Step 1. Reflect
When it comes to business equipment the first thing you may ask yourself is whether you should lease it or buy it. However, the first step should be looking at the bigger picture and considering the resources available to you and your business goals. Will this equipment help you serve your clientele better? Is your working capital stable enough to spend a certain amount of money? What are your short-term and long-term goals? Try to get a clear picture.
Step 2. Compare
While most people may think its cheaper to buy than lease, it really comes down to what works best for you. Buying might be your best option if you’re in a fast-growing business and have the money to purchase it upfront or are planning on selling it in the future. However, if you want to relieve the strain on cash flow by spreading out the cost over a few years, and like to keep up to date and the latest cutting-edge technology, then leasing sounds like a good idea for you.
Its easier to decide once you know the time frame for your equipment. Buying could be better if the equipment requires little maintenance and has a long lifespan, and leasing would be better for vice-versa. You can also use an assortment of both purchased and leased equipment- new and used, instead of going all in for either option. It all depends on what makes sense to you as the business owner.
Step 3. Research
It goes without saying that before making any huge decision about buying or leasing your equipment, its important you’ve done your research. This includes costs such as the purchase price, down payment, lease payments, tax impacts, insurance, financing, training, transportation, implementation, customization, downtime during transition, maintenance, repairs and upgrades etc. Most of the time suppliers are open to negotiations, so also consider the warranty terms and lease conditions on buying the equipment at the end of the lease. Make sure to get your insurer’s and banker’s input beforehand. All this information can be used to make a final decision.