Equipment Appraisal Blog | Understanding Machinery Appraisals

When you work in academia, you often have a lot of older laboratory and testing equipment taking up space in your facility while having to scrimp and save for that great updated equipment that your department really needs. How do you free up space while raising the money for upgrades without leaving money on the table because you're not sure of your equipment's value? The answer: a testing equipment appraisal.

How a testing equipment appraisal helps when handling department upgrades

• It tells you the current value of the equipment. Sure, that spectrometer was a serious investment in the 1970s, but does it still have any real value? Our equipment appraisers know what your equipment is worth now, so you can make smart decisions about what equipment should remain in use and which pieces should be retired. A piece of equipment that still provides significant use to your department that has retained a higher resale value would be a better option to hold onto than piece of equipment that has been dormant and has very little resale value, which can be sold without fear of having made a poor decision.
• It helps you set a fair price for the testing equipment you need to sell. Without a good equipment appraisal, it can be very difficult to determine exactly what value fits the equipment you're considering selling. Are you asking for too high or too low of a price? If you let this interested buyer walk away because you think they may be offering too little? When you're in negotiations on a piece of equipment, being able to pull out a machine appraisal that backs up your asking price helps ensure you're on solid ground for the negotiating phase of the sale and that the interested buyer is more likely to come around to your figure.
• It can help you determine when lab machinery needs to be replaced. One area of an equipment appraiser's report that is commonly overlooked is the estimated remaining lifespan. Because a well-qualified appraiser who specializes in machinery and equipment works with those types of machines on a regular basis, they can often make a good general estimate of remaining useful life on your lab testing equipment based on history of very similar machinery, wear and tear, signs of abuse, the conditions it's being kept in and many more factors that come into play. This is especially important as it allows you to plan ahead for estimated replacement dates. Though the dates are not set in stone, they can act as a handy reference point to plan around, especially for expensive equipment.
• It provides solid proof of equipment values beyond simple conjecture by people in your department. When you need to justify getting rid of older equipment, having equipment appraisals that hold up to strong scrutiny in legal, insurance and financial sectors can mean the difference between a simple piece of paperwork and an academic department politics falling out of epic proportions with long-lasting repercussions long into the future.

By having a quality testing equipment appraisal performed on your older equipment, you can best use your department's funds where it's most needed.

When you run a business, you know that to roughly paraphrase Benjamin Franklin, failing to plan is planning to fail. If you don't know what direction your company is going in, how to respond to changing market conditions or even where your company is strong and weak, you can't take advantage of opportunities and avoid risks when they come along. But even for those business owners or managers who do business planning for their enterprise, there can be some areas where you don't know exactly what you're working with. One of these areas is equipment values.

How Equipment Appraisals Help You Get the Most out of Your Business Planning

Often typing up significant amounts of equity, deciding on a timeline for equipment purchase or replacement and what type of transaction to undertake can be difficult to determine. Here are some examples of how an equipment appraisal can help in the business planning process:

• When to purchase machinery. Should you purchase new equipment before starting that new contract or after it's completed and paid? The biggest part of that answer hinges on how much longer your equipment is expected to last. Though a exact point of failure or the point at which it becomes unprofitable to continue repairing is hard to determine, a qualified machine appraiser can estimate a piece of equipment's remaining usable life will be. By knowing this, you can determine whether the existing equipment will make it through the contract or if it has potential to break down and cause serious delays and financial burden.
• When to sell equipment.  If you're hitting a problem point in your cash flow, should you sell equipment or take out a line of credit to cover the lean times? An equipment appraisal allows you to know what your machinery is actually worth by looking at the current market conditions. If your industry is going into a bust cycle, you may not get much money for the equipment you'd need to sell. If, on the other hand, it's going into a boom cycle, you may want to hold onto the equipment regardless to take advantage of favorable conditions. A machine appraisal could help with this type of information.
• Buying new or used or trading in. What type of purchase should you make? If you're considering buying new, can you save significant money by buying used instead? If you're thinking of buying used, would a new machine provide a significantly longer useful life for just a little more cash? Should you buy more equipment or just upgrade by trading in your old machinery? A good machine valuation specialist can help answer those questions by letting you know what your equipment is worth. By going into a dealership prepared with the current machinery values, you're able to negotiate from a position of strength.

When you have a machine appraisal performed, that information helps lead to better business planning in the future. By having a solid plan in place that reflects accurate information for your business, you can successfully grow your business.

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.

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.

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.