Business Equipment Leasing for Start Ups: What You Need to Know
Business equipment leasing is a cost-effective way for start up businesses to acquire the equipment they need. However, if you don't approach the process with adequate background information, you could end up wasting a lot of your valuable time and money. Here's an introduction to what to look for and what questions to ask when you're investigating business equipment leasing for start ups.
All potential new business owners are cognizant of their start up costs and their capital not only for starting the company but for day-to-day operations until the cash flow is a steady stream. Leasing equipment at the beginning will save the capital needed for other expenses.
For example, you are opening a suite of offices that can be rented by business people who are consultants, CPA's or other individuals who like to have the appearance of a regular office with secretarial service as well as an on-site conference room. Each of the ten offices will be the same size and will come furnished with a desk, executive chair and mat, trash can, two visitor chairs, one office wall art and a telephone that connects with the central secretary. Your conference room will have a table, 12 chairs, two trash cans and two pieces of wall art. You will need all of the secretary's office equipment as well, but that is a separate line item.
If you purchased all the furniture new, you would pay in the range of $40,000 without sales tax for a moderately priced group. However, on a 24 month lease-purchase your payments would be around $1800 a month for 24 months. For a 100% lease only it would be around $1200 per month. On a lease only program you would be able to save $38,200 of start up costs for the first month.
Terms and Conditions of Business Equipment Leasing for Start Ups
One of the first things that you need to understand before you enter into a business equipment lease is the terms and conditions associated with that lease. Lease terms can make the difference between getting a good deal and getting saddled with a piece of equipment that your start up company will quickly outgrow. When you first look at a lease, identify the required length of the lease and what trade-up or trade-in options you have. Make sure you select a lease that allows you to switch products in mid-lease to ensure that if your business needs change you'll be able to change your equipment as well.
As a start up, you may also find that your business equipment leases carry different terms and conditions than larger, more established companies face. Your size and industry will have a big impact on the terms of your lease: risky start ups like restaurants may find leases more difficult to come by or more expensive.
In addition to looking for satisfactory lease terms, you'll also want to examine the service packages that are offered by each leasing company. While business equipment is built for commercial use, many types of vehicles, industrial machinery, and office equipment that are commonly leased need frequent maintenance to continue operating smoothly. If you opt out of buying a service package, you may live to regret it as the cost of a service call by a trained technician can be hundreds of dollars. Service packages, on the other hand, are only a fraction of this cost and provide access to on-call technicians. However, not all service packages are created equal. Make sure you ask how many service calls your are allowed per year, how much the total package costs, if you can incorporate the cost of the service package into your lease, fee and if parts are included in the price.
Meeting your performance needs
The final step to take when considering business equipment leasing for your start up business is to make sure that the machine or equipment you've chosen will meet the performance needs of your company. When you compare your options, make sure the models you select have the speed, size, and functions that you need.
For example, if you're shopping for a multifunction copier, you'll have to decide your requirements for speed (pages per minute rate), paper sizes, and features like network support, scanning, and faxing. If you're looking for construction equipment, your decisions will be more about lift height or dig depth requirements, operating capacities, and horsepower. Just make sure the equipment you choose meets all of your requirements: it's not worth saving a few dollars on the lease if that limits the production and quick growth that's essential for a start up.
Whether your start up company is in retail, manufacturing, business services, or some other industry, there's a supplier out there who can lease the equipment you need at a reasonable price. Submit a free request for equipment leasing quotes and we can match you to qualified suppliers in your area.Ready to Compare Equipment Leasing Price Quotes?