated stopping their search and holding off until the market improved. The experienced realtor smiled and told them they could do that, and it could work out fine.
Or, she said, ask yourself these key questions:
Should you buy a baler now or later?
For the couple, weighing their current options with the benefits gained helped heal their buyer’s fatigue. For consumers in similar situations, there are very rarely disadvantages when the need is real and is not going to change. As such, for companies that have the money to invest, anything that is overpaid will quickly be dispelled by the satisfaction of getting what they needed and wanted. We have seen cycles of economies come and go, and would take the opportunity rather than wait for an unknown, because the future is always unknown.
The fact is that your costs are likely not going to go down for a while. Not having the equipment is likely to continue to make it more expensive, not less, to do the same job you are doing now. Delay does not delay expense. It is just expense in a different form.
So if you invest now, you start saving now. You are more efficient now. And you are prepared to save even more when things change so you are ahead of both the curve and the demand that will inevitably return. The sum of the later cost is a guess, at best. If you decide on now and not later, here are your options:
Cycles happen. You are in a cycle that is creating the need, that will also happen again, but now you will have what you need to keep up. If everything were normal, would you still need a baler? Probably. Will this baler be available in the future? Maybe, maybe not. Ask yourself, if this machinery is what I need and want now, how much opportunity cost am I willing to risk? The fact is, there is always opportunity created by uncertainty.
Should you lease-to-own or rent?
When it comes to new equipment, a lease-to-own or rental contract is always an option. Leasing gives you the ability to ride out the fluctuations with a very low interest rate, while taking the tax write off now. Section 179 of the tax code could prove to be a great strategy for a lease or financing. At term end, you own it!
For the couple and the house, not buying now was not going to change their need. They still had to pay rent just like you still have to pay for your recycling and trash to get hauled. Swapping that out for cost savings and efficiency is a good idea in any economy. Put all that caution into buying the right baler or compactor – a Bramidan. With our machinery, your cost of ownership is low and your reliability and functionality is high.
Considering investing in a baler that fits your needs?
The right investment is just that – an investment, not an expense. So as you consider what to do, ask yourself the pertinent questions that help you dispel the confusion and apprehension. Should you determine you are ready for an opportunity to invest, by all means, please consider Bramidan as the right choice for the right time.
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