Calculating ROI for your plumbing business can be tricky. For instance, the equipment you invest in might not provide immediate returns but, they can be profitable in the long run. State of the art equipment that is required for your business to grow will come at a hefty cost. Before buying the equipment you will have to consider the initial expense, how many jobs do you get per week/month that involves the equipment, do the jobs help cover the expense etc.
What type of plumbing business do you own?
Commercial Plumbing Business
Does your business work on large-scale plumbing systems such as corporate offices, schools, large shopping centers? Then the equipment you use will also be heavyweight and be on a large scale. The things you should consider before buying equipment for your commercial plumbing business are:
- Do not compromise on the quality of the equipment you buy as your plumbing projects are usually long and equipment will be subject to long hours of usage. It is smart to buy good quality equipment in the first place instead of replacing them frequently.
- Try to find the best deal for your equipment. Many vendors will be ready to give discounts if you buy in large quantities or are a regular customer.
- Analyze how your labor cost can be reduced by this equipment.
- Do thorough research on the latest advancements in the equipment that you require
Service and Repair Plumbing
If your business is in the service or repair side of plumbing, your equipment needs are entirely different. You do not want to stack up many pieces of equipment that might not be required in the near future. This is will lock up your money unnecessarily.
Before buying equipment for this type of plumbing business,
- Understand the requirements of your client and when you are sure that the piece of equipment is necessary for the repair, should you invest in it. Track your jobs and determine where you can invest to save your team time.
- Do your research on the equipment used by your competitors
- Create a relationship with the vendor in case you have repeat business
Can you get Financing for your Plumbing Equipment?
Yes, you can get external funding for buying your equipment. Many financial solution companies have come to realize the importance of the equipment in the profitability of business. There are a few types of equipment financing options that you can explore:
Fixed Cost Financing
This is one of the best financing options for buying plumbing equipment as you don’t have to go through rigid procedures to get working capital. These types of financing also have the shortest application and processing time. As the financial demand for tools and equipment increases with the growth of your business, small business equipment financiers help ensure you have the right financing when you need it.
Traditional Equipment Loans
This type of loan is best for businesses that are starting out and need funding to set up their equipment repository. In this type of loan, the equipment acts as collateral, and you can get up to 100% funding, though most lenders will ask for a 20% down payment.
If your plumbing business is Small Business Administration (SBA) loan eligible, then you can apply for equipment specific loan for up to $5.5 Million. There are many loans that SBA provides and the CDC (Certified Development Company)/ 504 Program is the best for equipment funding. The interest rate of this loan is determined by the current market trends but usually is lower than the other equipment funding options.
If there is a vendor you’ve had a long-term relationship with, you can go ahead and take this financing option. These loans are similar to a credit card but give the vendor more security.
Traditional Bank Loans
If you own a well-established plumbing business with a great track record, you can opt for this loan. Many commercial banks provide loans for equipment or expansion of the business. The requirements of these loans must be fulfilled if you need a loan and depending on the bank, you might need a down payment.
Running a plumbing business can be tedious. There might be a regular requirement for different kinds of equipment. But, in reality, you cannot own all the possible equipment needed for your business. This might just lead to chaos and unwanted stagnation of your capital. Choose your equipment wisely and buy them in parts instead of stocking them all at once. This will help your plumbing business grow steadily with more profitability.