7 Mistakes Business Owners Make When Buying Engines and Generators
Buying engines and generators for your company isn’t as easy as it sounds. There are literally hundreds of different choices, and some of the terms and comparisons you come across may not be familiar. Making things even tougher is the fact that each decision could impact your annual budget for years to come. After all, engines and generators aren’t just expensive today; they require fuel and maintenance going forward.
In the corporate world these sorts of decisions fall into the category of capital purchases. That means they involve a lot of money and can make or break the future of your enterprise. Unfortunately, you might not have a team of accountants and performance specialists on staff. So, you could be left choosing between various models and components on your own.
We don’t want to see you make any expensive mistakes. For that reason, today’s post is going to focus on the seven mistakes business owners tend to make when buying engines and generators. Let’s review them one by one…
Mistake #1: Buying More (or Less) Than They Need
It’s easy to forget this, but engines and generators are tools for your business. Everything else – including (or especially) statistics about torque and horsepower – should be put to the side. You are making an investment in your company because you have a specific need. No glossy brochure or online posting should distract you from that reality.
This is important to point out because it’s easy for capital buying to become an emotional exercise. On the one hand, you could easily find yourself buying equipment that exceeds your true needs because it feels safer to purchase “more” instead of “less.” And on the other hand, you could suffer from sticker shock when seeing just how much a premium engine or generator can cost.
The answer to both of these conundrums is to push all the extra information out of your mind, at least for a while. Instead, focus on what you need the engine or generator to do. Make a list of power requirements that suit the average and everyday operations for your business or site. Then see what it costs to fill that need.
Beginning with that sort of idea doesn’t guarantee that you’ll make a great decision, but it’s a good starting point so you can begin your search in the right frame of mind.
Mistake #2: Prioritizing Power Over Reliability
This follows along with the first point, but in a different way. Because business owners and executives tend to think of more power as being better than less, they are naturally drawn to products with high ratings for horsepower and output. That’s not necessarily a bad thing, but it’s worth remembering that raw statistics can be deceiving.
Reliability is every bit as important as operational capacity. In other words, your engine or generator has to work when you need it to. Otherwise it doesn’t matter how much you can haul, or how many units could be powered.
Imagine two athletes: one who plays like a superstar for a few games of each season, and another who is 10% less effective but available for every contest. Which would you rather have on your team? Is it better to have a fast sports car that’s constantly in the shop, or a luxury auto that starts every time you open your garage?
These are simple analogies, but they point to an enduring truth: reliability is a key aspect of performance. It doesn’t matter whether you need electricity, transportation, or pure engine power. You’re better off with equipment that works as advertised than you are opting for something with better capabilities but an unproven track record. Keep that in mind and don’t be distracted by options that won’t stand up to real-world operating conditions.
Not all engines and generators are built with reliability in mind. However, you can’t afford to have equipment that holds your team back instead of moving you forward. Don’t make the mistake of ignoring future reliability to save a bit of money today.
Mistake #3: Ignoring Operating Costs
If you are like most of the entrepreneurs we work with then you are always looking for ways to cut costs in your operation. You have to. Otherwise you would find yourself losing your margins and going out of business very quickly.
However, a big part of making smart capital investments is looking toward the future. An engine or generator that seems like a great deal today might not be as attractive once you consider what it will take to keep it running in the months and years ahead. But finding these figures can require you to dig into details, or even make future projections.
Operating costs can take many different forms. You’ll certainly want to think about the expenses associated with different types of fuel. You might also consider differences in insurance, maintenance, and storage. Further allowances can be made for training, custom fitting to existing equipment, and future replacements.
Each of these costs can be calculated and projected. It’s important, though, that you think about them before you sign a purchase order and not weeks or months after the fact. You certainly don’t want to come up with any surprises when it comes to the amount of money it will take to keep your business running smoothly.
Often, dealers and manufacturers will try to obscure higher operating costs associated with engines and generators, particularly those that have lower upfront pricing. Be sure you don’t miss the forest for the trees and end up with equipment that costs more than it should.
Mistake #4: Only Planning for the Present
In most cases, capital investments need to be used (and paid for) years into the future. And yet, many business owners fall into the trap of thinking about short-term needs when buying engines and generators.
As we’ve already mentioned, you certainly don’t want to spend more than you need to on equipment that won’t be utilized to its full capacity. And yet, it’s also wise to look five or 10 years into the future and imagine what you might need for your equipment. Is it possible you’ll be expanding into new territories or operating environments? Will you have more or less access to certain fuel types? Are you changing other parts of your fleet that will require special accommodations?
Think carefully about where you would like your company to be headed. Or, if you don’t have any firm plans for change, imagine external factors that could lead you to move in a different direction. Then, think about how those shifts will affect your needs for power and transportation.
No one can see the future and it’s possible that there are changes coming to your business that can’t be predicted. However, by asking yourself what might change in the next decade, you could allow yourself to plan ahead more effectively. At the very least, going through a few rounds of “what ifs” might save you from making an expensive mistake.
Mistake #5: Failing to Compare New vs. Used
Should you buy used or new equipment? Ask half a dozen business owners and you’ll get (at least) that many answers. Some will say the extra warranties and incentives make it worth it to buy new. Others will insist that you’re losing too much money through capital depreciation if you don’t buy on the used market.
The truth is that neither of these groups is necessarily right. While it’s always great to have the latest equipment and best financing incentives – usually available through new purchasing – used equipment has its place, as well. That’s particularly true when you have short-term needs that won’t necessarily last more than a year or two.
Closing yourself off to either one of these options altogether will make it less likely that you’ll find the right engine or generator at the right price. Unless you have a very strong reason for only considering one avenue, it’s worth comparing both to see what kinds of choices you have in front of you.
Earlier, we made the point that capital investments are just that: investments. Typically, when a business owner declares that they can only buy new, or will only shop the used market, they are making emotional decisions. They aren’t looking at the relevant stats and numbers, and they certainly aren’t comparing dollars spent versus output created. Instead, they are relying on a gut instinct that may or may not lead them in the correct direction.
New engines and generators are generally the most reliable available. Used equipment tends to be more affordable. Finding the right choice, or mixture, is about weighing cost and performance considerations. Keep that in mind and you’ll avoid one of the biggest buying mistakes.
Mistake #6: Neglecting Financing Terms
Since we are on the subject of money, let’s move on to a point that is simultaneously obvious and easy to miss. The financing terms associated with your capital investment can easily end up affecting your bottom line much more than the purchase price of the equipment itself.
Even small movements in an interest rate, or monthly payment, can dramatically affect the attractiveness of one option over another. That’s particularly true if both engines or generators can fulfill the same needs.
There are a couple of ways you can use this knowledge to your advantage. The first is to double- and triple-check all details and fine print. Know what you’ll be paying for your capital equipment, when the money will be due, and what the relevant incentives or penalties look like.
The second way is to negotiate at the margins when possible. If a specific manufacturer can’t meet the price you’re looking for on a specific engine or generator, for example, see if you can get a discount for early payments, or perhaps extend the period of time when your investment is interest-free. There might not always be incentives available, but it never hurts to ask.
Either way, be sure to know how the financing side of things is impacting your bottom line and make smart decisions accordingly. Then you can avoid one of the biggest and most expensive capital purchasing blunders out there.
Mistake #7: Buying on Their Own
You may have noticed that avoiding each of the mistakes we’ve laid out requires patience, perspective, and more than a little bit of industry knowledge. Those aren’t qualities you pick up overnight. However, that doesn’t mean you have to spend decades in this business learning how to manage capital investments – you just need to know someone who does.
That’s where the expert team at Valley Power comes in. Because we work with a wide variety of clients, and several different brands, we can help you find a solution that’s perfect for your business or situation. In other words, we have the experience and insider knowledge to make sure you don’t get more or less than you need… and that your bottom line is protected.
You don’t have to turn yourself into an expert on engines or generators to get a great deal on the capital equipment your company needs. That wouldn’t be a good use of your time or expertise. Instead, you just have to have someone on your side who knows the business, is in touch with the best manufacturers, and can put your needs first.
In other words, it’s time to talk with a member of our team because choosing power equipment on your own could be the biggest mistake of all.
How to Get the Right Power Equipment at the Right Price
At Valley Power we have decades of experience with diesel engines, generators, marine power, and so much more. If you’d like to know what your company can do with the right equipment (and the kind of advice that can help you save huge amounts of time and money), then we want to help.
Contact our sales team today to schedule a time to talk. You might be amazed at what we can do to help your business stay powered up and running smoothly.