How to Set a Budget for Heavy Equipment

How to set a budget for heavy equipment

No matter what kind of business you operate, budgeting is always important. Indeed, keeping your spending to a minimum is often the key to financial success, and this also applies to the construction industry.

Creating a budget and sticking to it is the best way to manage your finances. This is especially the case when it comes to purchasing heavy equipment, which can be rather expensive. Maintaining an ongoing budget for heavy equipment will pay off in the long run, as it will help you reach your business goals and achieve financial growth.

A heavy equipment budget is crucial for your operating expenses because you can see how much each additional machine will cost your business. This way, you can determine whether such expenditures will be worth it or not, in comparison to the opportunity for additional profits. Such a budget will also help you plan further purchases by providing a price range so you do not waste time looking into equipment you cannot afford.

Finally, a heavy equipment budget can assist with financing equipment since you must know how much you are willing to spend before investigating payment plans for a given piece of equipment.

Key Factors to Consider for Setting a Heavy Equipment Budget

Heavy equipment budgets can and should vary greatly from one construction operation to another, as they must be developed to meet the specific needs of the company. There are a number of important factors that are worth considering during the budget-setting process, including the following:

1. Determine your needs

One of the first steps for setting a heavy equipment budget is determining the company’s needs. As fun as it may sound to buy whatever equipment you want, it is a quick way to burn through your finances and even get your company into debt.

On the other hand, purchasing tools only when necessary will make much more financial sense. Of course, that first requires a thorough assessment of your company’s needs to see what types of equipment purchases are necessary and which ones are not.

For instance, if the company rents a particular type of equipment consistently, you may want to buy it to save on rental costs. Or, if you typically have to turn down certain kinds of jobs because you do not have the right machinery, you may want to purchase that type of equipment for similar projects in the future.

2. Create equipment lists

Another helpful step for setting a heavy equipment budget is creating different lists, including one of all the equipment the company currently owns, another for the equipment that the company currently needs, and possibly one more for equipment you will need in the future.

Examining these lists will remind you of where the company is and where you want it to be, and it will help you consider how to prioritize your purchases based on your needs.

Thoroughly looking over the first list might even be necessary before moving on to the creation of the second or third one, as you may see that certain machines in your current fleet are nearing the end of their lifespan and may need replacement.

3. Get quotes for equipment

Once you have a solid idea of the heavy equipment your company needs now or may need in the future, it is a good idea to start researching and getting price quotes to get an accurate picture of how much this equipment costs.

During this step, it is important to consult several sources, as prices can vary from seller to seller. After determining the average prices for the machines you need, you can then start putting together a more detailed budget.

Pro Tip: Ensure the details of what is included for each quote are available for review, most manufacturers and dealers provide similar, but not the same options for equipment add-ons such as extended warranty options, attachments, software packages, service and maintenance agreements. Make sure you are comparing apples to apples or fully understand the differences.

Pro Tip #2: If you don’t have the budget to purchase the equipment outright, ask for finance options and consider both the interest rates available as well as the payment plan options so you can ensure the purchase will fit into your working budget.

4. Determine the business advantages of certain equipment

If you are finding it difficult to choose which equipment to purchase because you need multiple machines, but you do not have enough funds for all of them, you may want to consider the business advantages of each piece.

After determining the price of each piece of equipment, try to evaluate how much you could gain from that same item. In the end, you may want to prioritize purchasing equipment that could potentially lead to monetary gains that outweigh their expenses, as this will benefit your company in the long run.

5. Consider the equipment’s operating costs

Although initial equipment costs are an integral consideration during the development of a budget, they should not be the only costs that you evaluate. You should also think about the operating, maintenance, and repair expenses that will inevitably arise throughout a machine’s life.

Understanding what to expect in terms of these costs for each of the machines in your fleet is important because it will help you judge how much room there will be in your budget for additional equipment in the future.

How Great West Equipment Can Help You Stay on Budget

If you are in the market for heavy equipment, but are also on a budget, Great West Equipment can help meet your needs. We have excavators for sale in BC as well as a wide assortment of other new and used heavy equipment from some of the world’s top manufacturers. Our team of heavy equipment experts would be happy to help you find the tools you are seeking while staying within your budget.

We also offer heavy equipment financing options, and will work with you to come up with a payment plan that is fair and within your budgetary limits. We offer both operating and capital lease programs, fully protected loans and leases, and remarketing program financing because we put our customers’ needs first. In addition, we have rental options available for a wide assortment of heavy equipment, including excavators. Explore our excavator rental options for flexible solutions tailored to your needs.

For more information about our excavators for sale in BC or to learn more about our heavy equipment financing options, call Great West Equipment at 1-833-730-0613 or contact us here.

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