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Junior Varsity
Becoming an equipment dealer
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<blockquote data-quote="Brad Weber" data-source="post: 48076" data-attributes="member: 114"><p>Re: Becoming an equipment dealer</p><p></p><p>Dealer agreements can differ from one manufacturer to another. Some may require minimum annual purchase commitments or even maintaining certain minimums of demo gear and/or inventory. Some may set up non-stocking dealers through distributors. Some may have geographic limitations or non-compete clauses. And some may sell to anyone with a heartbeat and a valid credit card, the heartbeat may even be optional.</p><p></p><p>There can also be other implications, for example does your state tax equipment sales but not service sales? Do you need to run parallel inventory and accounting to separate sales inventory and income from your rental inventory and income?</p><p></p><p>I once worked for a company that was involved in manufacturing, box sales, rental and contracting. Each group operated pretty much as an independent operation with shared administrative support and management and when I started there everything was under one roof. However, by the time I left that company the manufacturing aspect had split off into multiple independent companies, the rental division was completely independent in everything other than ownership and the box sales had morphed into inside and specialized vertical market sales. The needs and markets for each aspect were so different that there were limited advantages, and numerous disadvantages, to keeping them together.</p><p></p><p>Based on that experience, I believe that many production companies that sell equipment may do so for one or more of the following reasons:</p><p></p><p>1. It allows them to work with their clients in purchase versus rental decisions in a way that can be mutually beneficial (and that keeps the client from looking elsewhere).</p><p></p><p>2. It allows them to potentially take advantage of quantity or other special pricing for their rental inventory. You may not need 20 (or whatever number) amplifiers that would get you the quantity pricing but if you need 12 and can sell 8, then that can work to your advantage on the rental/production side.</p><p></p><p>3. It allows them to make or keep contacts through equipment sales that they can then try to leverage into additional production work (and vice versa).</p><p></p><p>4. They are somehow able to share some resources in a manner that benefits both the equipment sales and rental/production sides.</p></blockquote><p></p>
[QUOTE="Brad Weber, post: 48076, member: 114"] Re: Becoming an equipment dealer Dealer agreements can differ from one manufacturer to another. Some may require minimum annual purchase commitments or even maintaining certain minimums of demo gear and/or inventory. Some may set up non-stocking dealers through distributors. Some may have geographic limitations or non-compete clauses. And some may sell to anyone with a heartbeat and a valid credit card, the heartbeat may even be optional. There can also be other implications, for example does your state tax equipment sales but not service sales? Do you need to run parallel inventory and accounting to separate sales inventory and income from your rental inventory and income? I once worked for a company that was involved in manufacturing, box sales, rental and contracting. Each group operated pretty much as an independent operation with shared administrative support and management and when I started there everything was under one roof. However, by the time I left that company the manufacturing aspect had split off into multiple independent companies, the rental division was completely independent in everything other than ownership and the box sales had morphed into inside and specialized vertical market sales. The needs and markets for each aspect were so different that there were limited advantages, and numerous disadvantages, to keeping them together. Based on that experience, I believe that many production companies that sell equipment may do so for one or more of the following reasons: 1. It allows them to work with their clients in purchase versus rental decisions in a way that can be mutually beneficial (and that keeps the client from looking elsewhere). 2. It allows them to potentially take advantage of quantity or other special pricing for their rental inventory. You may not need 20 (or whatever number) amplifiers that would get you the quantity pricing but if you need 12 and can sell 8, then that can work to your advantage on the rental/production side. 3. It allows them to make or keep contacts through equipment sales that they can then try to leverage into additional production work (and vice versa). 4. They are somehow able to share some resources in a manner that benefits both the equipment sales and rental/production sides. [/QUOTE]
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