When you start a business of your own and all
the pieces seem to fall into place, it can be wise to look at the possibilities
to lease some of the company´s equipment instead of investing. Sometimes it can
be more profitable to lease machines and equipment instead of buying. The ownership
of the equipment used in a business is often irrelevant. Neither bosses nor the
people working in production cares about the ownership of the machines. The
status of the equipment and the cost is what is truly interesting. Leasing
equipment has a lot of advantages to owning it. Take IT equipment as an example,
this is a genre that is developing quickly. By having the latest a company can
keep up with other businesses in the branch and by leasing the
equipment you don´t need to invest over and over when things get old, you
just lease new ones.
No down payment
When you are investing in computers, cell phones or smart boards you need to put in a down payment. This will have to come from the company finances and means you will have company money tied up in the equipment. Since IT is changing so fast, this money is probably lost since there will be no second-hand value to the equipment. By leasing the equipment instead, you won´t need to put out a down payment, instead you pay a monthly lease. Deals are different, but the usual is to lease for 18, 24, or 36 months. When the lease expires you can renegotiate the deal or just expand or end it. You can ask for offers from other companies in the same branch to make the deal as profitable as possible.
If you make the decision to buy your IT equipment, you have to look at all possible suppliers. After having invested in the equipment it needs maintenance and repairs. This demands a lot from the company, both time and money. This can be overbearing for a small company, but also for a bigger one, both economically and having the competence. By leasing the equipment, you can skip this part by making the deal including support, service and repairs. A deal can also include upgrades, exchange and troubleshooting.
By leasing your equipment there are no surprises when it comes to costs surrounding the equipment. You have the exact amount for every month. This is directly affecting budgets in a positive way. Leasing is decreasing risks of unforeseen expenses. A careless employee bringing on a dangerous code through a suspicious email can result in a smaller catastrophe leading to large costs and loss of income. Leasing equipment keeps it up to date and the risk is therefor much smaller. This also creates a company that is attractive to employees. In nine out of ten cases, your own equipment is associated with high amounts for insurance which makes another saver in costs when leasing instead.
No matter what kind of equipment your
company needs for the day to day production and work, it can be very profitable
to look at how the costs could change by leasing instead of buying.
You have just started your new business;
your dream and idea has started! Everything looks good but boom! Everything
crashed! Unexpected things can happen and often they happen just because you
are not prepared. Learning from other people’s mistakes is no cliché, it´s a
qualification for starting your own business and to survive the first period.
It is not unusual for new businesses to crash within the first year. A recent
survey in Britain by an insurance company shows that half of all new businesses
don´t survive their first five years.
Business plan – The first rule
You might be wondering about why you need a business plan since your company is so small. Stop thinking, the business plan is the foundation in all companies. If you don’t have a well worked out business plan, you won’t succeed. Many businesses end because of a bad business plan. It is important to have set goals and to focus on them. Besides this you need to figure out the time aspects and part goals of your business. How far do you want to come, and when do you want to be there? You need a strategy on goals, competition, market prognosis and how to finance it – all has to be there from the start. By putting this on to paper, in text, you have the means to hold the course through good and bad times. You can make analyses by looking back at the business plan when something goes right, or wrong, and learn lessons from it.
Not all eggs in the same basket
As the owner of a business it is easy to have all the responsibility and knowledge yourself. This is of course good, to have all the knowledge and details, but by putting all eggs in the same basket the company is also very vulnerable. It is crucial to have a good network of partners and people around you that you can trust and rely on in cases of need. If you are in an accident or get sick, it can be devastating to the business if no one has information and knowledge on how to run it. If there are employees in the business, they should have access to key information, for example contacts to clients, financiers, or other important people. Write down all the important information somewhere and tell those who should know where to find it.
It is easy to fall in the trap when everything is good in the business. It can be really hard to make time for future plans when right now is going exactly as you want. The production goes on as planned but what happens if the market makes a turn? If you don´t have a long-term plan you can overturn your business very fast, this is a very common reason for companies going under. Incident in the short term demands a more detailed plan that takes time to make, while long term events don’t need that many details. Most importantly, you need a rough plan for upcoming events and incidents to give to all those involved.
Always keep your main idea in focus! It can be easy, when your company is going well, to be lured into possibilities outside your alignment. It is important to evaluate these opportunities before you make any commitments. You can miss something important, but as long as you keep focusing on your main idea your company will keep your vision and go forward and keep being profitable. In the end, everything falls back on to the business plan!