When it comes to purchasing equipment for your business, there are two types of equipment purchases you can make. One is income-producing equipment, and the other is non-income-producing equipment.
If you have any questions about this episode, you can email me at tyson@podiatrylegends.com, or if you’d like to learn more about One-On-One Business Coaching, please email me at tf@tysonfranklin.com; otherwise, you can go directly to my online calendar schedule a face-to-face Zoom meeting with me.
For example, let’s say you need to purchase eight chairs for your reception, and you’re deciding between a $150 chair and a $400 chair, which means you will spend $1200 or $3200 to purchase the eight chairs. In addition, the chairs’ comfort levels are about the same, and at first glance, they look similar.
This is when you need to stop, think and ask two questions:
- Will the $150 chairs be sufficient for your current needs?
- Can you use the $2000 you save elsewhere in your business?
Brand
If a $150 chair is sufficient and serves the intended purpose, why spend the extra $250 per chair, especially if it won’t detract from your brand?
I know from experience that you are better off saving the $2000 or investing the $2000 towards income-producing equipment that will generate income for many years.
Best ROI
As your podiatry business generates revenue long-term, you have choices; you can save it and earn interest or reinvest your money into income-producing equipment.
Ask yourself, where do you think you’re going to get the best return on your money?
For example, suppose you had $30,000 in your bank account, earning 5% interest. In that case, you’re getting about $1500 in income per year, but if you invested the same amount into purchasing income-producing equipment, how many times would you need to use the equipment to get the same return ($1500)?
When I purchased a milling machine to make orthotics for my podiatry business in 2008, it cost approximately $75,000 to set it all up. In the first year of operation, it saved my podiatry business over $100,000 in lab fees.
After taking away the costs of materials and running costs, I got my money back in the first year. Over the next eight years, up until selling my business, I was getting up to a 150% return on my initial investment, year in, year out.
Borrowing
Of course, not everyone has $75,000 in a bank account, so if you borrowed $75,000 at 10% and got a 100% return on your investment, it’s still a worthwhile income-producing purchase.
Equipment Goals
Therefore, before you purchase any new equipment, you must set equipment goals.
Purchasing equipment without setting equipment goals makes no sense, and I’ve seen a lot of expensive dust collectors sitting in the corners of many podiatry businesses because no goals or outcomes were set before the equipment purchase.
So, before making any equipment purchases, you must ask yourself the following question:
How long will it take before I get my full investment back?
To work this out, you need to know:
- How much you’re going to charge?
- How many times does this service/equipment need to be utilised?
Knowing this information lets you set realistic goals to calculate your return on investment.
What Does the Math Tell You?
A $10,000 piece of equipment charged at $250 per use must be used 40 times to get your money back; that’s less than one use per week.
Is this realistic?
What if it is used twice per week, that would be 104 uses for the year and generate $26,000 in gross revenue. That’s a high ROI.
What Is Your Marketing Strategy?
Therefore, you should also develop a marketing strategy as part of your goal-setting process. You may only need to use your new equipment 40 times to get your $10,000 investment back, but how are you planning to achieve this goal?
What marketing tactics are you going to employ?
Opportunities
This is why income-producing equipment should be a business priority over non-income-producing equipment, and it can and should be used to set your business apart from your competition.
Think about the services you currently offer and whether you can offer more.
For example, do you have a wax foot bath? They are inexpensive and only cost about $300 to $400 to set up, yet not every podiatrist has one, but it can add thousands to the bottom line with little to no effort.
So, keep your eyes open for opportunities, and remember a patient’s bum will rarely tell the difference between a $150 and $400 chair; however, they will notice a business that reinvests their profits into new equipment and technology that will provide a better, faster, more efficient outcome for them.
Competitors
If you can purchase something that none of your competitors is currently using, it will set you apart from the crowd, but first, do the math, work out if it is a viable purchase, set your goal for your ROI and have a marketing strategy in place before you make the purchase.
Get this right, and you’ll set yourself up for income-producing equipment success.
Coaching & Mentoring
Purchasing income-producing equipment and developing a marketing strategy and tactics is something I have done a lot of coaching and mentoring around, so if you need help in this area, please reach out and contact me.
If you have any questions about this episode, you can email me at tyson@podiatrylegends.com, or if you’d like to learn more about One-On-One Business Coaching, please email me at tf@tysonfranklin.com; otherwise, you can go directly to my online calendar schedule a face-to-face Zoom meeting with me.
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