Writing an equipment replacement plan can be a daunting task. Many questions run through your mind: “Where do I begin?” “Which equipment needs to be replaced?” “How much money should I set aside?”
Sometimes we settle on the hope that we aren’t even in our current position when it’s time for the replacement plan to go into action, so we just ignore it. Equipment replacement plans are necessary but not scary.
Here are eight steps to help make equipment replacement a breeze.
1. Determine Your Budget
The first item you need to address when it comes to writing your equipment replacement plan is the budget allocated for your equipment. Industry best practices suggest you should set aside 1.3% to 4.7% of your annual revenue budget to equipment replacement. It is important to know you should expect to allocate a higher amount — around 15% — every five to seven years. If you are just starting out or building a new addition or facility, expect to spend $20 to $25 per square foot on your initial equipment purchase.
2. Run Financial Reports on Your Equipment
ACSM Fitness Facility Standards and Guidelines recommend fitness facility operators have a preventative maintenance program for their fitness equipment. This includes documentation showing when the scheduled work was performed.
In addition to the preventative maintenance records, it’s also important to document any costs associated with maintenance or repair. Keeping detailed records allows you to run reports on your equipment such as the costs associated with each machine, type of equipment and manufacturer. Once you have the true cost to own, you can make better financial decisions when it comes to determining whether you should repair or replace a machine.
3. Determine the Need for Replacement
After you determine the true cost to own your equipment, you can begin to assess the need for replacement. You can categorize each of your machines into one of three categories of replacement need below:
- 1 – Critical
- 2 – Moderate
- 3 – Low
Once you have categorized your equipment, you can begin to rank them. Determining your need for replacement gives you direction on where to go with your replacement.
4. Determine the Cost to Replace
Once you determine the need for replacement, you can begin to determine the cost of replacement. Start gathering quotes for equipment that fall into the critical and moderate need for replacement categories. Filter your costs from the largest investment to smallest investment. Categorize the costs into the following investment buckets:
- 1 – Low Cost
- 2 – Moderate Cost
- 3 – High Cost
5. Score Your Priorities
Now that you have ranked and categorized both the need and cost for replacement, we can begin to make decisions around prioritizing your equipment to replace. Begin to add the numbers beside each equipment together. You should see numbers totaling from two to six. Anything with a one can be left off. Having this collective numbering system allows you to see the priority level for each machine, with two being a high priority and six being a low priority. We have now completed a system that we can stack up against a manufacturer’s lifespan.
6. Compare to the Manufacturer’s Lifespan
When purchasing new equipment, you should document the estimated retirement date based off the manufacturer’s lifespan and instructions. This is a solid reference point, but we also know that everything looks good on paper until you add the human touch to it. We often refer to the human touch figuratively speaking, but when it comes to the lifespan of fitness equipment, the literal human touch can make an impact both for better and for worse. You can compare your equipment lifespan to the priority system above to make concrete decisions around replacement.
7. Write Your Plan
Writing and acting on your equipment replacement plan is the final step of setting your fitness facility up for financial and member success. Once you write your plan, it’s imperative to share it with colleagues and make sure it stays as a departmental priority. As we’ve mentioned before in the keeping your facility fit article, sometimes your equipment replacement budget is easy to get taken away if you don’t have a solid plan for it.
8. Lather, Rinse, Repeat
An equipment replacement plan isn’t a destination. It’s a roadmap for success. You still have to make some collective decisions on what you are going to do. You may choose to replace multiple items that rank as high priority, or you may choose to replace only a few items that rank as low priority. A low priority of ranking (6) doesn’t mean the need for replacement isn’t critical. It means it’s critical but a high cost to replace. At the end of the day, you have to make decisions that match your organization’s mission, gets you closer to your vision, and falls in-line with your goals and objectives.
Antoine de Saint-Exupéry once said, “A goal without a plan is just a wish.” Happy planning!
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