By Craig Leerman • October 17, 2013 Like most production company owners, I regularly take stock of my equipment inventory, evaluating the need for updates or additions to match current and future needs. A recent audit led me to consider investing in higher powered 12- or 15-inch-loaded stage monitors. The process of investigating what matched our audio requirements with what’s available in the marketplace emphasized that there are a whole lot of variables beyond sound that come into play regarding the acquisition of new gear. All businesses, no matter what field of focus, face many of the same challenges when confronted with the task of updating inventory. The biggest issue is return on investment (ROI): will the equipment pay for itself and hopefully make money for the business before becoming outdated and/or obsolete? Because if not, unless you’re a trust-fund baby with unlimited funds to blow on gear, it’s best not to spend the money. I’ve seen this seemingly simple concept get a lot of sound/production companies in big trouble over the years, largely because it’s not quite as simple as it seems. Here’s how I go about it, using my recent “wedge quest” as an example. Being Realistic To begin the process, I evaluated current needs and inventory. My company mainly does corporate gigs requiring small-format monitors to provide speech and audio playback onstage for presenters. We also encounter a wide variety of performers at corporate events, including dancers, acrobats, singers and bands. The inventory already includes small dual 5-inch monitors that handle speech and cueing applications, and compact 10-inch coaxial boxes that are great for theatrical performances, singers, and bands that don’t require a ton of volume out of a wedge. For larger/louder acts, we have older 2-way cabinets with 15-inch woofers and 2-inch compression drivers on horns. They’re big and heavy, and while they pretty much still do the job sonically, age is becoming a factor. Looking to the future, I see us continuing to serve the same types and quantity of gigs, but there’s also an opportunity to do more festivals and one-off concert shows. Now, here’s the point where I’ve seen some folks get into trouble, because they tend of foresee a “best case” scenario that rarely materializes. I take the opposite approach, playing out the “worst case” scenario, and then go to a “realistic case” of somewhere in the middle of both extremes. Worst case: we get no new business. Best case: we book several new gigs a month. Realistic case: we’ll probably realize some additional business if we work for and earn it, but it’s not easy to ascertain just how much. Decision: initially rent the appropriate wedges as we need them, and if this new direction gets solid traction, invest in new wedges. Caveat: our current larger wedges are quickly becoming outdated, so perhaps adding newer models is justified anyway. High Finance The next thing I looked at was our budget. Figuring out how much to spend on a purchase is one of the hardest things any businessperson has to do. There are so many variables to take into consideration – purchasing outright verses leasing, leasing with the option of buying, purchasing new or used, and financing options. The advantages of leasing include limited or no down payments, the ability (in many cases) to get a tax deduction on lease payments, and not getting stuck with gear that may become obsolete in a few years as technology changes. The disadvantages are that it costs more to lease, and you won’t own it when the lease is up. Leasing with the option to purchase at the end of the lease solves that last problem, but will add significantly to the cost of the item. Purchasing works best for items that will provide long, useful service, not likely to become outdated for the foreseeable future. It’s a good idea to investigate if there’s a significant technology upgrade or innovation coming in the product category. In my case, I was looking at stage monitors, and while new improved models hit the market regularly, they don’t invalidate existing units. (Advantage to purchasing.) One option that can get overlooked is buying used. Well cared for used gear can be often be acquired for a fraction of the cost of new. Equipment no longer providing ROI to the current owner may be the right fit for your needs and budget. Further, some companies like to invest in the “latest and greatest” gear, meaning that their used stuff might not be all that used and therefore provides strong value. Read the rest of this post 1 2 About Craig Craig Leerman Senior Contributing Editor, ProSoundWeb & Live Sound International Craig has worked in a wide range of roles in professional audio for more than 30 years in a dynamic career that encompasses touring, theater, live televised broadcast events and even concerts at the White House. Currently he owns and operates Tech Works, a regional production company that focuses on corporate events based in Reno. http://techworksreno.com/ Comments Have something to say about this PSW content? Leave a comment! Cancel reply Scroll past the ”Post Comment” button below to view any existing comments. Your email address will not be published. Required fields are marked *Comment Name * Email * Website This site uses Akismet to reduce spam. Learn how your comment data is processed. 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