Growth and Scalability: How to treat every kit purchase as a revenue-generating asset

Johnson Reed
2m read

Whether you’re new-start, growing or established business, chances are, you’ll always be on the lookout for ways to improve and develop. This ethos is necessary to adapt and survive in the constantly-evolving business landscape. Effectively, standing still is moving backwards!

At Johnson Reed, we understand that sometimes upgrading and purchasing new equipment is necessary to enable and maintain your day-to-day operation, and sometimes your investment may be part of a wider strategy to grow and improve your business.

Regardless of your rationale, it can help to adopt the analytical mindset of a business growth expert to ensure you’re making a worthwhile investment and taking a step in the right direction towards your business growth.

Here’s the inside track on a business growth expert’s decision-making process, and how to approach every equipment purchase as a revenue-generating asset;

  1. Identify areas within your business that could be causing inefficiencies or have the potential to increase revenue. Is anything causing a bottleneck in your workflow? Could you be saving on raw materials or energy bills? Is something already working particularly well that has the potential to be rolled out further? It might not always be existing practices or pieces of kit in need of an upgrade but something new altogether, so keep an open mind and don’t be afraid to consider new options. It’s good practice to stay up-to-date with industry news and keep a keen eye on competitors to ensure you’re in-tune with constantly-evolving industry trends and expectations.
  1. Estimate the return. Compare the cost of your desired equipment against the increased revenue or saved expense once these changes have been implemented. It’s important you’re able to track and measure the impact to determine whether the return is attractive enough to justify the purchase.
  1. Calculate the corresponding monthly lease repayments over the equipment’s useful life. Head to your smart phone’s app store and search ‘Johnson Reed’ to download our free app. Simply enter the equipment cost, lease period, industry and whether you’re a new-start or established business, and the app will calculate your weekly, monthly and net costs plus the tax relief! Or for a formal quote, call the JR team on 0161 429 6949.
  1. Ensure the monthly return on investment is attractive. The savings or increased revenue from your new purchase can be offset against the fixed repayments to help you reach the point of ROI much sooner, whilst maintaining a healthier cash flow. Generally, we’d consider an attractive ROI to be a minimum of 2x, but this varies from sector to sector.
  1. Order the equipment.
  1. Measure the impact. Keep comprehensive reports and review regularly to ensure the changes are having the intended effect. If applicable, try split-testing to compare two variables and identify the best method. This stage is all about finding out what works for your business, and capitalising on it to optimise the investment.
  1. Repeat the process to continue making effective growth decisions and scaling up your business!