Investing in large, expensive machinery is often necessary in industrial businesses. There are many reasons down the road, however, that you may no longer need it. You may be upgrading to a new model or moving into a new line of business altogether. Whatever the reason, if you find yourself stuck with an expensive, large scale machinery item that’s still in working order, you have several options that will help you still use it as a revenue stream.
The EaaS Model
One of the newer and more compelling options for turning a profit from a substantial piece of machinery is the EaaS, or equipment as a service, model. In this arrangement, you essentially provide a “subscription” service to an interested party. They pay you a flat rate to have their equipment at their disposal, but then pay a premium for the amount they use it. The advantage to this is that you are given a steady income, and the machinery may last long enough to generate quite a return.
You can also offer a traditional lease or lease-to-own contract. In this scenario, you would agree to a structured monthly payment schedule for a predetermined term. Let’s say you decide on a 24-month lease arrangement. During that time, the person using the equipment will pay you, but you retain ownership. You, however, will be responsible for routine repairs and maintenance. At the end of the term, you can offer a buy-out price, or you can build it into the end of the lease. In this way, you may still turn a profit, as depreciation won’t figure in.
Of course, you always have the option to sell outright. The advantage is that you will end up with a lump sum of cash, with nothing more to worry about than proper paperwork. On the other hand, you may be leaving steady income on the table as opposed to the other two options.…