Leasing vs. buying for your business
One question that is important to ask yourself fairly early on in business is whether you are going to buy or lease your equipment. All businesses need some form of equipment, so it is an important decision to make that can impact cash flow and more. There are pros and cons to each option, as there isn’t a one size fits all solution, as what will work for one business may not work for another. So with all of this in mind, here are some questions to ask yourself in order to think about what is going to be the best option for you and which will suit your business the most.
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What capital do you have?
This is an important question and one that is good to consider in the leasing versus buying debate. Put simply, if buying what you need outright is going to put you into a lot of debt or make a big dent in your budget, then it is likely that leasing is going to be the best option. A big dent in your budget is when you will have to cut back in other areas, right when you’re starting out. If you won’t have money for advertising or marketing then it isn’t going to make sense to buy outright, as your first thought as a business should be customer acquisition.
How much do you need the most up-to-date equipment?
One big advantage of leasing equipment is that it means you have access to top of the range equipment that you might not be able to afford outright. Generally, as a rule, the cost overall of leasing can be higher than buying something outright, though. So it is a good idea to think about how often the equipment would be used and how vital it is for the business. If you will use it all the time and having the best available to you is important, then either option would work well, depending on the financial situation of the business.
How often will it be used?
There are some items of equipment that just make sense to buy. For example, a bakery business should get a bakery tray selection, as well as other smaller equipment. Some items of equipment like ovens or large scale refrigerators might be better to be leased, again, this all goes back to the budget. If you will use something a lot and it is not inexpensive to buy, then it can definitely be worth getting yourself so you don’t have to think about the maintenance of them or what you will have to pay back if they become damaged by you.
How do you want to manage the equipment maintenance?
Even if you’re not thinking about finances, one of the things that you need to consider and is a big difference in owning or leasing, is about the maintenance and who the responsibility will fall to. In most cases, unless still under a warranty, if you own the equipment, you are the one who will foot the bill for any maintenance and faults. On the other hand, if you decide to lease the equipment, then in most circumstances, it will be up to the lessor to take care of any maintenance or issues.
