Landscape Management, October 2012
31 OCTOBER 2012 LANDSCAPEMANAGEMENT NET ment is overused or underused or if maintenance and repair costs outpace the income from jobs The operator will struggle fnancially if compensation is based on job cost containment Customers likely will be unaware of the companys inability to reach its goals but theyll notice the higher bid and cost numbers in an attempt to balance goals better Customers might not vocalize their frustration then switch to a competitor that can meet its goals without higher prices After an analysis you might determine your feet doesnt match your needs for the upcoming business year You might therefore decide that its time to make changes That means disposing of a portion of your feet while paying close attention to the total cost of ownership TCO and fair market value FMV to recoup as much of your fnancial losses as you possibly can TCO consists of 1 a systematic accounting of all costs direct and indirect relating to an investment decision or acquisition and 2 a model for managing an asset using data to analyze and establish best practices The TCO model concludes its time to dispose of a piece of equipment when the expense of an asset is greater than the return Effective disposition is based on FMV which is an estimate of the external market value of an asset based on what a knowledgeable willing and unpressured buyer would likely pay a knowledgeable willing and unpressured seller in the open market FMV differs from the intrinsic value one might place on the same asset based on his preferences biases or extenuating circumstances By closely analyzing your feet you will take the guesswork out of this far reaching portion of your plan Inspect your feets age and maintenance costs study them in relation to your jobs and look closely at each jobs costs in relation to your feet The data will paint a clear picture of your year taking you one step closer to a confdent and easy business planning process LM Sabourin a former national accounts manager for The Toro Co is president of EquipmentSite com Contact him at Kevin Sabourin@ equipmentsite com Sales 8003343388 Williamston NC www reddickequipment com Quick tip the total cost of ownership model concludes its time to dispose of a piece of equipment when the expense of an asset is greater than the return
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