If you’re operating your own business, especially one that’s just starting out, one of the biggest obstacles is getting your hands of the right equipment. Quality, industrial strength equipment often comes with an exorbitant upfront cost that most fledgling businesses struggle to handle.
This kind of financial stress right out the gate can have a lot of negative side effects down the road. As a result, it’s often a good idea for businesses to start out by finding the best small business loans available and leasing the equipment they need to get started. This is true in a wide variety of different industries.
Benefit 1: Manageable Costs
There are a number of benefits to this tactic. For one, leasing equipment turns a massive upfront cost into a manageable monthly expense that you can include as part of your regular budget. Many businesses struggle initially with keeping their regular income steady and this is made easier when you’re not scrambling to dig yourself out of the large financial hole you made buying a critical piece of equipment.
Leasing equipment actually helps balance the budget as it gives you a greater sense of the amount of money your business is working with month to month instead of throwing everything in a pile in hopes of eventually cancelling out that negative. And along with this, you can get the business acquisition loans as well that will help you make your business strong.
Benefit 2: Looks Good on Paper
On a similar note, because leased equipment appears on your budget as a monthly expense instead of a single massive negative it makes your business seem much more appealing to other potential lenders and financers. While the differences may seem abstract to you, a lender will look at your monthly balance sheets and see that you’re not already in debt to someone else and, in fact, have cash on hand to help cover their payments. This can be the key difference between acceptance and rejection when applying for a loan or a line of credit. Obviously, the key in any lending situation is finding the right provider.
Benefit 3: Negotiable Pricing
Leasing also creates a potential ally. After all, whoever holds the lease to your equipment now likely has a vested interest in your companies success. While they could repossess the equipment if necessary, most lenders prefer to have a steady, paying customer over a piece of hardware. This means they may be more amenable to negotiation if circumstances change, while a purchasing may leave you in a “bought it as you saw it” situation.
Benefit 4: Easy to Update
Another potential benefit is that it makes upgraded equipment easier to acquire. When buying straight out, many businesses get saddled with outdated or dis-functional equipment simply because it’s all they could afford. This gear is expensive to acquire but difficult to get rid of, taking up space and energy long after it’s usefulness has ended.
When leasing, you have the opportunity to figure out how long you may need a piece of equipment for and budget accordingly. When the time right simply ceases payments, return the equipment, and that’s that. Now fill that empty space with whatever the newest model is.
Conclusion
While gut instinct might suggest that leasing equipment is a risky move to start out with it can, in fact, be a solid financial move depending on your business model. This is because it turns a single massive expense into a functional monthly cost. This takes away a massive amount of mental and financial strain, allowing you to focus on operating the most successful business you can.
