If you are starting your own bakery, investing in startup bakery equipment can be a real issue.
Depending on how large you intend your bakery to be, and what kind of equipment you need to have right from the beginning, you may be looking to spend anything from a thousand to several thousand dollars. It doesn’t matter what the model, shape and size of the equipment is if you can’t get quality equipment at an affordable price.
Acquiring the best startup bakery equipment requires planning and the startup costs can be very high especially if you plan on offering a wide range of goods such as cakes, pastries and bread. Unless you are willing to do things by hand, there are certain mixtures that you have to purchase in order to make the wide variety of goods. Purchasing a separate mixer for each of the goods will cost triple the amount of money unlike if you wanted to just open a bakery and sell bread.
How To Acquire Cheap Startup Bakery Equipment
As you can see, the equipment needed to start a bakery can be quite expensive especially for startups. If money is tight, then you can choose to purchase used bakery equipment.
Used bakery equipment can save you a lot money and help free up cash flow. Used equipment doesn’t necessarily mean that it is damaged equipment. You can get used bakery equipment that is in good condition. Before purchasing used equipment you should check to see if it is running smoothly and find out how long it has been in use.
The next best option would be to take out a loan from a bank. This is considered both a cheap and expensive option. It is a cheap option because the bank will lend you the money that you need to purchase your startup bakery equipment. It is considered an expensive option because you have to repay the bank loan whether you make a profit or not. Moreover, if you do not repay the loan on time, it will significantly hurt your credit score.
This leaves one other option, leasing. Leasing is so far the cheapest method of acquiring equipment for new and even established bakeries. With leasing, you don’t have to purchase the equipment upfront, you only pay for using the equipment and when your bakery does not succeed, you can simply return the equipment. It won’t damage your credit score in any way.
The idea of leasing when starting out is not a new one. Leasing allows you to try out different brands of equipment and this gives you the opportunity to learn what works for you and what does not. You can also upgrade to more expensive equipment models at no extra cost.
Other benefits of leasing include:
- Tax benefits
- You are not tied to restrictive covenants
- Allows better budgeting of your money
Don’t Fall For The Lowest rates
While leasing seems to be the easiest solution, you should never choose an equipment leasing company solely based on the rates they offer. This sounds counter-intuitive but it’s actually not.
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Leasing companies that offer you low rates usually fail to also include other payments that you may have to make. For instance, they may fail to have in place a clear mechanism of how they will calculate fair market value of your bakery equipment. Fair market value is the value of the equipment at the end of your lease period.
In addition, they may also not factor in interim rent. So as you can see, going for the lowest rate only gives you half the picture of how much it would cost you to lease your startup bakery equipment.
What You Should Do
You should hire a financial analyst or a lawyer who is experienced in dealing with leasing. This is because they know more about the tricks of the trade and can easily identify when a deal is not what it appears to be.
Many people mistakenly get into lease agreements with provisions that only favor the lessor. This is why it is very important for you to have a professional go through your lease agreement before you sign anything.
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