When Your Equipment Breaks Down

If it has moving parts or electronic components, it can break. And if it breaks unexpectedly, you can bet that it won't happen at a convenient time--and that it will cost you.
Magazine Contributor
2 min read

This story appears in the November 2007 issue of Entrepreneur. Subscribe »

Protecting your company from equipment breakdowns requires prevention tactics, alternative resources and insurance.

Maintenance is key to preventing breakdowns, says Chris Murphy, 43, president of Murphy Lighting Systems, a lighting control systems integrator with offices in Orlando, Florida, and Chatsworth, California. "Almost everything you buy has a recommended maintenance schedule," says Murphy. "Complying with that schedule will help extend the life of your equipment and keep your warranty protection in force."

Computers and other equipment containing delicate electronics are also susceptible to damage from lightning and power fluctuations. Murphy recommends using quality surge protectors and uninterruptible power supplies, or UPSs, and offers these items as part of the lighting systems he sells. If customers decline that part of the package, he urges them to buy at least standard UPS equipment elsewhere.

All the electronic equipment in Murphy's office is wired into a UPS bank. "If we have a power outage, it gives us time to properly shut down the computers and put them to bed until the power comes back on," he says. "In some cases, it gives us enough work time to finish a project if we need to."

Of course, there's no guarantee that even well-maintained equipment won't fail at some point, which makes backups for both your data and production systems critical. If it's not practical or realistic for you to duplicate your equipment, risk management consultant Brad Forsythe recommends forming alliances with other companies to provide mutual assistance in the event of an equipment breakdown or other business interruption.

Make this a competitive advantage by letting customers know that you have a preventive maintenance program, effective backups and alternate sources, advises Forsythe, president of Best Practice Advisors LLC. "Your customers want to make sure their business needs will be cared for," he says.

Finally, consult with your insurance agent about equipment breakdown coverage. But don't make insurance your first line of defense. Without an equipment breakdown recovery plan, Forsythe says, "by the time you're collecting on the insurance policy, you may already be out of business." Equipment breakdown insurance can pick up the cost of fixing a covered item and even pay for related property damage, lost business income and other costs incurred due to the breakdown while your backup plan keeps your business running and your customers happy.

Jacquelyn Lynn is a freelance business writer in Orlando, Florida.

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