The rapid pace of technological change often gives business equipment a limited life span. Repairs and maintenance are inevitable and eventually the equipment simply becomes obsolete or unusable.
To determine whether the time has come to dispose of your equipment, it's worth first taking an inventory of how often it is used and repaired. Is this equipment costing you more than it's worth to keep on hand? If costs are excessive, it may be time to get rid of the asset.
But before buying new equipment to replace it, ask yourself whether that is really needed. Will it make your company more profitable? It may help to do a cost-benefit analysis of your options. One worthwhile exercise is to compare the costs of repairing equipment with replacing it.
Whatever your choice, equipment should be disposed of properly and in a way that meets all legal obligations.
Set a policy
An official equipment disposal policy makes good business sense because it helps your company systematize the process. Properly conceived, such a policy can help you generate cash to buy more efficient equipment, or redirect resources toward other projects such as exporting or marketing. A disposal policy can also help you assess the merits of buying reconditioned equipment, or free up space in your workplace by getting rid of equipment you don't need. And it can improve your plant layout when more efficient equipment is purchased, boost your company's image as an environmentally friendly organization and help good community causes when equipment you no longer need is donated to charities.
What kind of equipment can you dispose of?
There's a wide range of equipment that you can put on your disposal list. Typical items include photocopiers, furniture, printer and fax cartridges, cellular telephones and other telecommunication devices, audio-visual and lighting equipment, medical devices, vehicles and glass.
How do you dispose of equipment?
Here are some of the questions entrepreneurs must consider when getting rid of equipment and machinery.
- Can you sell it as is?
- Do you need to refurbish it to get a better price?
- If replacing it, will the new equipment be put to adequate use?
- How often is the existing equipment used?
- Can you afford to replace it?
- Is your evaluation of the equipment's mechanical system reliable?
- Does the equipment contain harmful materials?
- Will you need the help of an expert to dispose of it?
It's best to familiarize yourself with local regulations prior to disposing of machinery, computers or other equipment. Start with your municipality's waste management and environmental regulations. Environment Canada also offers invaluable information on waste disposal and tips on how to reduce, reuse, recycle and recover equipment. Specialized magazines also offer worthwhile information on solid waste and recycling.
Here are some common equipment disposal methods, with some points to consider for each.
- Donate refurbished or old equipment to charities or schools. ReBOOT Canada is a nonprofit organization that refurbishes old computers and distributes them to charities and people with limited access to technology. It finds homes for about 5,000 computer systems every year. The advantage of donating is that you're contributing to a good cause and may be eligible for a charitable tax deduction. However, you may also be solicited later for more donations.
- Sell your equipment online or at local auctions or advertise it in trade magazines targeted at readers in the same industry. This will usually net you a better price than selling through an intermediary, and the proceeds can be reinvested in the business if you don't need to replace what you've sold. The downside is that this option leaves you handling the logistics of the sale yourself.
- Recondition equipment so it can fetch a better price and help pay for the new equipment that will replace it.
- Dismantle equipment so that it can be recycled, reducing waste. Local waste management initiatives may offer helpful information if you pursue this option.
- Trade it in for more efficient equipment. This may speed the acquisition process and cut the price you pay for the new equipment, although this service generally carries a cost.
- Scrap your equipment by selling it off as iron or metal to a scrap yard. It's easy to do and can generate cash, although some municipalities require you to pay to have it sent to a scrap yard.
Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.
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