Are you feeling hopeful this Christmas?
Kevin F. Clune, CLP
With the Christmas season upon us and the New Year fast approaching, many business owners are consumed with strategic plans for future development and possible expansion. After all, entrepreneurs are by nature very optimistic and more importantly, this is the season that inspires hope.
While seeking advice, these business owners will find many articles such as one I recently happened upon that was titled, “Financing an expansion; ten mistakes to avoid”. It was published in a business magazine and written by a commercial banking manger. I asked myself if anyone would even want to begin to plan an expansion if there were so many pitfalls, or would Henry Ford have ever decided to build cars if he had read this article?
Since it is the season to be merry, I will not pore over every admonition on the list. However, I would like to focus on a few of the warnings and make the case that an equipment lease could be part of the solution.
1) Failure to generate a comprehensive budget.
2) Determining the right balance of debt & equity.
3) Planning for the increased working capital needs.
Easy Budgeting: Leasing allows easier budgeting and many firms can fiscally function more effectively when they have a fixed monthly payment, an option that leasing allows.
Balancing Debt & Equity: Generally, a business can lease equipment much more easily than traditional bank financing. Many companies also find it no longer makes sense to invest capital in assets that depreciate quickly in value.
A lease option gives the Lessee the ultimate in choices and flexibility. Management and Purchasing Professionals are poised to take advantage of whatever option allows them to stay efficient, compliant and competitive.
Preservation of Credit Lines: Leasing allows customers to maintain existing credit lines with suppliers and banks. Cash purchases not only deplete cash reserves that business may need for operations; it can have a negative impact on the balance sheet.
I have great admiration for risk takers who have the courage to seize opportunities and decide to launch a business and then take the next steps to expand and grow. It is easy for a commercial banker or a lease executive to offer advice. As you consider all the plans, it may be a good time to become aware of all the financing tools at your disposal.
In the meantime, we at Clune & Company have HOPE that your Holidays will be filled with good cheer and that you will have success in the New Year.
Merry Christmas,
Kevin F. Clune, CLP
Clune & Company
