“You’ve got to spend money to make money” is a popular saying, from business boardrooms to craps tables in Las Vegas. But, is it really a good idea to spend money at a time when the economy has been slow to recover?
It’s a question your customers deal with every time they consider purchasing a new performance item. And it’s a predicament many shop owners are struggling with these days as well.
In the October 2010 issue of Performance Business, we asked several suppliers about the benefits of shops investing in equipment and other upgrades during what’s still considered by most to be a down economy. Of course, every shop’s situation is unique. But, if your financial standing will allow it, should you consider spending some money now to make more money later?
The professionals we talked with say it may make sense, particularly in these three instances:
Increasing market share. If your shop is located in a market where there’s more competition than work, then gaining market share is a vital component to your long-term success. In this case, upgrading your equipment—and therefore your menu of services—can give you an edge as customers shop the various performance offerings in your area.
“Slow periods are when companies should position themselves to take market share once things turn around,” notes Ed Kiebler of Rottler Mfg. So, if your company is planning on being around for a while, it might make sense to upgrade now to distance yourself from the competition.
Branching out into new areas. If there’s a feeling your shop’s current offerings have run their course—or that your customer base is shrinking to unsustainable levels for whatever reason—then you may be considering a change of direction for your company. In that case, making the jump now while equipment prices are low could be in your best interest.
“Newer tools and equipment technology generally grows the capabilities of a shop to better-serve its existing client base,” says Andy Weyenberg of Miller Electric. “This also enables entry into other lateral or even vertical markets, which before might not have been accessible but are good sources of additional revenue.”
Establishing your local identity. As you know, today’s performance retailers don’t just compete with other shops. These days, Internet sales can be your biggest foe. And new equipment can be a powerful weapon in that battle.
Matt Patrick of ZEX gives the example of shops adding a nitrous refilling station to attract new and repeat customers.
“I know owners have to consider the costs of adding the equipment and finding a local supplier,” he says. “But something like this can set your business apart and make you the go-to shop for performance in your area. Then, the next time that person needs something new, he’ll consider you first. It’s an advantage brick-and-mortar shops have over the Internet. People love to see and feel the products, and be in an environment where they can build relationships and interact.”
So, if you’ve been asking yourself the tough questions regarding facility or equipment upgrades, know that there are manufacturers and suppliers available to help. They can get you the information needed to determine if investing now really will bring rewards later.