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Part time CFO services | purchasing equipment
Robert Piasecki, the author of Rich dad poor dad says good debt is a powerful tool, but bad debt can kill you, part time CFO services says business owners need to understand when can use that is a powerful tool within their business. Business owners canít afford to pay for equipment vehicles for their business, they canít get financing equipment, they turned to purchasing used equipment vehicles as a good option. But is purchasing used really a good option for business owners?
Something that business owners should take into consideration when they are unable to get traditional financing, is that there is a loan can about that exists specifically to help small business owners, says part time CFO services, it is the Canada small business financing loan, and will lend business owners up to $350,000 to buy equipment and vehicles. This is easier to get than traditional financing because the federal government is the guarantor, so the banks are more likely to loan business owners the money. This can be a better option that leasing or by used.
Why is a loan a better option than financing, asks part time CFO services. The reason that leasing isnít a great first option, is the fact that business owners will never be able to get a rate that is better than getting the loan. Often lease rates are double what financing rates are, and then when the leasing company or manufacture advertises a much lower rate, business owners need to be aware that there is often hidden fees with that price, that raises the price without them knowing about it. Business owners should be aware of application fees or financing charges as This can inflate the rate.
Another tactic that manufactures or leasing companies often use is they advertise that there is 0% financing, but offer a lower rate if someone buys that cash. This isnít 0% financing explains part time CFO services, the finance rate is just lumped into the purchase price. A better way to figure out what the rate is, is a business owner should ask how long is the term, what are the payments, and what would the price be if they paid in cash. Then theyíll be able to figure out the right for themselves.
Set out that a business owner has figured out how to get financing, what should they purchase asks part time CFO services, should they purchase new or used? Something that business owners need to take into consideration when making the purchases, is will the term be shorter if itís used, and what will be the cost to maintain or fix the use equipment? Because used equipment is more likely to need maintenance, as well as fixing from time to time, business owners need to figure out if they can afford to factor in the cost of making payments, paying for the running of the equipment, and fixing and maintain equipment. Since used equipment has shorter term is, does this make financial sense for business to buy used? Usually the answer the question is new is better.
Part time CFO services | purchasing equipment
Business owners arenít able to get financing for the equipment vehicles they need to run a business, and they canít pay for themselves, and turned to purchasing his equipment as an option says part time CFO services. But is purchasing used vehicles or equipment a good option for most business owners? To answer that question there are several factors that a business owner needs to take into consideration.
The first thing that business owners need to take into consideration when they are looking at financing for new versus used, is what is the term of the loan will be used and what is the term of the loan for brand-new? Part time CFO services says that often used equipment has a shorter term than brand-new. The reason for this is because since the asset is already depreciated in value by being used, and will continue to depreciate, forcing the bank to need that money back sooner. Even though the used equipment have a cheaper price take on it, by having to pay back the loan much quicker, makes it a less viable option.
Since 50% of all business owners fail within the first five years, and 29% of those businesses say that running out of cash was the reason they failed, helping business owners make good purchasing decisions is key to helping them over that hurdle. A better option is often to pay more money for the new equipment or vehicle, then taking a longer time to pay back. This will be a lesser financial strain on the business.
The second thing that business owners should take into consideration when they are looking at buying new versus used, is what is the cost of operating the equipment? Part time CFO services says business owners may want to consider that use equipment will cost a little bit more to operate, because there will be increased maintenance that equipment, in addition to more time on the business owners part maintain it, as well as take into consideration the older equipment they break down. Can the business owner pay for the equipment to be fixed, and can they pay for their production time to be down, when a piece of equipment fails? Business owner should also take into consideration paying their staff to not be productive when that piece of equipment is down.
Part time CFO services says that these questions usually indicates that buying is not as good an option by brand-new equipment vehicles, but there are also exceptions to that rule. If a business owner does not use a piece of what it meant often, such as daily,can a business owner save money by buying used? Answer this question is yes, if the beast isnít being goes on a regular basis, buying used the business owner save money. It can be more cost efficient than buying brand-new or renting a piece of equipment to whenever they need to use it. If itís not being used on a regular basis, it wonít affect the bottom line breaks down occasionally, in the business owner doesnít have to spend much time or money fixing.