Can leasing heavy equipment really be the key to saving money in a business? How do leases work?
It’s not easy to be able to take that next step and start up your own business, never mind be successful in the long run. Being experienced in your field is one thing, but risking all of your assets and your career to reach a new level of success is guaranteed to be a challenge.
Building your own company takes quite a bit of your time and dedication, but with hard work and smart planning, entrepreneurs can succeed over a long period of a time. However, being a business owner means gaining newfound knowledge in managing employees, marketing, and finances.
Everything in your business begins and ends with the money, from the employees you hire to the stock you acquire. After all, you spend money on your business in order for your business to be efficient enough to make money.
With your business not making money right off the bat, however, it can be fairly difficult to spend money on your company in such a way that your company is efficient in its field. It costs money to get the best equipment and stock possible, and when you’re limited to your own out-of-pocket capital, you’re stuck spending a lot of your money for a less-than-ideal setup.
That’s why companies look into alternative methods like getting equipment leases so they don’t have to worry about paying through the nose for equipment. However, how does leasing heavy equipment really work to your advantage compared to a purchase?
How does Purchasing Heavy Equipment Work?
The answer is simple: when your business is starting, purchasing heavier, expensive equipment is not even remotely viable. You spend a lot of your precious capital getting equipment that is guaranteed to cost money later on.
Heavier machinery needs to be maintained, repaired, and eventually replaced, and that all costs money. With smaller equipment, purchasing is a much easier to manage for a host of reasons: you claim it as a business asset and get some funding, purchase the equipment, and it generally lasts longer and requires less maintenance versus heavier equipment.
Think of smaller tools like hammers, wrenches, screwdrivers, and saws: they’re cheap off the bat and last quite a long time; even old hammers can still get the job done. However, a lathe costs at least a few thousand dollars to purchase and you need to constantly take care of each part of the lathe to ensure that the equipment runs effectively.
Within a few years, you’ll see the quality go down and you’ll have to either replace the equipment or deal with subpar hardware. With an equipment lease, getting that heavier equipment is much easier to accomplish.
Say you’re trying to get a lease that’s worth about $5,000: paying for that up-front then paying to maintain it can be difficult.
How does Leasing Heavy Equipment Provide Businesses with an Edge?
However, with an equipment lease, you can get the lathe leased to you for a flat monthly rate, which may add up but is still much more manageable for you to pay.
Paying $50-$100 a month for your equipment is much easier than paying all of that money up front, especially if that equipment isn’t going to last much longer anyways. Plus, with an equipment lease, you get hardware repaired for you if it breaks down instead of having to deal with paying to replace it.
Leasing also has tax benefits to it; depending on the Section 179 of that year, you could end up getting quite a bit of money in your returns. The best benefit of leasing is that it gives you options: you can get a lease and, at the end of the lease, purchase the equipment at a haggled rate if you have the money to do so.
Or, if you decide you like leasing for your business, you can continue the lease for another period of time and get an upgrade. Many business owners want to know how does leasing heavy equipment benefit them, and the answer is that it gives them options as well as breathing room financially.
To learn more about how does leasing heavy equipment work to your advantage, click here.