Those of you who are successful in your business might find that growth is a reality that you should face. Your business is only going to be as successful as it is large. Small shops small clients. Often people are put in the all too familiar place of being able to afford little bits and pieces and not the large capital required to grow to a large enough size to become a franchise.
A trend amongst amateur business owners is to earn a small amount to maybe get half way with the planned expansion then take a loan to cover the full expansion and use the accrued finances with previous work efforts and give the business a head start with its new look. Essentially a kick-start either to paying back the loan or upgrading other parts to accommodate the changes. Now, many financial experts will tell you that you should be able to get all the change work done with the loan, let’s face it, if you are reading this then you might not be as experienced as some other business owner and could use a little friendly info.
Be aware that there are always going to be unexpected occurrences and there is often times very little that can be done to prevent certain events. A simple risk assessment and a little planning will go a long way to keeping the bugs out of the system.
When lending money. The interest rate is the most important concern only after factoring in the other obligations. When looking at maintenance plans and insurance try to get them to work together. Many companies will give clients benefits, for example; your insurance gives you a 5% discount on your annual fees if your equipment is fitted with a tracker and is maintained on a maintenance plan. Check your maintenance plans and make sure the limitations and responsibilities are agreeable and address changes before committing.
Consider leasing machinery. If you look around you might find that there are many good deals for leasing what you need. It may also give you more flexibility. Being able to trade vehicles in on a regular basis is very appealing as you can get newer machines with more capability. Depending on the leasers, you might have a short period to test drive machines and change if the machine does not meet specifications.
Taxes and taxes and Vats. Payments for services rendered in simple terms. You may be eligible for certain tax breaks, you should get your accountant to work out your tax on a regular basis so that when it comes to submitting your tax it can be cleared as soon as is possible. You may be surprised how much you can get back when applied correctly.
Over 40% of the equipment sold for business use was Communication Equipment, Software, and computer equipment. Look at the end of plan options as closely as the start of the plan. Look for Wear and tear clauses and buy over options so if the machine reaches the lease conclusion and is still in good condition you may want to buy it for a drastically reduced rate or if on a rent-to-own contract it may be yours by default. Keeping a good machine is a great option as the machine can continue service at a reduced rate for running costs.
Look at the cancellation cost for both buying and leasing. Leasing usually has lesser penalties associated with cancellations as opposed to buying and taking loans. Also, keep in mind the payment frequencies. These things considered, it may be worthwhile to cancel a lease that is financial, not viable further. In either case, get hold of someone that can assist you and find out all the options available.
When it comes down to the contract consider the following:
- Collateral requirements.
- How many days will it take to receive the first payment of new funds?
- Higher credit ratings usually offer lower rates.
- How do the lenders renew, cancel and modify loans?
So, at the end of the work day, your business is going to grow and need more equipment as it grows. It makes sense to lease or finance your equipment rather than purchase it outright. Over 70% of companies that need finance will lease the equipment rather than just loaning the money. Customizing your terms and arranging the agreements in the way that suits your business and ways of operating can also be a major factor in making your money work for you.