Equipment is changing so rapidly that one often wonders when to replace existing equipment. New embroidery machines or DTG printing equipment is an expensive proposition. This makes a logical decision all the more important.
How should I know when to acquire new equipment?
The question is, is my equipment really that outdated. Embroidery machines still use the same patented rotating hook assembly which was invented by Eli Singer. The only things that change are the electronics. A 30 year old machine will sew the same as a new machine. Only difference may be speed and electronics. The end result will be the same.
Brand new may be just an expense you don’t need. Remember a multihead embroidery machine sews best at 550 stitches per minute.
How to I acquire a new machine.
Do I purchase, lease, rent, or borrow the money? If you have cash this is the best way to purchase any new equipment. I remember people who grew their companies on borrowed money and then the recession hit. Not a good move. They are still digging out.
Rent or Lease. These are good options if you can project future sales will support a monthly lease payment.
If you rent you never take ownership of the machine. It is a monthly expense that is gone once it is made.
There are two types of leases. Operating or Capital lease.
With an operating you have the option of purchasing the machine at the end of the lease. The lease ends with a optional balloon payment. This is an expensive way to purchase a machine if you can’t get financing from a bank. Lease companies are moving away from this type of lease because they don’t want to be stuck having to take ownership of the equipment if you back out of the balloon payment.
A capital lease gives you full ownership at the end of the rental period. At the end of the lease the equipment is paid for. This is a popular way to lease when you can’t outright borrow the money.
What method of financing do I choose?
First choice is to borrow the money it’s the cheapest. The other options depend on your credit worthiness. Good luck