Knowing exactly the right time to replace sealcoating equipment is critical to the financial health of your business. You don't want to replace equipment you could have maintained, and you don't want to lose money on equipment that is no longer worth maintaining, so finding the balance is key. Here’s when you should consider replacing your sealcoating equipment.
Scenario #1:
Faulty Equipment Is Costing You Money
When equipment failure is preventing you from completing jobs, you are losing money. One single day of downtime could cost you $500 in clear profit. Losing one day a week to repairs adds up to $2,000 a month of lost profit, and that’s before factoring in the potential costs of those repairs.
Right there is the money that could have been spent replacing, or upgrading, sealcoating equipment: if repair costs over time are greater than the purchase price, buy the new machine.
Scenario #2:
Improper Maintenance Is Shortening Your Machine’s Lifespan
Properly maintained equipment that's repaired promptly will have an extended shelf life. The reverse is true. Neglecting maintenance, or poor maintenance, will lead to costly repairs that will have you shopping for new equipment in no time.
For instance, failing to keep the sealant in the tank properly mixed and stirred can result in a blocked suction port. The pump will run dry, which leads to long-term damage.
That’s why it’s so important to keep a maintenance schedule, such as checking your pump regularly for leaks. Fill the pump with water, plug it, and dry the outside thoroughly. If after 15 minutes you see any water around the outside of the seals, you have seal replacement to do.
This video shows you exactly how to do this repair:
If bad maintenance is the reason you need to replace sealcoating equipment, be sure to come up with a plan for your new asphalt sealing equipment to keep it working long-term.
Scenario #3:
It's Time To Expand
As your business grows, your equipment needs to grow with it. Adding a better spray system with features such as a larger tank will help you get your jobs done faster. Better yet, you’ll be more efficient, adding to the number of jobs you can complete in a day.
Remember, when you replace sealcoating equipment, it never hurts to keep the old asphalt sealing equipment as back up, spare parts, or for use by a second crew.
Scenario #4:
It Makes Financial Sense
Replacing asphalt sealing equipment has the exact same factors as buying a new car or truck. Here's how to make a smart money decision:
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- Track your maintenance costs. Keep a running total of how much you are spending to maintain your equipment. Do not include replacement spray tips; you'll need those replaced regularly on new equipment as well.
- Log profit loss due to repair. Every time you lose a day or a half-day of work because your asphalt sealing equipment needs repair, track how much profit you've lost.
- Think before spending. Before buying any new part like a hose, pump, or engine, look at the system as a whole. Are you going to need to replace multiple parts soon? How much will you end up spending this year on replacement parts?
- Check your depreciation. If your business has already used up most of the depreciation value on your current system, it's a good time to replace sealcoating equipment for tax benefits.
- Track your maintenance costs. Keep a running total of how much you are spending to maintain your equipment. Do not include replacement spray tips; you'll need those replaced regularly on new equipment as well.
Two Tax Write-Offs Asphalt Contractors Need To Know
Section 179
Section 179 is a tax write-off that lets you deduct the full or partial cost of any depreciable asphalt maintenance equipment you bought this year. This tax code allows you to deduct the cost of the equipment in the same tax year instead of deducting it gradually over the years.
The sealcoating equipment should be purchased this year and be in operation before December 31st. This tax write-off does not apply automatically, so you have to opt in by filling out Form 4562. Visit the Section 179 official website to learn more about it.
Bonus Depreciation
Bonus depreciation allows you to deduct a significant percentage of the total cost of a qualifying asphalt maintenance equipment in the first year of its service instead of over the years.
To report bonus depreciation for eligible sealcoating, crack filling, or line striping equipment, simply fill out Form 4562.
Calculate your potential savings below:
Add it all up: Your yearly maintenance costs, profit loss, and known future replacement part costs tell you how much your asphalt sealing equipment is costing you. Compare that to how much it will cost to replace sealcoating equipment. Simple!
Some Reasons NOT To Replace Your Equipment
If none of the above scenarios fit your business, you can probably continue to use your equipment.
However, you should keep these simple repairs you can make to save your current machine:
- Hose Replacement – A nicked hose is easy to replace, and economical.
- Pump and/or Engine – The tank is durable for 20 to 30 years since it's 100% steel, so a replacement pump and/or engine can be a smart cost-efficient alternative.
- Spray Gun – The gun can be replaced easily and inexpensively, and is critical to professional sealcoating results.
Need a resource on sealcoating, crack repair, and running an asphalt maintenance business? Then sign up to the Asphalt Kingdom Build Your Own Business Blueprint! Enroll for free and refer to it as you go along
