This ultra-important budget ensures you're recovering your true equipment costs. Your equipment budget is a financial plan to recover and replace the money you sink into your equipment and the numbers from here will feed into your estimates to ensure every job recovers the equipment costs it incurs.
In this video you'll learn how to:
- Budget and recover your fuel and repair expenses
- Calculate how to recover the costs of owned equipment
- Calculate how to recover the costs of leased equipment
- Calculate how to recover the costs of smaller equipment grouped into trailers
- Budget for equipment rental expenses
Creating Your Equipment Budget
The purpose of this article is just to give you a quick overview of the equipment tab within your LMN Budget.
- Only include vehicles/equipment that go onsite to jobs. Any other equipment (e.g. owner's truck, a loader at the yard, small tools/equip) belongs in the overhead budget.
- In the General Expenses section, make sure you do not include 100% of your costs. Some of your fuel/repairs/insurance/other goes to overhead vehicles. Estimate the % you should assign to your equipment budget vs. the % you should assign to your overhead budget. (e.g. if you spent $25,000 in fuel and you have 1 owners truck and 4 crew trucks, you might allocate 80% of fuel to your equipment budget and 20% to your overhead budget).
- Do not forget to include a forecast for Equipment rentals in the Equip Summary.
You will have four options for your Equipment Class: Owned, Leased, Group and Custom.
Please see more information about the Equipment Class options below.
- Use the Owned equipment calculator for any equipment that you either own outright, or are financing with the intent to own.
- Tips for the Owned equipment calculator:
- The equipment calculator's Replacement Value should be what you'd spend on a replacement, not what it's worth today (e.g. If you buy new trucks for $35,000, but you have one that is 8 years old now, use $35,000 for the replacement cost, not the value the truck is worth today).
- Include all the years you'd expect to own the equipment, not just the number of years remaining (e.g. If you keep your trucks for 8 years on average, and you have a truck that is 6 years old, you should budget for the full replacement value and the full years life (8 years) not just the 2 years remaining).
- Use the Inflation/Interest Rate to budget for interest payments and/or use 1%-2% to keep up with annual inflation.
- Use the Leased equipment calculator for equipment that you lease.
- Use the Group equipment calculator for groups of equipment that go together (e.g. Maintenance Trailer + Tools).
- Tips for the Group equipment calculator:
- Include any expensive equipment you have in your trailers (ie. Mowers, Blowers, Trimers, etc.).
- You do not need to add small tools individually to this list. Instead, you can add them in as a line item in the Group area (ie. Hand tools).
- Use the Custom equipment calculator if you want to enter your own annual equipment recovery costs.
- You should budget for all of your equipment, even if it's "paid off". You should be charging your customers to use it and saving to replace it.
- Remember - your budget is a forecast. If you plan on buying more equipment this year, you should include that equipment in your budget.