Debt free or new machines??

[WildWestDesigns]

No where is my comment did I say to be "stupid".....There has to be a plan and a good business case to incur debt....

I have seen many cases in the past where folks run old equipment "debt free" and pay way more for consumables and/or labour than they would with more modern and efficient equipment...

I didn't say that you said "to be stupid" nor was that my issue. My issue with what you said was a "false dilemma". I have also had machines crap out on me that were new. I'm taking not even 2 days out of the box, while I was still getting lessons on how to operate it. I've had it now a couple of weeks and it's only been operational for 4 days of that time. It's back up and running now, but you take chances with machines no matter what. Unfortunately, I have a hard time trusting it now, but maybe it'll be smooth sailing from here on out for awhile.

Do you want to be debt free or do you want to make more money?....

There was nothing in there about examining the situation or anything like that. You merely asked if you want to be debt free or make money. Hence my issue with that statement without knowing the particulars as to what the costs are compared to the benefits for Matthew's own situation that's a bold thing to say about making money.

 

[artbot]

i think having this signs101 community has made "new" machinery less important because we can keep old machinery running like new.

 

[Plum House]

Debt free, 'nuf said. Though I would have liked a "like" button for the Dave Ramsey comment.

 

[James Burke]

Personally I believe in being debt free as a hedge against risk. Because of that it has taken me longer to get as far into the game as I am in, but I don't have that stress of always needing the machines running etc to get bills paid.

Amen preacher. Now, just give us the benediciton and we can all go home.


JB

 

[binki]

use those checks from your credit card. if you can't pay the monthly spiff you own the equipment and the unsecured debt goes to collection. dont anser your phone after that.

 

[FireSprint.com]

We're going into a BIG political year, so going debt free at this point would mean we're not ready for a 300% increase in business next year. We buy alot of used equipment though, so it doesn't take long to pay off when the season starts up again.

Growing a small business correctly is just as hard or hard than finding the customers you need...

 

[ChiknNutz]

Debt is Dumb.

 

[James Burke]

Debt is Dumb.

Careful....that's a very broad statement.

Purchasing your supplies on monthly terms is debt. Sometimes it makes good business sense, but other times it can be a rattlesnake.

I know a lot of people who like to "use other people's money", but a guy or gal can get in trouble real quick if they're not disciplined to set funds back.

Personally, I prefer to pay for everything with cash.

JB

 

[James Burke]

We're going into a BIG political year, so going debt free at this point would mean we're not ready for a 300% increase in business next year.

Hmmm...this sounds like the same rhetoric those politicians generate.


JB

 

[WildWestDesigns]

We're going into a BIG political year, so going debt free at this point would mean we're not ready for a 300% increase in business next year.

I fail to see the nexus between being debt free and not being able to handle a 300% increase in business next year. Being debt free doesn't mean in of itself mean "you" can't handle a 300% increase in sales, it really depends on what that 300% increase translates to. My 300% may or may not be the same as yours.

I have to ask though is that 300% a dead cert or is it a forecast? Even if you have contractual obligations that translate to 300% increase, it still may not happen. Contracts are broken every day in the business world. It just depends on if it's better for a company to go through with the contract or if it costs them less to break it and pay the "fees" associated with breaking it.

That is, of course, if "your" contract stipulates on such fees if the contract is broken by the other party or if the non-refundable down payment is it.

 

[Fatboy]

I will buy the machines.But that is me.....you will have to make that decision!

 

[artbot]

maybe it should be some kind of usage threshold. break down the amount of hours per day or week that the printer runs. divide that by the amount of the payment. so that you have direct hour per dollar for cost of ownership. new or not, the machine payment should be a monthly write off, not an "investment". now compare that cost of ownership per hour to the throughput net per hour that your shop gets from that machine per hour. if say, every hour that machine runs, it provides a $22 or $44 or whatever profit. make sure that the cost of ownership on that machine isn't more than about 5% to 10% of that number (which sounds really high to me because my machine has $0 monthly payment). with this equation a seldom used machine could cost $5 per hour to own (running) per month. and only create $20 per hour running. or that machine might cost $.75 per hour and create a $80 net per hour.

basically you just don't guess at the notion of having beautiful new equipment. in most cases a machine that cost $2,000 will do the same job that a $15,000 machine will. and fortunately the more these printers run, the better they work. so there's no "don't" wear it out mentality.

my best example is i have the ugliest most embarrassing old school (built from 2x10's shopbot cnc). it's about 30 years old. i use it about once a month. it knocks out a $10,000 order or a $2000 order. but at once a month, i will never ever ever upgrade. maybe i should paint it? or pinstripe it? it deserves a medal for being indestructible. and for that matter, i bought out of the back of a moving truck for $4k about 20 years ago.

 

[btropical.com]

we just crushed 80 cars so hello big debt payoff , I am now just gonna skate on all the stock we have >>>>>>>>>> MGB MGA Midget parts also Datsun 240 z and crap load of other odd cars , just got a Pacer in ........... If you have to make a decision watch all the commercials of everyone skating and dancing around and trumpeting buy more stuff buy more stuff . Debt on low interest car loans or mortgage OK but payoff all your high interest stuff . keep a nest egg for emergency . Congratulations ! SUB OUT SOME WORK till you see whats happening and look for deals <<<<<< Don't buy the first thing you see

 

[john1]

blah blah blah, it's a no brainer man. Pay off your vehicles and have a few less payments to worry about.

If it's not broke, don't fix it (aka don't buy a new machine if you don't really need it, prioritize what's important first)

I'd hate to be the guy who has all these machines and payments to go with them and then some. It's nice to own things but that's just me. I paid off my vehicle when i bought it because that was a smart decision i could do at the time, Same with my Versacamm so i didn't have a payment to worry about. No interest, none of that crap which makes you pay more in the long run so take the "hit" and get it done if you can.

 

[Clear Choice]

Debt free....you can design then sub-out the printing.
FIND GOOD RELIABLE VENDORS/PARTNERS.
Let the vendor pay for new equipment/upgrades/repairs/supplies.
When you see that you have enough continual business to keep
that machine busy 75% of the time...then consider a purchase.
BUT, figure your time & labor into the equation too.

Design-Proof-Order...move on to the next job.
OR
Design-Proof-Load Media-Print-Finish

Yes, you do have a bit more control when you own the equipment
and the turn-around times can be a bit faster....but most often
the balance is in your favor when brokering the actual printing.

It's your choice...do you want to spend your time producing the
product or designing/selling more product?

Those jobs that need immediate turn-around are usually clients
who never plan ahead and will always be PIAs.

Just my 2 cents!

 

[4R Graphics]

I would have to look at the amount of work we have or project to have for the new equipment.

As for the package absolutly not find and put together your own package.

Perhaps buy some used equipment.

We started doing wraps and well it took us 2 wraps subed out to make us get a printer that printer was picked up used for $5000 and picked up a China laminator to start and we have moved forward and never looked back but we have the work to justify the original purchases and the growth to better newer equipment.

If you are new to printing there is a learning curve small but there is one for getting quality print jobs out.

Can you work on your own equipment (we do) bought a JV3 160 for our first printer got the manuals for it and have done all the head changes and alignments (saved lots of money over the years).

 

[jasonx]

No one here knows your situation or your real numbers.

You need to take the path that results with more net funds in your pocket. If you can generate more profits with adding more debt that exceeds that savings you'd make then covering the existing debt now then the choice is simple either way.

Business is always about generating a return on your investment.

 

[signswi]

No one here knows your situation or your real numbers.

You need to take the path that results with more net funds in your pocket. If you can generate more profits with adding more debt that exceeds that savings you'd make then covering the existing debt now then the choice is simple either way.

Business is always about generating a return on your investment.

I always wonder about all the posts here asking about simple things like pricing and ROI calculations. Take some business classes at a local university extension or something already. Business failure rates aren't high because it's easy.

That said I wouldn't personally take on debt for a sign business without projections that were rock solid. It's just not a good enough market and margins can be really low. If I really wanted to own a sign business and was starting from scratch I'd build up capital doing consulting and brokering first.

 

[FireSprint.com]

I fail to see the nexus between being debt free and not being able to handle a 300% increase in business next year. Being debt free doesn't mean in of itself mean "you" can't handle a 300% increase in sales, it really depends on what that 300% increase translates to. My 300% may or may not be the same as yours.

I have to ask though is that 300% a dead cert or is it a forecast? Even if you have contractual obligations that translate to 300% increase, it still may not happen. Contracts are broken every day in the business world. It just depends on if it's better for a company to go through with the contract or if it costs them less to break it and pay the "fees" associated with breaking it.

That is, of course, if "your" contract stipulates on such fees if the contract is broken by the other party or if the non-refundable down payment is it.

We're in the political sign printing business. It's about as easy to predict what our increase will be during political years as any reasonable, experienced sign shop can predict what they'll do in May based on January sales. We're just forecasting what we'll do in Even numbered years vs recent odd years.

Now I couldn't tell you what we'll do two or three years from now, but next year, we have a pretty good idea.

You can also forecast it with coro sales, screen inks for coro & polyboard, etc.

It's not rhetoric. It's an honest forecast that we bet money on every other year. As we say in the Midwest, you have to make hay when the sun is shining.

 

[WildWestDesigns]

We're in the political sign printing business. It's about as easy to predict what our increase will be during political years as any reasonable, experienced sign shop can predict what they'll do in May based on January sales. We're just forecasting what we'll do in Even numbered years vs recent odd years.

Now I couldn't tell you what we'll do two or three years from now, but next year, we have a pretty good idea.

You can also forecast it with coro sales, screen inks for coro & polyboard, etc.

It's not rhetoric. It's an honest forecast that we bet money on every other year. As we say in the Midwest, you have to make hay when the sun is shining.

I can understand that. I'm just still trying to reconcile how being debt free would keep you from being able to handle an increase of 300% sales. There are a lot of ways that you can go about being debt free and still be able to handle increase in sales that may or may not happen next year. While your forecast does seem reasonable, there still is a chance that it doesn't go as well as planned for whatever reason. I'm not saying it won't go according to plan, just saying that there is a chance.

Just having a hard time reconciling it is all.