“Earn your success based on service to others, not at the expense of others.”
– H. Jackson Brown, Jr.
According to statistics published this year by the Equipment Leasing and Finance Association, equipment leasing is a $1 trillion industry.
In an earlier article, we gave an overview of what leasing is and some of the ways in which it differs from purchasing. However, understanding what equipment leasing can do for your business is only part of the equation. Having made the decision to lease, you must choose the best lease for your business. There’s a well-developed market primed for businesses to use equipment leasing to expand, and grow their assets, but the business owner must carefully distinguish between a good lease deal and a bad one.
Ideally, you want a lease that very clearly defines your rights and responsibilities, as well as those of the lessor. So how do you go about choosing the best type of lease for your small business?
The best way to get started is to look around. If you already know what type of equipment you need for your business, then comparison-shop the options. Some key considerations in weighing up any lease option are:
• Cost per month
• Maintenance contract – type and cost
• Availability of training
• Customer service
• Availability of software and hardware support
• Obsolescence upgrades
• Term of contract
• Renewal terms
Many leasing companies will package maintenance as a separate component. If a piece of equipment fails altogether, it’s likely the leasing company will replace it, as they should. But what if the equipment temporarily goes down? Will there be a 2-hour, 4-hour or 24-hour response time in getting a service technician on site and the equipment back in operation?
These details are critical because unless a piece of equipment is operable, it’s just a piece of junk taking up room and impeding your business from operating profitably. Consider also what will happen when a newer, better model becomes available. We’ve briefly covered the difference between a capital lease and an operating lease. Assuming you have an operating lease, do the lease terms allow for an immediate upgrade to this model of equipment, or will you be required to wait till the contract is up for renewal? Clearly these considerations will materially affect your business; although you may be in a hurry to get your equipment and get started, these things should be carefully considered at the beginning, in order to avoid headaches down the line. In Part II of this article we’ll get further into the financial consequences of a lease agreement.
For more information on this and other matters related to small business financing, please contact Commander Capital Funding Group today on (888) 748-7731 or email@example.com.