Gripes about buying equipment.

T Monahan

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Tom Monahan
I hear it expressed often enough, "That is expensive!"

I say, "Do the math and see if that is really true."

Who among the MB members here uses math to determine if an expenditure in equipment is justified?

Is it fair to say that elements to consider may well include saving labor while improving performance?

What do you think?
 

The Great Oz

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Who among the MB members here uses math to determine if an expenditure in equipment is justified?
Likely everyone. Buying fads and shiny stuff require the use of Reagan math.

Is it fair to say that elements to consider may well include saving labor while improving performance?
No bigger reason than time/labor saving if you're buying something new to you.

Of course, you have to have enough income, or enough increase in income, to justify the cost.
 

Desk Jockey

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Yes of course math but more importantly I always want to know when possible, is what kind of sales should be expected.

NOT potential, but what has has been the history that others making the same purchase experienced. This helps establish budgets and allows you to develop a marketing plan. The greater the expense, the more I need to know these numbers.
 
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Papa John

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I cave into peer pressure.. If its a "MB Must Have" I'll probably buy it. These "toys" have really increased our quality.

Tom---If I could afford a Warehouse I would be one of your customer's--- I have a "wet" dream about Centrum Force about 6 times a year.
Just today after re organizing our rug plant, I thought-- Gee, maybe I do have room for a Centrifuge?
 

BIG WOOD

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I cave into peer pressure.. If its a "MB Must Have" I'll probably buy it. These "toys" have really increased our quality.

Tom---If I could afford a Warehouse I would be one of your customer's--- I have a "wet" dream about Centrum Force about 6 times a year.
Just today after re organizing our rug plant, I thought-- Gee, maybe I do have room for a Centrifuge?
It would be nice to have a Centrifuge.

But on my side, it'd be nice just to have a damn shop! I'm trying so hard to build pay my debt down and build up my assets to be able to invest in a nice building next to my house to be able to park my trailer and future box truck, and have a spot to set up a rug bath area
 

Jim Martin

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fact is fact...and we all know it...this is the most over priced...expensive..price gouging industries around...you can face the truth or hide your head in the sand and ignore it...but it is what it is.....that being said...if you know what your doing it is a very profitable industry to be in and if you do it right you can live a pretty good life...and from that point you have 2 ways at looking at things...what is going to make me money...and whats out there that will help me make money...

for example..after talking with a friend of mine and going over a few things I am going to add granite counter top cleaning and sealing onto my company...this is something that after I buy all of the things I need..it will make me money and I will get a good return for my investment...

until the vegas show...I already had good wands ..but then I tested Toms and it did not take me long to realize that if I bought it..it would change the way I do things and help me make money by saving time and changing my cleanings..although expensive..my investment will pay for its self time and time again just by helping my production...so again..different scenario ..but a good return on my investment......

so when you take everything into consideration..know your industry...know your business..know whats out there that you can profit from....and if it cost you a bit..and either way it can help make you money...then its worth it...because thats the name of the game.....making money......
 
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Cleanworks

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I think a lot of us got into the business kinda by accident. No business plans, no idea where we are going, etc. We just knew how to clean carpets and some people appreciated that and paid us and made us think we are a carpet cleaning company. As we went along we bought better equipment when we could afford it, got some education here and there and really thought we were hot stuff. The thing neglected by a lot of owner/operators is business training. How to run/manage a business and how to grow it. In order to be able to set up a proper rug cleaning plant with all the bells and whistles, you first need a building to do it in. The building must have the appropriate power/water/drainage to accommodate the equipment. You can spend $200,000 on all the equipment you need. Think of the rug tumbler, rug washer, centrifuge as the bare minimum then add in all the accessories. You have to have a rock solid plan on how you are going get enough rugs to not only pay for all that, but to be able to make a decent profit as well. If you are the type of entrepreneur who can do that, then more power to you. The rest of us will have to learn or just keep drooling over all the nice toys.
 

Desk Jockey

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We have a 100k purchase coming this week (not rug cleaning equipment). We've spent the last month mulling over the prospect of a new business and how it could compliment what we already do.
Equipment is the easiest part. Sales, marketing, staffing, implementation, those are the biggest concerns.

I've made many mistakes in business but if this flops it will be worse that all my mistakes combined.

However no reward without risk. I believe we have given it due diligence. Only time will tell.

Ain't life fun! :biggrin:
 
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Cleanworks

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At least you spent a month mulling it over. You probably have been thinking of it for much longer than that. I have a cousin and her husband in Saskatchewan who have a large roofing business. One of the largest in the area with a great reputation. I was talking to him last summer at a family reunion and he credits their success to Systems. You have to have systems in place for everything, marketing, employee training,customer accquistion and retention, accounting/payroll, you name it. Otherwise, it's just a good idea
 

T Monahan

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The following is to consider for those who make a commitment to wash rugs as an ongoing business. So, if you already had the space to accommodate some new equipment, an existing wash floor and space for rug storage, consider the math for a suggested set up with automated tools like the following:

10’ Tumble Duster

14’ Stainless Steel Centrifuge (SP-14 Centri-Maxx®)

12’ Stainless Steel paddle wheel Wash Tub (Centrum Star)

10 Pole Dry Tower motorized and cabled rug hanging system (X-Series)

This whole package retails under $125K. Let’s demonstrate a lease option scenario of 5 years with a buy out for $1 at the end. Let’s assume 7% financing and no money down. Payments would be around $2475 a month for 5 years and then the payments stop.

To illustrate the lease cost: The cost per 8 hour day, 5 days a week, is only $14 an hour. The cost becomes less per hour if more than 40 hours a week is considered for rug plant work. The reality: It is less than the cost of an employee that you hire around $10-12 an hour depending on what your State & Federal taxes are and whether you factor additional expense due to insurance coverage and any other benefits you may offer. Another cost factor to consider in acquiring machines over adding more humans to do the same work is that the payroll may have to offer some medical insurance and vacation time. This adds to the hourly commitment of more employees.

Given the foregoing perspective by way of illustration, the question now is: Does owning these production tools to reduce your time, while increasing your efficiency and capacity, appear expensive?

It also depends whether paying $14 an hour (for the equipment acquisition) speeds things up enough to give you a significant return on the money being spent on it. Granted, you have to have the flow of rugs coming in to justify the hourly expense too. I submit that 20-25 rugs a day or 2000-2500 sq. ft at a minimum average ticket of $3 a sq. ft would yield about $6K a day. Most of the work could be done with one person if this equipment was put into play, but two people with this equipment is better. Little to no post cleaning work will occur provided the operators are skilled during the wash process.

Note: Equipment does not ever replace education, and the aptitude for the skill of implementation of things learned not the ability to identify what you are processing to insure proper techniques are being used for each rug.
 

Cleanworks

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You also have to add the shipping cost, installation, electrical connections/panels, customs and duties if going out of country. I'm sure I am forgetting some things. Having said that, I would love to have that type of equipment. Just a matter of sitting down and formulating a solid business plan. You have to want it bad enough to do the right thing. You also have to be able to train your employees to run it. Although 1 man can cope, 2 is better when dealing with heavy, wet rugs. There was a nice rug lift at the Vegas show that could eliminate 1 employee perhaps.
 

T Monahan

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You also have to add the shipping cost, installation, electrical connections/panels, customs and duties if going out of country. I'm sure I am forgetting some things. Having said that, I would love to have that type of equipment. Just a matter of sitting down and formulating a solid business plan. You have to want it bad enough to do the right thing. You also have to be able to train your employees to run it. Although 1 man can cope, 2 is better when dealing with heavy, wet rugs. There was a nice rug lift at the Vegas show that could eliminate 1 employee perhaps.

That is why I rounded up. You can downsize the total cost by getting a different versions of the same equipment off our site so that shipping and electrician costs would not exceed $125K. After all, it was just an illustration anyhow. Adding more cost to the entire set-up only increases the hourly cost a bit.

Here is our wet rug loader that is portable and easy to use:

https://www.centrumforce.com/products/wet-rug-loader-air-powered
 

The Great Oz

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I'm OK with guys buying stuff just because they want it. If it makes someone feel better to have shiny stuff, that might make the difference in attitude that gets them through tough times.


Or, makes them work hard enough making payments to get better at running their business.
 

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