Before you invest in a franchise, you’ll need to take stock of all of the options in the marketplace to choose the one that’s right for you. But after you’ve made your decision, you’ll have yet another choice to make: how will you stock up on your franchise equipment?
There are two options — lease or buy franchise equipment. To help you make the right choice and answer the age-old question “Should I lease or buy equipment for my franchise?” we’ve broken down the advantages of both in the lists below.
The Advantages Of Buying Equipment
When you buy a piece of equipment, you own it, which means you’re building equity. That means that you can use it as an asset and borrow against its value in the future. To maximize this benefit, you will want to buy things that hold their value (or even better, gain value) over the long term.
Here are four more advantages of buying franchise equipment:
You Can Improve It
If you are the type of person that likes to tinker with things, then buying may make better sense for you. That’s because you can make modifications and customizations as you see fit. For example, you can add special equipment and aftermarket options to your vehicle, which is necessary when running a mobile franchise. With a lease, however, you will have to return the equipment in its original form with no alterations.
You Can Sell It
When you lease a piece of equipment, you’ll have to turn it in at the end of the lease agreement and get nothing in return. On the other hand, when you purchase equipment, you can turn it into cash by selling it when your needs change.
There Are A Variety Of Tax Incentives
Businesses in the United States can deduct the costs of many equipment purchases. However, not all types of equipment will qualify, and the deduction varies from year to year (the deduction limit in 2015 is $25,000). In addition, in both the U.S. and Canada, you can deduct the cost of depreciation, allowing you to offset some of the costs of the equipment as it gets older and loses value.
It’s Often Cheaper In The Long Run
While the initial costs of buying equipment may be higher than leasing, over time it will prove less expensive. That’s because you will only have to pay for the item once; with a lease, you will have to continuously pay for new equipment at the outset of every lease agreement.
The Advantages Of Leasing Equipment
The primary benefit of leasing instead of buying equipment is that it requires a relatively low initial investment. Leases typically do not require down payments (whereas purchases can require up to 20% down) and you can get the equipment you need without hurting your cash flow, which is critically important for new businesses.
Here are four more advantages to leasing franchise equipment:
There Is No Risk Of Obsolescence
Another great benefit of leasing is the fact that you will never be stuck with an outdated piece of equipment — you can just return it and put your money towards the latest and greatest model. This makes leasing an especially appealing option for computers, software and high-tech equipment.
You Can Position Yourself As A Modern Company
Leasing gives you access to advanced and modern technology, which can help position you as an advanced and modern business. This perception will help you attract and retain customers, especially if you are in an antiquated industry where innovation helps you stand out.
Leasing Is Tax Deductible
Leasing is generally fully tax deductible as an operational expense in the United States.
You Won’t Have To Worry About Maintenance
There’s nothing worse than making a big purchase and, only a few months later, realizing it is a big money pit. When you lease, you won’t have to pay for maintenance as the leasing company is in charge of fixing the equipment when something breaks or malfunctions.
The Best Equipment Is The Kind That Makes You Money
Whether leasing or buying franchise equipment, these expenses can account for a high percentage of startup costs for franchise operators. At Bin There Dump That, we feel that equipment shouldn’t just be a line item that takes money out of your bottom line; it should be a tool that helps you put more into it.
That’s why we don’t offer generic dumpsters. We offer unique, residential-friendly bins that fit in driveways and other tight spaces, making them the ideal choice for homeowners and contractors. The bins are also clean, attractive and branded, which helps you build name recognition and market your franchise. Lastly, the bins are exceptionally durable and built to last, limiting the need to buy new bins due to wear and tear and lowering your replacement costs.
Learn more about our bins and all the ways Bin There Dump That helps our franchisees maximize their potential and profitability. Download a free franchise kit today.
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