What is the next big trend?
“There is nothing that we own that doesn’t have something in the future that might affect it.”
This statement was made by the Oracle of Omaha, Warren Buffet, while being asked about his purchase of a controlling interest in Pilot Flying J Truckstops. On the surface, it may appear that Buffet is skeptical about the future of electric cars and robot driven trucks in the U.S..
However, Buffett is hailed as a visionary who sees the future of the chain as not only a stable source of revenue from the existing gasoline and diesel-powered truck fleet, but as a logical network of electric vehicle and natural gas stations as the transformation occurs. “Trucks are going to be around for a very long time….As fast charging of EV’s takes greater hold across the U.S., places like Pilot Flying J will become even better revenue machines…”
This is a perfect example of “hedging one’s bets” to stay competitive in a changing industry. This story naturally leads one to wonder how we can apply this same strategy when making business investment decisions?
While not on the same scale of this Buffet investment, financing a capital equipment acquisition with a lease can also be a hedge against obsolescence. There are also other benefits:
- Convenient source of capital with 100% financing.
- Preservation of credit lines that allow greater liquidity.
- Easy Budgeting makes upgrades possible.
- Tax Advantages with faster depreciation.
As business owners, we have to navigate through the many predictions of new technology on the horizon and weigh their potential impact. Just as the Pilot Flying J can easily adapt to the new trends of Electric Vehicles while serving existing needs, a lease can allow for the flexibility one needs to transition into newer and more competitive equipment.
We wish you much success in managing the next big trend in your industry. Let us know if we can serve your needs.
Kevin F. Clune CLFP
Clune & Company
