Summer Heat
By Kevin F. Clune, CLP
If you have managed to escape the heat wave, you are in a minority. However, for all of us, the summer is heating up in more ways than just the temperature, which is having an effect on the state of business.
The Supreme Court ruled that the Health Care bill was constitutional but with the threat of repeal and other complications, the issue is yet to be resolved. The expiration of tax cuts on December 31, 2012 is also looming. The biggest unknown, of course, is the identity of our future President, the future makeup of the Senate and the implications inherent in the different philosophies of governance.
It is widely reported that the uncertainty of all of these issues is keeping businesses from taking risk to expand and add additional employees. While I am not an economist nor am I promoting one philosophy over another, I do firmly believe that our economy is negatively affected by this instability. The statistics bear this out with the labor reports on job growth and the U. S. Economic figures showing anemic GDP growth.
Fortunately, the record low interest rates are the silver lining in the cloud. If you have already taken steps to reduce costs to keep your balance sheet healthy, a cash purchase of essential equipment will diminish your cash and your borrowing ability at your bank. The advantages of financing with a lease include:
- Lock in record low lease rates now before rates inevitably start moving the other way.
- Since equipment cost will increase with inflation, you will purchase with today’s dollars.
- Financing equipment with a lease can also offer other potential benefits on your balance sheet.
- A lease can allow for easily accomplished technology upgrades.
We have no control over the weather and limited control over the outcome of the unresolved decisions and upcoming elections, but we can control how we react. The resolution of the aforementioned major questions of the day before year’s end will hopefully alleviate the sluggish economy, and spur growth.
Vendors should motivate their customers to take advantage of this unique situation since businesses in need of essential equipment could be ahead of the curve. This may be a perfect time to aggressively replace outdated equipment or add machinery that will enable your business to be poised for growth.
Thanks for your business,
Kevin F. Clune, CLP
Clune & Company
