When Lease Is More Equipping your new business doesn't have to cost a fortune.
Entrepreneur magazine, September 1999
One way to keep equipment costs down is to lease rather thanbuy. These days, just about anything can be leased--from computersand heavy machinery to complete offices. The kind of businessyou're in and the type of equipment you're considering aremajor factors in determining whether to lease or buy. If you'restarting a one-person business and only need one computer, forinstance, it probably makes more sense to buy. On the other hand,if you're opening an office that will have several employeesand require several computers, you may want to look intoleasing.
According to the Equipment Leasing Association (ELA),approximately 80 percent of U.S. companies lease some or all oftheir equipment, and there are thousands of equipment-leasing firmsnationwide catering to that demand. "Leasing is an excellenthedge against obsolescence," explains Laurie Kusek of the ELA,"especially if you're leasing something like computerequipment and want to update it constantly."
Other leasing advantages include: lower monthly payments thanyou would have with a loan; a fixed financing rate instead of afloating rate; tax advantages; conservation of working capital andno cash-devouring down payments; and immediate access to the mostup-to-date business tools.
One drawback to leasing, however, is that you'll probablypay a higher price in the long run than you would have with astraight purchase. You may also have to retain the equipment for acertain period of time--a difficulty if your business is influx.
For more information on leasing, take a look at the memberdirectories offered by the ELA (http://elaonline.com/WhosWho.cfm)and the Business Technology Association (http://www.bta.org). The LeasingSourcebook (Bibliotechnology Systems and Publishing Co.) isanother directory of leasing companies. You can also check theYellow Pages.
Excerpted from Start Your Own Business (EntrepreneurMedia Inc.). To order, visit http://www.entrepreneurmag.com