If you own and operate a business, you understand better than most just how expensive running a business can be. In addition to having to cover the cost of overhead expenses, materials and employee pay, you must also invest in the right equipment. Most companies these days need that standard office equipment such as computers, printers, copiers and phones. Each of these items is costly in and of themselves. However, if you are in the construction or agriculture industry, you need heavy equipment, which often costs more than a small house. Most businesses cannot cover those expenses on their own, which is why they turn to equipment financing. Whether you own an established business or are trying to start one, here are three reasons you should consider financing your equipment.
Financing Helps Preserve Capital
Even if you do have $100,000 grand in the bank, you need that $100,000 to cover the day-to-day expenses. From utilities to employee pay and product production to advertising, there are dozens of operations that require an ongoing monetary commitment. If you spend all of your business’s capital on a single piece of equipment, you own the equipment outright, which is nice, but what happens when you don’t have any business and cannot afford promotion pieces? Or what happens when you cannot afford to pay your employees for two weeks or until the next paycheck comes in? Equipment financing allows you to preserve your capital for rainy days and still possess the equipment you need to get the job done.
Financing Allows You To Easily Upgrade
Remember when you first purchased your vehicle and it was the most technologically advanced vehicle at the time? It had power windows, a built-in CD player and heated seats! However, five years later, your friend was showing off a car with all that plus Blue-Tooth capabilities and built-in TVs, and five years after that, a colleague was driving a truck with its own Wi-Fi. The point is, thanks to the leaps and bounds in technology, equipment changes on an almost daily basis. There is always something newer and better to buy, but if you purchase something outright, you cannot afford the newer, better equipment. Equipment financing allows you to upgrade after a short term instead of having to commit to longer terms and aging equipment.
Financing Pays for Itself
When you finance equipment, you are financing something you use, or a “contributing asset.” This makes your equipment a lot like an employee in that it pays for itself by continually working for you.
Whether you have an established business or are thinking of establishing a business, consider equipment financing. Financing is a smart way to grow your business at any stage.