50% of all new businesses fail within the first five years.
One of the main reasons a lot of businesses fail is because they run out of cold, hard cash. If you’re worried about your business running out of money, you might want to consider leasing equipment instead of buying it.
In this post, we’re going to take a look at 7 advantages of leasing your business equipment. When you’re done reading, you’ll know how you can better manage your business finances with the help of leasing.
1. Improved Ability to Manage Cash
Leasing means you only have to pay a relatively small amount of money for your equipment every month. This can be a massive help if the equipment in question is expensive.
Suppose you run a farming company and you need to invest in some tractors.
If you’re going to buy the tractors, you’ll need to put aside a large chunk of capital. This can put a lot of pressure on your business, and it might mean you need to take on more investors than you’re comfortable with.
You may also end up putting yourself in a situation where cash flow is tight.
This can make your business stressful to run, as poor cashflow levels can make it difficult to hit payroll. It could even affect your ability to pay suppliers.
If you miss any of these payments, it can damage your reputation. This can have a negative impact on your future success.
If you have a leasing agreement, you need a lot less capital upfront. You’re then left with a lot more cash in the bank. This spare cash can help you avoid the scenarios listed above.
2. Access to a Better Grade of Equipment
Leasing also gives you the chance to make use of a better grade of equipment within your business. Generally, you’ll find the company offering the equipment is going to invest in the latest equipment.
This is so that they’re better able to attract clients. After all, if they can offer better goods it’ll help impress potential clients. Everyone wants the latest stuff. If you were to invest in the latest items on your own, you’d likely have to fork out a lot of money.
This is especially the case in the world of IT where the latest equipment can sometimes be a necessity. For instance, if you want to start a video editing company, you’ll need to invest in computers that can handle high-quality video.
Cheap computers will not get the job done, and even if they can, they’ll be very slow. This can hurt productivity levels. New computers, though, can overcome these issues. But if you don’t use leasing, buying new computers with cash can be very expensive.
Having access to high-quality equipment can also make it easier for you to win clients. You can mention it will take less time to complete projects. You can also state that you have high production standards because you use the latest technology.
3. Maintenance Costs Are Easier to Deal With
If you buy your own equipment, you’ll need to fix it yourself if something goes wrong. But if you lease, then this becomes less of an issue.
If you need to replace broken items, the leasing company can help you. This can be a huge weight off your mind if the equipment you’re using is critical in your business.
Suppose you didn’t make use of equipment leases. If the equipment is vital to your business, it means that your business will come to a standstill if the equipment is not working.
If your business comes to a standstill it might mean that it’s not generating any income. But you’ll still need to use cash to pay for the repairs. This can create a stressful situation as you’re spending money, without necessarily any money coming in. If you lease equipment, though, a quick phone call will help you replace the item in question.
4. Easy to Get an Upgrade
Leasing also makes it easy for you to upgrade the items you’re using in your business. This is especially helpful if you’re leasing any kind of tech.
It may be the case that your existing setup isn’t powerful enough to make use of a new software in your industry. If you can upgrade your systems, you can easily overcome this issue and ensure your business can make use of all the latest software.
5. Hiring Is Easier
Leasing also indirectly makes it easier to hire staff. Because your equipment costs are relatively small and predictable, it means you’ll have more money to spend on employees.
This means you’re better positioned to hire people, without putting your business in a financially trying situation.
6. Easier to Take on Big Projects
Suppose you land a large client. If you’re not making use of equipment leasing, you’ll need to spend money on equipment to fulfill the client’s project.
This might mean you need to take out a loan to cover the costs. This can be risky, especially if the client is only going to pay you upon completion.
With leasing, this is less of an issue. The payments are smaller, and so it’s easier to expand your business without putting a lot of strain on your finances.
7. Potential Tax Benefits
Leasing can also provide potential tax benefits. The benefits on offer will depend on the region you’re in.
To find out what you can deduct, take some time to speak to an accountant.
Do You Know the Advantages of Leasing?
If you need equipment for your business, leasing is something you should consider.
In this post, we’ve taken a look at 7 advantages of leasing equipment for your business. You’ll be able to better manage the finances of your business.
If you’re going to lease something for your business, be sure you read the details of the leasing agreement. This will ensure that you don’t enter into an agreement that’s going to cost you a lot of money in relation to interest payments. But, provided you check the details, leasing can represent a great option.
Interested in using solar in your business? Check out this post for some tips.