Running a business successfully and reaping rewards at any time can be challenging. During the past 18 months and with the ongoing threat of COVID-19 outbreaks, those challenges have been intensified and increased. When things are not coming together, when we feel like we’re working to capacity but just not seeing results in the bottom line, it can be frustrating. Astute business owners and operators look to all areas of their operations to achieve improvements that will generate increases and better profits. A key aspect is a productivity. This term is a favourite go-to for political and business leaders as well as many economic commentators. But for the regular business operator perhaps in agriculture, construction, mining, retail or any other sector, what actually is productivity and why is it important to consider?
What is productivity?
While it may seem so in some contexts, productivity is not a buzz word it is a real economic measure of the output of a business. In economic terms, it is a measure of the efficiency of a process, a specific operation or an entire business over a period.
In the simplest terms, it is achieving a greater output for less input. Converting what is put into the process into more output at a faster rate. Building the same house with 10 fewer workers and receiving the same price. Producing the same tonnage of agricultural produce by the same farmer in less time.
For general business, it can mean getting more out of what you already have by working harder or better still, smarter. Or getting more output or results by reducing costs or input.
Increasing Productivity
Operating with less efficient machinery and equipment can hold back productivity. You just don’t get as much done in a day if your backhoe, grader or dozer is running less than optimally. If farming machinery is ageing and constantly out of action for repairs, then productivity will decline.
Productivity is a link between costs and output or income. If your costs are too high, then your optimal productivity won’t be realised. This measure is important to business operators because it is a truer sense of performance than say the whole figure output or income. An increase in income or output may have been achieved through massive increases in costs. By putting on my staff for example.
If you’re facing the challenge of not seeing the returns for the effort that you feel you should, then possibly it’s time to analyse your productivity. That sounds technical and time-consuming, but it doesn’t have to be. It may be as simple as having a hard look at the equipment you’re using and facing the stark reality that you really do need to upgrade if you want to get ahead.
Manufacturers of heavy-duty equipment especially in the excavation, farming, mining and construction sectors have long focussed on producing efficient machines. Gains in energy efficiency are of particular note. Engines are being made more efficient to save fuel costs for producers and users. Fewer costs can deliver improved productivity.
Technical advances in plant and machinery have been massive in recent times and these improvements can greatly contribute to the overall productivity of a business.
Read more on productivity here.
Achieving Productivity Gains Through Equipment Finance
Acquiring new, more efficient plant, machinery and equipment can be a key step to improving productivity in your business. Hand in hand with the acquisition decision is the financing decision process. Finance can play a vital role as the repayments are a cost to the business and hence can impact productivity.
In making your equipment finance work for you to contribute positively to productivity there are several aspects to be mindful of:-
- Selecting your lender
- Selecting your loan product
- Achieving the lowest cost outcome
Be mindful at every stage that the costs of funding are a cost to the business and a contributor or a detractor to productivity gains. Equipment finance can be a maker or breaker.
While there are numerous sources of equipment finance available – banks, non-bank lenders and dealer finance, using Jade Equipment Finance, a broker-style lender can assist you to improve productivity on several fronts.
Not only can we source you the cheapest equipment finance to reduce your business costs, but we also save you the time in sourcing finance yourself. For many business owners, especially sole traders and SMEs, not being available to work in their business can come at a cost. What’s your current hourly rate? Are you prepared to spend, how many hours speaking with multiple banks and lenders about finance at that rate? How much in dollars will that cost you in lost income and hence productivity?
The range of equipment finance products available offer benefits in regard to tax deductions and other aspects. Having a conversation with your accountant as to which will deliver the best outcomes for your business is an important step in the process.
Reducing Costs of Funding For Equipment Loans
The cost of financing even the most efficient machinery and equipment is a cost to the business and as such an impact on productivity. Keeping that cost of funding to a minimum is a step in the right direction to improving the productivity of your business.
The interest rate is the key driver of the cost of finance and that is why at Jade we focus on achieving the cheapest interest rates on equipment finance across the board. That’s on all our finance products, for all types of equipment, all business types and even for low doc and no doc equipment finance and bad credit applicants.
By achieving the cheapest interest rate and structuring the finance deal in regard to loan terms to achieve the desired repayment amount while not incurring excess interest, can keep the costs of funding at minimal levels.
View our equipment finance interest rate table here.
You might be used to running on gut instincts and advice from your accountant at tax time as a gauge of how your business is performing. But perhaps to ensure you get the most return for your effort it’s time to consider productivity and how you can improve that measure through cheap finance equipment purchases.
Contact 1300 000 003 for quotes on cheap finance.
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.
