To Buy Or Not To Buy?

Making The Choice

Sure, leasing IT equipment can potentially save you headaches, but is it all sunshine? Arentsen's July 2000 report on the IT leasing industry points out many advantages to leasing IT equipment, but it also sheds light on some drawbacks.

For instance, once you sign your name on the dotted line, you're locked into that lease. If you realize you aren't really using the equipment and determine you just don't need it, you still have to pay. (When you cancel a lease, you usually end up with stiff penalties.) Drawbacks can also hinge on the specific piece of equipment you're interested in leasing.

Case in point: Dennen says he's been happy with his lease and his relationship with OneCore. He admits he won't consider leasing equipment such as PCs, however. While he believes his phone system will suit his company's needs just fine when the lease reaches its end, Dennen doesn't want to run the risk of having outdated computers in his office. "Even with a two-year lease, PCs may be obsolete by that time. It makes more sense to us to purchase the PCs and use a program, like Gateway's, where we can trade them in toward a new purchase in a year or so," he explains.

As equipment leasing earns its reputation as the "road most traveled," you'll probably discover that it beats purchasing when you need to get new technology-based equipment for your company. But despite Dennen's positive experience and leasing's growing popularity, you should always measure the pros and cons of leasing for each piece of equipment you're considering. Whether you lease or buy, or come up with a combination of both options that gives you the best of both worlds, the way the puzzle fits together is different for each business.

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This article was originally published in the January 2001 print edition of Entrepreneur with the headline: To Buy Or Not To Buy?.

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