“If you buy things you do not need, soon you will have to sell things you need.”
– Warren Buffet
Jason A. Duprat, Entrepreneur, Healthcare Practitioner, and Host of the Healthcare Entrepreneur Academy podcast, answers a question from his text community regarding making big purchases. In this episode, Jason runs us through a step-by-step calculation to determine whether or not an expensive purchase is worth it. Wait for the YouTube version of this episode to see his calculations on-screen!
3 KEY POINTS: When deciding on a big purchase
- Always go back to the numbers.
- Let your emotions simmer down.
- The more information you gather, the better your decision-making.
EPISODE HIGHLIGHTS:
- Jason features a question from his text community. The inquirer recently opened a MedSpa and is looking to purchase expensive equipment. They're wondering if now would be the right time to continue with that purchase.
- Purchasing the equipment will add five additional services to what they can offer, there are no consumables related to those offers, and they can buy the laser at a discount.
- For these cases, Jason recommends going back to the numbers.
- Typically, you don't want to finance anything that loses you money. However, in business, if you can buy something and pay for it over time while it makes you money, it's called Leveraging.
- You can look up free Amortization Calculators on Google.
- Don't focus so much on that big number. Instead, focus on the monthly payments and the number of patients required to execute and pay for this particular device.
- The first rule of business is to use Leverage to grow your business and your income.
- The calculations discussed throughout the episode are as follows. These are based on hypothetical numbers only.
- The Laser is worth $180,000
- 20% discount –> 144,000
- 10% Downpayment = 14,400
- Total Remaining Balance = $129,600
- 10 years for the loan term
- 5% interest rate
- Estimated monthly payment = $1,400 per month
- Extra cost for maintenance or electricity = $300 per month
- Monthly cost = $1,700
- Five additional services upon acquiring the equipment
- Each service would cost, on average = $250
- 7 Treatments are needed in order to break the cost of the equipment
- Each treatment takes 30 minutes
- = 3.5 Hours of Labor
- Multiply by $150 per hour
- = $525 monthly
- $1,700 + $525 = $2,225 monthly cost
- The Laser is worth $180,000
TWEETABLE QUOTES:
“If you want to get an opportunity to buy an expensive piece of equipment, try and sit on it for a day or two. Don't let anybody pressure you into making quick, rapid decisions. Let your emotions simmer down and look at it from a rational, financial standpoint.” – Jason A. Duprat
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“The more detail you can include in terms of your information gathering, the better your decision-making will be.” – Jason A. Duprat
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