Cost versus Benefits
It's not unreasonable to wonder at what point will my investment in a rotary washer start to pay dividends. Although biased, I'm confident that it will provide you with a positive return on investment in the first year of use.
The benefit can be quantified in three ways:
- The cost of manual washing vs automation (break-even point). This is what people tend to look at first.
- The ability for the business to improve productivity and/or profit.
- The less tangible benefit of having a machine do all your dirty work with improved safety and staff morale.
Manual Vs Automation.
There are a number of "what if's" involved, but if your employee base hourly rate is around $22/hr, then typically once they are doing between 1 to 3 hours of manual washing per day within your total business, then you would be better off with a rotary washer.
The variance between 1 - 3 hours takes into consideration the machine size. If you were to invest in a small SW800, then typically more than 1 hour per day and you will be cost neutral based on this measure, but likely ahead on the other two measures. As you invest in larger, more expensive models, then the break even point also rises.
Other factors that might be considered when investigating the break-even point:
Taxation. The above estimate assumed that the tax rate and therefore deductibility of manual washing (wages) vs full service rental are equal, hence it was ignored for the calculation.
Small businesses may be able to reduce their tax liability in year 1 via the Government 100% Instant Write Off provided by the Federal Government. Check with your financial advisor to see whether this applies or is of benefit to your business.
Productivity and Profitability.
There are of course other opportunities and benefits from owning or renting a rotary washer:
Once your employee has been freed from the drudgery of cleaning your kit manually, they can be-redirected onto revenue producing activity! Often billable hours can be charged out at over $100/hr turning the cost of owning a machine into a profit generator right from the get-go. Regardless of whether the employee is able to generate additional revenue, the potential for increased productivity is obvious and has a multiplier effect on the benefits.
Is cleaning something that can be charged onto a customer or provided as an add-on service? Again, your washer could be turned into a profit generator rather than a cost centre.
Is cleaning parts presently a choke point in your production line? Many businesses have benefited significantly by introducing automated cleaning and thus improving the productivity of their entire facility. If you could halve the time spent cleaning would it significantly impact on your business? Typical cleaning cycles are between 15-30 minutes whilst producing consistent results every time.
Less Tangible Improvements
Not as easily quantified, but just as valid as the more financial outcomes is safety, environment and staff morale.
Safety & Environment.
Manually washing parts can be dangerous, especially where high pressure cleaning is being used. Employees will be coming into direct contact with spray, grime and chemicals (such as solvents). If you are not operating in a properly bunded area, you could also be unknowingly in breach of the Environmental Protection Act 1970, which could ultimately result in enforcement action from the EPA.
Morale. Often overlooked but possibly one of the more important aspects is happy staff. They will be more productive, safer and healthier, and in the end, who doesn't want their employees to be happy?
Your staff will appreciate the fact that you are making their work-life just a little bit more pleasant and hopefully realise that you are not just investing in a more profitable outcome for the business, but that you are also investing in their welfare.
In short, you should view the Washer as simply another employee. One that won't complain about being given the dirtiest jobs to clean, won't take a break, is happy to work all day plus overtime and will never take a sickie or ask you for a pay rise.
Want to discuss about acquiring a washer? Feel free to email, SMS or call.
Note that the above information is general in nature and therefore may not apply to your particular circumstance. You are encouraged to seek your own independent financial advice to confirm whether the above benefits apply to your business.
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