On 3/5/2020 1:57 PM, Ken Norton wrote:
As a professional photographer, equipment replacement is a cost of
doing business. It's one you want to control as much as possible, of
course, but unless you're a bloody tightwad light me, you'll budget an
annual spend based on obsolescence as well as wear and tear.
<. . .>.
In fact, if the item is costly, and has a residual value similar to
the purchase price, then it makes sense to keep a rider on it.
Well, now, yer talkin' amortization, which is a taxy kinda thing, not actual money - unless you're putting it aside as
real money. In a huge, Fortune 500 company, we didn't do that. The portion of Capital Expenditures that was replacing
worn/obsoleted, etc. assets came out of current cash flow, not saved up past amortization and depreciation. I did the
CAPEX budgets for many years. I did the numbers, the guys in the corner offices approved them and the guys with the
(notional) green eyeshades kept track.
When I was doing the numbers for a joint venture, we looked almost exclusively at EBITDA, Earnings before Interest, Tax,
Depreciation and Amortization. Interest is dependent on choice of means of financing the business, tax not a part of
business operations and the other two are non-cash.
One of my work friends for some of my years at Safeway was manager of the Insurance Dept. (They didn't go in for fancy
titles back then, the guy who ran the second largest dairy company in the world was simply Manager of the Dairy Division.)
Bert in fact managed a quite large "insurance company". We were self-insured for all ordinary business risks, even
employee health. If you have the financial strength, it's way cheaper than paying the higher overhead and profits of an
outside insurance company.
One way to do it with your green eyeshade on might be to pay about 2/3 of what the insurance premiums would be into a
special account, and use it to pay off your own "claims". It's a long run strategy, and depends on other reserves in
case the account temporarily goes negative. The smaller the operation and the lower the capitalization, the higher the risk.
As I have no income from photography, I simply ask "Would it hurt very badly if I dropped this stuff in a river?" (And
I'm afraid I ask another, quietly, "How much is it worth to me to avoid all the hassle and paperwork by just buying a
Alternate Assurances Moose
What if the Hokey Pokey *IS* what it's all about?
Themed Olympus Photo Exhibition: http://www.tope.nl/