Impressions - February 2015 - 44

If you have equipment you
seldom use, get rid of it or start selling
its services. Otherwise, it's costing
you money.

Taking advantage of a tax
break is not a good reason to buy an
embroidery machine, but this is a typical
example of why we do things we later
regret when the machine sits idle.

to get the ball rolling on the orders this
machine can fulﬁll. The winter months
pass with no progress made on marketing
or selling the new embroidery capacity
and, in the meantime, the money spent on
it no longer is available.
Adding to the cost is the fact that insurance had to be purchased to cover at least
80% of the replacement value, and that bill
is getting paid each month without any sales
to offset it. In some scenarios, a full year may
pass before an owner ﬁnally admits he's
never going to invest the time and resources to make a return on this whimsical
investment. Unfortunately, he's stuck with
an asset on his books that is not producing,
and depending on what was purchased, the
machine may have dropped in value.
A tax advantage is worthwhile only if
the equipment is producing and the business is making a proﬁt. If the machine is
not generating income, there is no advantage to getting the tax break. Because of
this, business owners should take a hard
look at everything in their shops and ask
themselves, "Am I getting my full value
out of every piece of equipment?"

SELL OR SCRAP?
Over time, most shops upgrade equipment, which means a decision has to be
made about whether to keep or get rid of
the older model. Naturally, when capacity
is being added, the old machine is still in
use; however, what do you do with the stillworking automatic press that doesn't meet
44

Impressions | February 2015

your shop's current needs? If the space is
available, most shops will move it out of
the way to be dealt with at a later date.
While social media and e-commerce
sites make it easier to ﬁnd buyers for
used equipment, in some cases, it should
be hauled off to a scrap yard. If you sell
it, you will have to disassemble it for delivery. This must be done in such a way
that it can be re-assembled, which is a
time-consuming hassle.
You always can say you're selling it "asis" but then you run the risk of selling it to
someone who has no clue what he is doing.
The next thing you know, you are spending
inordinate amounts of time helping this
guy get it set up and running, and maybe
even assisting him in getting started in the
business. In the end, it's not worth it.
I've got a great example of this in my
shop. I have a small working automatic
press that I tried to sell numerous times,
including to an equipment broker. However, it needs a set of squeegees, ﬂood bars
and pallets that cost more than what the
machine is worth. It would be valuable as
a set of spare parts to someone with the
same model, but the cost to crate and ship
it also would cost more than the machine
is worth. The best solution in this case is to
have it hauled off to the junk yard.

CONDUCTING AN EVALUATION
Some decorators are disciplined enough
to do their own shop evaluations, but most
are not. I have found that many of us have

an entrepreneurial mindset, which really
turns out to be a disguised form of attention deﬁcit disorder. Any email, phone call
or new toy will distract us from focusing
on the job at hand, namely what to do
about that piece of equipment gathering
dust in the corner.
For this reason, I suggest recruiting
someone who is not involved with your
company on a day-to-day basis to be your
evaluator or accountability partner. This
should be someone to whom you are
comfortable talking and who can give
an honest evaluation without the risk of
offending you. Perhaps you can choose
someone on your business team. This includes your lawyer, banker, accountant
or insurance agent. If you have a business
coach or are part of a business networking
group, these also might be options.
You want someone to walk around
your shop with you and make you feel
guilty. Establish these rules:
* The evaluator will tour your shop and
ask questions about anything. The
shop owner must answer them.
* The evaluator should have the shop
owner justify everything.
Questions might include:
* What does this do?
* Why do you have two of these?
* Why is this positioned over here
so that your employee has to walk
across the room to use it?
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Impressions - February 2015

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