Art & Entertainment | Book Reviews | Education | Entertainment Video | Health | Lifestyle | Sport | Sport Video | Search

 


Oily Rag column: Frugal business

Frugal business

By Frank and Muriel Newman
Week of 25 March 2013

We know a lot of oily raggers not only live off the smell of an oily rag, but they run their business off the smell of an oily rag also. Be it business or pleasure, the net effect is the same - more of your dollars in your pocket instead of someone else’s.

A reader asked us about the pros and cons of leasing versus buying an office photocopier, so, we have crunched the numbers. We asked one of the well know office equipment suppliers to give us a couple of options. In the first option, we could buy a new machine for $5,995 (a pretty fancy one admittedly). The second option was to lease the machine on a 48 month term at $177.56 a month.

The ownership deal is pretty straight forward. You pay for it, you own it, you claim depreciation for tax purposes at 40% a year on the diminishing value, and you can sell it anytime you like.

The leasing deal is more involved. You don’t own the machine, so it’s not yours to sell at the end of the 48 months. If you want to opt out of the lease agreement before the 48 months you will be liable for the remainder of the 48 payments (!) – even though, having returned the machine, they may have leased it to someone else or sold it on the second hand market.

In this example, the total lease payments over the 48 months are $8,523. In other words, there is $2,528 worth of interest in the repayments. Assuming the machine is leased for the full 48 month term and has a resale value equal to its book value at that time, the effective interest cost on the money is 24% (higher than credit card interest rates!). And that’s the best case scenario - it would be a heck of a lot worse if the contract were terminated early.

A third and better option would be to buy a second hand machine. In this example a good used machine that does pretty much the same thing as the $5,995 new one could be bought for about $3,000.

Now to accommodation matters. When making motel reservations always ask for a “corporate rate”. Sometimes they will fob you off but often they are only too happy to sharpen their pencil and give you a deal. If you are a regular customer then you certainly should receive a discount. If they don’t offer a corporate rate, ask if they are running any “promotions or packages”. Alternatively, shop around online. Check the web sites of your favourite hotel chains. They may have some online promotions.

Have a look at www.lastminute.co.nz - it does not even need to be a last minute booking to get a deal; you can book weeks in advance. One oily ragger recently booked a hotel in Tauranga at $89 instead of the normal room rate of $120. That’s $31 they saved - a 25% discount!

Big Fat Lazy Costs. These are costs that contribute nothing to the success of the business but sit around because no-one has taken the time to review them. In one case a business was able to save $3,000 a year by putting its cleaning contract out to tender.

That Big Fat Lazy $3,000 saving went straight through to the bottom line where it should be.

Let’s not forget that cutting costs produces an instant increase in profit and is a lot easier than trying to win new business. For example a business that adds a 25% margin to the cost of goods needs to increase sales by $15,000 to add $3,000 to the bottom line.

If you have a favourite money-saving tip, please share it with us so we can share it with the oily rag community – send your ideas to us at www.oilyrag.co.nz or write to Living off the Smell of an Oily Rag, PO Box 984, Whangarei.

*************

Frank and Muriel Newman are the authors of Living Off the Smell of an Oily Rag in NZ. Readers can submit their oily rag tips on-line at www.oilyrag.co.nz. The book is available from bookstores and online at www.oilyrag.co.nz.

© Scoop Media

 
 
 
 
 
Culture Headlines | Health Headlines | Education Headlines

 

Scoop Review Of Books: From Here And There

Being Chinese: A New Zealander’s Story
by Helene Wong.
This is the fascinating story of Helene Wong, born in 1949 in Taihape to Chinese parents: her mother, born soon after her parents migrated here, and her father, born in China but sent to relatives in Taihape at seven to get an education in English. More>>

Chiku: Hamilton Zoo's Baby Chimpanzee Named

Hamilton Zoo has named its three-month-old baby chimpanzee after a month-long public naming competition through the popular zoo’s website. The name chosen is Chiku, a Swahili name for girls meaning "talker" or "one who chatters". More>>

Game Over: Trans-Tasman Netball League To Discontinue

Netball Australia and Netball New Zealand have confirmed that the existing ANZ Championship format will discontinue after the current 2016 season, with both organisations to form national netball leagues in their respective countries. More>>

NZSO Review: Stephen Hough Is Perfection-Plus

He took risks, and leant into the music when required. But you also felt that every moment of his playing made sense in the wider picture of the piece. Playing alongside him, the NZSO were wonderful as ever, and their guest conductor, Gustavo Gimeno, coaxed from them a slightly darker, edgier sound than I’m used to hearing. More>>

ALSO:

Howard Davis Review: King Lear At Circa

In order to celebrate it's 40th birthday, it is perhaps fitting that Circa Theatre should pick a production of 'King Lear,' since it's also somewhat fortuitously Shakespeare's 400th anniversary. If some of the more cerebral poetry is lost in Michael Hurst's streamlined, full throttle production, it's more than made up for by plenty of lascivious violence designed to entertain the groundlings. More>>

Scoop Review Of Books: Tauranga Books Festival

Escape to Tauranga for Queen’s Birthday weekend and an ideas and books-focused festival that includes performance, discussion, story-telling, workshops and an Italian-theme morning tea. More>>

Get More From Scoop

 
 

LATEST HEADLINES

 
 
 
 
Culture
Search Scoop  
 
 
Powered by Vodafone
NZ independent news