#Immediacy on speech making

We may be quite confident of our expected use of the equipment ...

We may be quite confident of our expected use of the equipment in the first year or two, but what then? We may have no use at all for the machine in 3 or 4 years' time. One way round this problem is to take a view on the likely period over which a 'payback' can be obtained. Let us take, as an illustration, the relatively simple case of an automatic car-wash: Purchase and installation cost £110,000. Gross revenue per customer £12. Materials used per customer £11 Maintenance costs per month £175 Other monthly costs, eg insurance £145 Expected number of customers per month after allowing for repairs and other 'downtime' 200. On the basis of the above figures the gross revenue per month will be £11 x 200 = £1200. From this figure we must deduct £11 x 200 for materials £1200 and a total of £175 for maintenance, etc, yielding a net revenue of £1125 per month.

On this basis the initial purchase and installation cost will be 'paid back' after 1000 per cent = 200 months just over 16 years Clearly, not only is a period of 16 years far too long to wait, but car owners may not even want the service by then. The self-cleaning car, if someone invents it, will be the end of all car-wash services If, however, we could confidently forecast 2000 customers a month for our car wash, then the position is entirely different. The payback period would be reduced to just less than one year. This is a much more satisfactory period in the sense that we can see much more reliably what is likely to happen/in the way of competition and demand.

Although a fairly simple example, the car-wash calculation illustrates the approach required in evaluating potential equipment.

Some calculation is necessary, depending on circumstances, to provide an objective even if only approximate idea of the revenue and profit likely to be gained.

Sometimes new or additional equipment will save labour and contribute by reducing wage costs per unit of output.

Sometimes quality improvement may be gained to either meet the competition or open up a new market. Whatever the case, no purchase of new equipment should be made unless a clear contribution to future profit can be seen.

Similar costing may be required to answer the third question: 'Is there any better alternative?' Not only is it necessary to compare the features and costs of similar equipment offered by other suppliers, but profitable results can be derived from turning the whole subject on its head; going back to square one and asking if there is any other way of achieving the result without buying equipment at all. There is always the chance that one of the following lines of action will be cheaper: Sub-contracting all or some of the work; Re-designing the product so that it, can be made using existing equipment; Adapting existing equipment to enable it to do the work.

Reducing the cost of existing equipment There is a 'classical' problem which besets all users of machinery, whether it be computers, communications equipment such as telex machines, factory machinery, or even vehicles.

This is the problem of what to do when along comes a more modern and more efficient equivalent machine long before the old one has reached the end of its useful life.

The businessperson must decide whether or not to replace his old but ...

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The pressures of dealing with customers, the excitement of the impending stand ...

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Machines B and C =are starved of parts, or - ii. B ...

Machines B and C =are starved of parts, or - ii. B and C cannot keep up with A and A stands idle for some of the time