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One of the most important decisions a business owner has to make is one that involves spending money. More specifically, we're talking about spending money to acquire new equipment for your business. It doesn't matter if you're paying cash for the equipment or financing it, it's still a lofty decision to make. Here are five important things to consider if you are or if you soon will be in the market for new equipment.
First and foremost, let us not forget one of the primary reasons you started your own business-making money. The first and most obvious question you should ask yourself is-"how much revenue will this new equipment generate for my company?" If it's not going to directly or indirectly generate revenue, then what's the point? If it's going to generate a nice stream of income, then there are a few more considerations to ponder.
Another item to consider is whether or not you can get financing if you need it and what sort of financing can you get. Obviously if you have been in business for many years, have great personal and business credit, and have solid financial, then you'll be able to get the best financing/leasing packages available. If you are a newer business or have credit challenges, you very likely won't qualify for the best finance/lease packages. Does that mean that it's (the financing) a bad deal? ABSOLUTELY NOT! The question you have to ask yourself if you find yourself in the need of financing and you can't quite qualify for the best terms (or if you aren't even close to qualifying for the best terms) is this: With the proposed monthly payment, will I still be generating a net profit? If you are, then maybe the financing is not so bad after all. It's better than the alternative-you know-don't get the equipment because you don't like the terms of the lease/finance package AND don't generate any additional monthly or yearly revenue. Remember, you may not qualify for the lowest terms now, but you will eventually. Also, if you opt for a lease, don't forget to share the details with your CPA so that he or she can properly asses your deductions. You may be able to write off the entire lease payment as an expense for the entire term of the lease.
The next two things to consider go hand in hand. When looking into the possibilities of adding equipment, ask yourself if you'll be able to get year round use from the equipment and if not, will you be able to rent it out to another business? If you don't have a full time use for the equipment, there may be a market for renting it out to other businesses.
Last but not least, how long will the particular equipment last or be useful to you? The life expectancy may have an impact on your decision and it may have an impact on financing terms. Some lenders will limit the term on certain pieces of equipment while on other pieces of equipment they may offer longer terms.
These are several things to consider when your business is in need of new equipment. The biggest and most important aspect is-will the new equipment “show me the money?"
About Vitality finance Group
If your company is in need of new equipment, please give us a call (877) 834-3247. We'd love to help you line up the financing. You can also check us out on the web at http://www.VitalityFinanceGroup.com
If you've had a tough time getting financed for your equipment, check out the tab on our website marked “special programs for damaged credit"
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