Investing in Tools

By Scott Grove
Let’s face it: most of us are tool junkies. Yup, I freely admit it! In the early days, I’d buy whatever new gizmo was on the market. On weekends, I went to all the auctions, scooping up super deals on tools I would never use. Sometimes I’d get a large piece of equipment that I needed and then spend days moving it, installing, wiring, fine-tuning (read: rebuilding) the entire unit only to realize why I got such a good deal on it in the first place. I’d justify all these purchases as re-investment in my company. But was
this really the best use of my time and money?
Investing in equipment should not be done on a whim. There are many factors to consider, including direct cost, possible financing fees, time savings, usage, space requirements, maintenance, life span, training, and more.

  1. The first consideration for justifying a purchase is need. Do you truly need this new machine, tool or
    gadget? Will it speed up your process and/or improve your quality of work?
    I look for bottlenecks in my fabrication process and determine where I spend most of my time. With multiple employees and a production line, I watch the flow and analyze what steps take the most time,
    which slows down the entire progression. Identifying these areas will hone in on what tools might help speed your process.
    For example, sanding is a big time suck. Now before you go out and buy a 48” wide belt sander and then upgrade your dust collection system (which you didn’t realize you needed) you must also think about how much time you actually spend sanding per day / week / month. If you generate so many parts that require sanding, and the new behemoth sander will be running every day, then it makes sense. But, simply upgrading your handheld sander by increasing the diameter from a 5” to a 9” Dynabrade or 11” Gem can cut your sanding time in half. This might make more sense.
  2. Purchasing the big stuff, simply put, costs big money. Cash flow is always an issue for small shops and sometimes buying a large purchase can be the slow kiss of death. I’ve see more than one shop go all gung-ho for a CNC machine, only to see it sit idle for days, if not weeks. Idle machines cost lots of money.
    Financing is often the way to go and rent to own can also help when tax season comes around. Basically, your monthly payments are fully deductible. When buying new, many manufactures offer zero interest,
    which can be very attractive. But don’t be lured without considering other factors.
  3. Large equipment takes up valuable floor space which translates into more rent. One might consider smaller or handheld tool alternatives, although these might not be as fast, they certainly offset their cost
    and can make a better investment. For example, Festool’s handheld edge bander is a perfect example.
    This unit is a fraction of the speed of a big boy, but it can be stored under a bench.
  4. Consider buying a more expensive tool or machine: high price usually indicates better quality, less maintenance, and less downtime, which can mean a lower total cost of ownership over the life of the
    tool. But when business owners cheap out and buy an off-brand, it costs them more in the long run with constant maintenance or a shortened life span. Invest in quality. It’s smarter and it only hurts once.
  5. This also goes for auction deals: do you want to be a woodworker or an equipment maintenance tech? For any used equipment, it’s very important to know the unit and if spare parts are available, and don’t forget a manual. It’s a fine balance, be sure you know what you’re getting into and how much time this unit will require to set up and maintain.
  6. Using one specific job to pay for a tool isn’t bad, as long as you can pay your bills. Generally speaking, if a piece of equipment can pay for itself within a year or 3-5 jobs, you’re ahead of the game. Typically,
    an investment should not go over five years to pay for itself.
  7. Don’t get blinded by technology. Yes, it can make a huge difference but crunch the numbers. I have gone head to head with a CNC and in certain operations, I still beat it for short runs. Programing, set up,
    and test runs all slow down the process and just pushing through old school may just be the most efficient way to go.
  8. Many new pieces of equipment require special training, which may or may not be included in the purchase. That means you or an employee will have to spend time on a painful learning curve. Worst case is if you invest in employee training, then he or she gains the knowledge and will take it with them when the time comes for them to move on. You’re then back to zero and another training expense.
  9. It’s good to know if there is a buyback or upgrade option. It seems that whenever I buy, within the next quarter there is a better, faster model available making my slightly used investment obsolete.
  10. Safety is another important consideration, but it’s non-quantifiable. Anyone getting hurt on the job is costly and will affect your bottom line. Consider a SawStop table saw: it’s a perfect example of a good
    investment for this reason alone.
  11. Consider the variety of tools that are designed specifically for a small shop that can make a big difference in profitability. For example, a Shaper Origin handheld CNC; a compact HVLP spray finishing
    system; pocket hole units; mortise Domino unit, multi-use planer / joiners, vertical panel saw, etc. All these and more and be affordable, save floor space, and increase productivity and profits.
  12. If you’re a small shop (and if I was starting over again) I’d consider a multi-use station, an all-in-one table saw, plainer, joiner, sharper and more that takes up a small footprint. For the money, and more
    importantly, the space savings, you can’t beat it.
    So, make sure you crunch your numbers before making equipment investments. You might have to resist the urge to have the newest, biggest, latest, and greatest, but you’ll know you’re making a solid
    decision that’s best for your business. With open eyes and proper ROI (return on investment), a good investment is money well spent.

To learn more about the work Scott Grove does and how you can have Scott do a remote teaching for clubs or private groups, visit him at https://imaginewoodworking.com/