Start-up businesses always have to make up unfavourable tradeoffs especially if they are on a tight budget. One of the unavoidable crossroads you will come to as an entrepreneur just striking off is whether to buy expensive equipment or get it on a lease.
While most people would be better off buying for a start, there are some things that push them into leasing rather than buying. For instance, good Volkswagen commercial vehicles will come at a hefty cost and will need even more to license and service.
Nonetheless, you will have all the convenience and reliability you would expect from having that van or truck under your sole control.
Buying or Leasing: Why Not Both?
Whenever you listen to or read someone peddling the buy vs. lease debate, you will be drawn into a maelstrom of ideas that portray either side as the best choice for startups and establish businesses. The most interesting thing is both schools of thought have reasonable points and are worth a following.
Have you ever considered the fact that a business could benefit from either leasing or buying?
- Lease to get the extra equipment you need to satisfy a job boom at affordable rates
- Buy to get a base fleet that you will need to keep your business going
This buy lease model gives you the chance to enjoy both sides of the coin without either tying too much of your cash in a fleet or ignoring owning to the extent of nothing to use on short demand.
Buying Can Be Cheap in the Long Run
While leasing might seem cheap at first, the costs pile up over time since the company that is leasing has to make profits. The additional fees associated with leasing will pile up in the long run, and any entrepreneur must look forward to buying their own fleet so as to avoid paying extras to the leasing company.
Other things that come hidden in the leasing world include:
- The leasing process can be a bit confusing. If you are not keen enough to go through all the terms and conditions, you will find a hidden clause that will throw your math off the scope
- Insuring leased vehicles might be a bit more expensive than insuring your own vehicles
- Leasing might not be as convenient as it sounds. There are tough fees involved if you decide to walk off the lease before the term is over. This means you might end up with a fleet you don’t need and can’t liquidate when business is not booming
Nonetheless, you have to put your money where most of your money comes from. Doing the right tradeoffs between leasing and buying will leave you with some monetary headroom to expand your business regardless of how expensive it is to run it.
Over time, you can even up the playing ground by getting your own vehicles as assets from a reliable dealer who also services their vehicles so as to cut down on your fleet management costs. This is the optimum hybrid model of leasing and buying to keep your business running.
Read more at JCI-EC.