Equipment Appraisal Blog | Understanding Machinery Appraisals

How a Restaurant Equipment Appraisal Lets You Turn Up the Heat

Posted by Equipment Appraisal Services on Tue, Sep 27, 2016 @ 02:30 PM


When you're in the restaurant business, change is inevitable. You'll need to change suppliers, update your menu and constantly train staff. But what about the big changes, when you're considering expanding your location or offerings, adding a new location or changing the direction and focus of your restaurant entirely? Though a restaurant equipment appraisal may seem like a strange way to manage the risk of these potential opportunities, it can actually be a great benefit - heres how:

How a restaurant equipment appraisal helps you manage risk in new ventures

  • Know your bottom line. One of the first places where restaurant machine appraisal comes into play is to help you determine the risk in taking a new venture or opportunity. A bit part of the decision is comparing your assets against your liabilities. But if your assets aren't accurately valued, you don't really know what that figure should be. Are your assets undervalued because they have additional features or are exceptionally well maintained? Are they overvalued because they need repairs or have seen excessive wear and tear? Having restaurant equipment appraisals completed helps you know exactly what your equipment, and by extension your asset accounts, are actually worth. This helps you make decisions to change your restaurant, expand it or open new locations based on accurate information and an accurate view of the risks involved.
  • Leverage your assets to help with business changes. Because a well-qualified and certified appraiser will have a particular methodology that he or she follows to determine the accurate value of your restaurant equipment, it provides legal documentation of those values. When you approach your financial institution about getting financing for your business' planned changes, having an equipment appraisal from a certified appraiser ensures them that you've done your homework and are taking the expansion - and their investment in it - seriously.
  • Consider whether the equipment will be an asset in a different direction. If you're making a large change in the direction or theme of your restaurant, some of the equipment will still be helpful while others may be put to better use somewhere else, allowing you to raise more capital to invest in your new venture. If you've run a buffet in the past and are changing over to a more traditional style of restaurant, steam tables and similar fixtures can be sold to invest in new furnishings and similar investments that will help you make the most of your new opportunity.
  • Get a better idea of how long the equipment will function effectively and efficiently. Because equipment valuation specialists look at restaurant equipment all the time, they have a good idea of how many more years you'll get out of the mixer you've purchased for your bakery expansion on your country cooking restaurant or the industrial-sized gas wok in your new Mongolian BBQ establishment. This also helps you decide which equipment to keep for your new venture and which to replace in the interest of keeping things running smoothly.

By having a restaurant equipment appraisal performed on your restaurant machinery, you can ensure that you know exactly where you stand and have the proof to back up your new venture.

Tags: equipment appraiser, restaurant equipment appraisal

Estate Taxes: Knowing How to Approach Equipment Value Protects Your Legacy

Posted by Equipment Appraisal Services on Tue, Sep 20, 2016 @ 11:00 AM


You've spent years building up your business. You've invested wisely, accounted for possible risks and taken the time to build your business into what it is today. You've even groomed the next generation to take over your legacy when the time comes. But have you accounted for gift or estate taxes in your planning? With the high cost of these taxes, failing to plan for them in your estate planning can leave your legacy open to risk. Here's how you can avoid this pitfall through proper, certified equipment appraisals:

Estate Taxes: Knowing How to Approach Equipment Value Protects Your Legacy

Documenting Machine Values

Whether you're planning on passing on a business or just have some good equipment, documenting your equipment values through a machinery valuation can meet several needs at once. It can help prevent fighting by those left behind, with the impression that one family member, partner or friend is getting more than another. If your estate is being divided up between a certain number of people, with equipment left to one and cash to another, it helps determine how much cash the equipment is worth. If you're planning on using a living trust, it also has the advantage of keeping your loved ones out of probate and keeps your accounting and wealth private.

Making Arrangements for Estate and Gift Taxes

Estate and gift taxes can be very heavy, especially if you're passing a large business on to the next generation. By having a current machine valuation performed, you can determine a more accurate picture of what your business assets and equity actually are. When you do this, you can then estimate how much these burdensome taxes may be and make allowances for them either in your life insurance, your business insurance or by leaving a certain amount of equity available to cover these needs. If you are planning on making allowances for these items, you'll want to account for what estate taxes may remove from these funding sources as well.

What Kind of Machinery Valuation?

If you're thinking of simply looking for similar equipment online or finding someone who sells used equipment to give you a general estimate of your machinery's value, we would strongly encourage you to avoid this approach. We've had to try to help families who have suffered a loss whose loved one has gone this route, just to discover that the machinery valuation that was provided was completely inaccurate, whether it's because they need to sell the equipment quickly to pay estate taxes, because the machinery will require extensive work and expense to remove or because the individual who prepared the estimate didn't really understand what they were looking at. Using a certified equipment appraiser helps ensure that the values you're working from are accurate, because the appraiser is required to work within a particular set of constraints and specific methodologies that are approved and often used in probate court. 

By keeping an eye on your equipment values and knowing what to expect in terms of estate taxes, you can rest assured that your legacy will be passed to the next generation as you intended.

Tags: appraisal, estate taxes, estate planning

Areas Inspected During a Rubber Equipment Appraisal

Posted by Equipment Appraisal Services on Tue, Sep 13, 2016 @ 01:30 PM


When you're considering have equipment appraisals performed on your business, it's normal to wonder what the equipment appraiser will inspect during the machinery valuation process. But what parts are inspected during a rubber equipment appraisal? Here is a quick look at what kind of things a professional machine appraisal takes into account when dealing with rubber equipment:

Areas inspected during a rubber equipment appraisal

  • General condition of the machinery: This will check whether the machinery itself is in general good condition. This can include virtually every system of the machine, from feed bins to extruders. Pulleys, belts, drives and bearing will be checked for smooth operation. It can also include checking the quality of the output from the machine, to make sure it is producing the appropriate material in a uniform quality and quantity. 
  • Condition of safety features: Because accidents cost a business in terms of worker morale, worker's compensation claims and legal fees and penalties, safety equipment should be in place and in good repair. Missing safety features will lower the value of your machinery, because most sensible buyers won't purchase a piece of machinery that has had its safety features compromised.
  • Signs of abuse: These can be worn paint, guards that are loose or worn, problems or breakdowns that are left unrepaired, major dents, structural damage such as bends, cracks and poor repairs, loose or worn components that prevent it from working correctly or similar concerns. Machinery that shows signs of abuse typically has a much shorter expected lifespan than equipment that has been properly looked after.
  • Records related to maintenance and repair: This can be in the form of maintenance and repair logs, but if you haven't been able to keep up a log, don't panic. If you can produce receipts for these services on that particular machine, statements from mechanics or technicians that have provided these services or similar documentation, they will often suffice. These records help prove that the machinery is being well cared for and is being maintained in good condition.
  • The conditions in which the machinery is being kept: If your machinery is being kept in a damp or dusty environment or in extreme temperatures, it may lower the expected lifespan and the appraised value.
  • Estimated remaining machine lifespan: This will tie in to signs of abuse, general condition and maintenance records, but if the machinery is expected to last longer or shorter than the industry average, it will affect the final valuation of your machinery.
  • Current market conditions: If you're in an industry that is booming and there isn't enough equipment to go around, your equipment may have a higher value than it would if your industry is going through a bust cycle and there is plenty of equipment on the market that isn't selling.
  • Reason for the appraisal: There are any number of reasons a business has equipment valuations performed, from deciding when to replace aging equipment to gaining better accuracy in the business' bookkeeping to securing a loan for expansion. Different approaches are taken depending on the need for the appraisal.

By knowing what areas are considered during a rubber equipment appraisal, it's much easier to have all the necessary areas accessible for the equipment appraiser ahead of time.

Tags: rubber equipment appraisal

Need an Insurance Loss Settlement? Equipment Appraisals Get You There

Posted by Equipment Appraisal Services on Tue, Sep 06, 2016 @ 12:00 PM


Did you know that 25% of businesses that go through a disaster or loss never open their doors again? This is primarily due to insufficient insurance or not being able to prove the value of equipment and other items that were lost. How do you protect your business against this kind of unexpected problem? An equipment appraisal can go a long way towards ensuring you have sufficient insurance to protect against a loss or proving equipment value for an insurance loss settlement. Here's how:

Need an Insurance Loss Settlement? Equipment Appraisals Get You There

Determining Insurance Coverage

When you're buying business insurance, you want to make sure your equipment is being covered for its actual value. Why? Many people rely on tax return depreciation as a quick guide to machine value, but the actual machinery value may be much higher or lower than what the standardized depreciation value allows.

If it's overvalued, you may be paying too much for premiums while not receiving the full amount you've paid for during a loss. If it's undervalued, the insurance company may balk at paying you the full value during a loss because you didn't pay for sufficient coverage. A machine appraisal can go a long way to provide proof of value for your equipment and help you decide how much coverage you need to cover business losses during a fire, flood or other disaster.

Dealing with a Loss

But what about when your business suffers a loss? During that stressful time, you want to reach a settlement as quickly as possible so that you can get new equipment and get back into the swing of things. When you do have a loss, can you prove what your equipment was actually worth? Having proper documentation complete by a certified machinery appraiser available for your insurance company helps to prove the equipment's value and goes a long way in an insurance settlement. It ensures that you'll receive a settlement that is both accurate to your loss as well as speeding up the process. Why? Because a certified appraiser's report uses a specific methodology and approach to determine equipment value. 

But what if you haven't had a machine appraisal performed before the loss? Fortunately, appraisers are often able to go back in after a loss and determine equipment values at the time of the loss by taking a solid look at the condition of the machinery, the market at the time of the loss, any repair and maintenance logs that are still available and similar information. Because this type of valuation is difficult, you'll want to make sure the appraiser you're working with is certified, has experience in equipment appraisal and specifically has experience in post-loss machinery valuation. 

By having a machinery valuation performed before you have a business loss, you can make the insurance loss settlement process go much more quickly and smoothly. But when determining your equipment values, make sure you're using a certified equipment appraiser who has a certification in or significant experience in machinery valuation. Why? Because documentation from a certified appraiser holds legal weight and will hold up in court if your insurance company is reluctant to pay out.

Tags: Insurance Loss, settlement