(ThyBlackMan.com) The tech and investor mania is cranking up again! Leafly.com (think AngiesList plus marijuana stores) recently closed $50MM in investment capital. Another fly-by-night app, YO (an app the pulls your contacts and merely text them, you guessed it, ‘Yo!’) recently closed $1.5MM in VC money. So whether you are getting seed money, Angel Capital, Series A, or friends & family, the time is now to focus on keeping those investments close to the chest.
One of the more expensive aspects to developing a start-up business is purchasing the equipment you’ll need in order to conduct operations. This could be anything from the tools you’ll need to the office chair at your desk. As buying these items could greatly increase your budget, perhaps you would want to consider commercial equipment financing instead. It is a method that can give you more immediate starting capital in order to develop the business.
Benefits of Leasing Business Equipment
There are many benefits that come from leasing business equipment. Although the business may not completely own the materials, leasing will impact various areas of the company in a positive way. Some of these benefits could even be considered an eco-friendly practice as you don’t waste old tools and equipment. In what ways can this help you achieve success?
- Reducing immediate funds required when starting the business
- Putting efficient and modern tools in your hands today
- Making upgrades and improvements easier to manage
Reducing Immediate Funds Needed
Instead of paying full price to purchase tools and equipment, leasing allows you to essentially “rent” what you need. This will reduce the amount of money that is required to start the business. Instead of budgeting the purchase of goods, the money could be spent towards other facets such as marketing campaigns and advertising. Any money that can be reduced from the purchase of equipment could affect your immediate success by increasing the budget in other areas.
Putting Efficient and Modern Tools in Your Hands
When leasing equipment, you may be able to use up-to-date technology and other efficient tools without the hefty price tag that is attached to such goods. Budget constraints could force you to buy certain tools and equipment that may be useable but less efficient. Why settle for
substandard equipment when leasing items could provide you with the tools you need for improved business practices? Efficiency is the cornerstone of any business and the right equipment can increase your income.
Making Upgrades and Improvements Easier to Manage
Some leasing contracts allow you to “swap” older devices and equipment for newer models that have been released. Others will rely on a specific length in which you can use the item with an option to renew with different terms and equipment. Instead of amassing a collection of outdated equipment or tools, leasing provides you with a method of trading in for improvements. Depending on the terms of the lease, you can upgrade your equipment and devices at certain times or when the contract expires. Some may even alter ongoing contracts giving you the opportunity to use improved equipment.
What are Some Factors ito Consider When Leasing Equipment
While leasing equipment does have its advantages, there are several factors that need to be considered before signing a contract. While some of these may seem obvious, there are others that some business owners don’t realize until after the fact. These include:
Realizing Ownership of the Equipment
The equipment you lease is still owned by the leasing organization. You may be liable for any damage or defacement of that equipment while it’s within your possession. Depending on the lease itself, you may be required to pay for replacements or repairs if the equipment is in need of such.
Lowered Tax Liabilities
Instead of worrying about depreciation, leasing equipment could reduce your tax liability. The payments for a lease could be construed as a general operating cost resulting in a lower tax expense.
Understanding the Contract in its Entirety
Before signing a lease for any equipment, always ensure that you understand the contract in its entirety. This could save yourself a great deal of trouble should there be parts of the contract that you misunderstand. If you’re in any doubt, inquire the help of a lawyer in order to help you understand the form before signing.
Establishing Financial Security
Not only will leasing equipment provide you with the means of increasing the efficiency of your starting capital, but it can also help you establish a credit history. Although some may be tempted to purchase goods using credit, the lease payment will look better on a history report while allowing you to do more with less money.
Staff Writer; Roy Jacobs