Do you need to invest in new equipment post COVID-19?
In this article: Businesses are looking at how best to restart, is now the time to think about streamlining your business or, maybe invest in equipment. Industry expert Tom Denton gives his thoughts
Most garages and workshops are tentatively getting back to work after a COVID-19 break, although some stayed open, in many cases to help key workers. It doesn’t matter which of these two groups you are in, this is a strange time for businesses.
At a recent IMI meeting, (online of course), we discussed article topics. One suggestion was made that it may be useful to look at streamlining businesses due to the lack of cash. In other words, how to cut back on spending on tools and equipment, but at the same time, find a way to continue working.
But after talking with lots of garage owners and technicians, quite the opposite seems to be the way forward. Many are considering investing in tools and equipment. They are doing this as a way to keep going, rather than cutting back. Some have taken low interest ‘bounce back’ loans in order to do this.
As some of you will know, I don’t have a proper job now, I mostly sit at my desk writing automotive textbooks. However, I spent many hands-on years in the trade running a small service, repair and diagnostics business. This possible choice between streamlining or investing did, therefore, make me think about what I would have done.
Is it time to streamline…
Rather than just cutting back on costs, and managing without vital tools and equipment, I think this option would be about redefining what we do. Reducing fixed costs, simplifying the operations and more clearly defining what the business does. It could also mean less need for training.
There are definite disadvantages. Turnover could be reduced as you need to turn away some work because what you can offer is limited, and looking to the future, it could mean you’re unable to adapt to changes in the market.
But if you did decide to streamline your business, you could look at:
- Stop investing in new equipment, (diagnostic scanners for example), and concentrate on servicing
- Sell off current equipment and pay off any finance
- Stop supplying courtesy cars and sell off those that you have
…or should you be investing
New equipment will increase costs but could open new opportunities, making your business more lucrative, ready for the future and better able to meet customer needs, not to mention possible upselling opportunities. But there are risks too.
Investing in new equipment can add additional fixed costs as well as the need to improve your skillset. Not only that it could add complexity to your business, and there’s always the danger of not actually being able to sell the services you can now offer.
If this is the route you want to follow, you could look at investing in:
- Full 4-wheel alignment and ADAS calibration system and training
- Equipment for all aspects of electric vehicle high-voltage work and training
- Automatic testing lane (ATL) for doing MOTs
Specialising in just some areas of the trade could be a good thing, and if that reduces your costs then perhaps even better. However, is that preparing you for what may happen in the longer term? Conversely, particularly in these uncertain times, is it wise to be looking at increasing our costs, even if the bank loans are on very good terms?
There is no right or wrong answer here and it has to be a decision that suits your business, finances, and personal ambitions. Streamlining may involve losing staff, and whether that’s an easy or difficult decision, it’s definitely a big one.