Equipment damage can affect your business in various ways, especially if the equipment is a critical component of your operations. For example, building contractors rely on expensive equipment, such as excavators, whose breakdown can grind business to a halt. You should know the effects equipment breakdown could have on your business so that you can prevent them.
Equipment Breakdown Effects
The effects of equipment breakdown typically depend on your business. Below are some common ones.
Repair or Replacement Costs
The most obvious cost is that of fixing the damage or replacing the damaged equipment. Best business practices require you to analyze the repair versus replacement options before you decide which route to take. The analysis helps because equipment replacement requires significant investment.
Equipment Rental Costs
You might need to rent alternative equipment if your regular one breaks down. Consider a contractor grading a road whose machinery suddenly breaks down. The contractor might need to rent another grader to complete the project within the deadline as the damaged one undergoes repair. The rental costs are additional expenses over the usual business expenses.
Missed Deadlines or Contract Breach
An equipment breakdown can cause you to miss a work deadline. For example, that might be the case if equipment breaks down and you don’t have the money to lease another one. You might also miss a deadline if you have the money, but no equipment is available for lease.
Missing a deadline can also lead to a breach of contract. Breaching a contract might lead to other consequences, including monetary penalties and lawsuits.
Many businesses experience reduced productivity during equipment breakdown. Your business might experience reduced productivity if:
- You lack alternative equipment
- Your employees have to improvise, for example, by doing some of the work manually
- The breakdown affects your employees’ morality
Reduced productivity is possible even if you get to repair or replace the damaged equipment because such steps take time.
Established businesses rely on their reputation to get new clients or win contracts. Unfortunately, broken machinery can damage your reputation if it makes you unable to deliver on your promises.
The reputation damage can even lead to a loss of customers down the line.
All the above problems can lead to reduced income for your business. Factors that determine the effect include:
- The breakdown duration
- The nature of the equipment
- The repair or replacement cost
Reduced income is especially bad for young or small businesses.
Damage Mitigation Tips
Buy the Right Equipment
The first tip is to be selective with your equipment purchase. Caution is especially useful when purchasing used equipment. That way, you won’t end up with defective equipment at risk of breakdown.
Service and Maintain Your Equipment
Regular service and maintenance will keep your equipment running for a long time. Follow the manufacturer’s recommendation for best results. Let your technicians or service company come up with an efficient maintenance policy and stick to it.
Insist on Professional Service and Repair
Only qualified technicians should service or repair your business equipment. This caution is critical whether you are using in-house technicians or third parties. The professionals will use their skills and experience to prevent frequent breakdowns.
Train Your Operators
Human error can cause equipment breakdown. Hire the right people for your machinery operations. Train your workers so that they can operate the equipment with minimal risk of damage.
Act Fast Upon Breakdown
Lastly, act fast and look for contingency measures in case of an equipment breakdown. For example, you should look for alternative equipment, fix the broken one, and take measures to prevent future mishaps.
Your business might suffer equipment breakdown despite your best precautions. Thus, always ensure you have adequate equipment breakdown insurance to compensate your losses in case of a breakdown. Contact Kenneth Rhodes and Associates for quotes on equipment breakdown coverage.