The commercial truck industry is requiring everyone to upgrade to more emissions-friendly engines. Many industries are upgrading equipment to include GPS asset-tracking technologies. IT equipment needs to be upgraded seemingly every hour and a half. Whether part of a regulatory move, a push for greater efficiency or the requirement to keep up with the competition, the word “upgrade” has a big impact on business owners’ lives. And a bigger impact on their cash position.
A Little Planning Helps
Most of the time, businesses understand the seemingly never-ending need to reinvest in their commercial equipment. They just don’t plan for it. More than 8 of 10 small business owners only think about upgrades or replacements in a break/fix emergency. No wonder everyone thinks of replacing the equipment they need as painful. Waiting until this big event to look at upgrades or replacements can be a very costly endeavor. Did you know that businesses that plan for capital equipment acquisitions versus ones that wait until the wheels fall off have nearly 20% lower equipment acquisition costs?
Sinking Cash Into Equipment Is a Sinking Feeling
Another major reason why businesses feel the pain of upgrades is the cash drain. Big hits in cash flows for unplanned equipment needs hurt. So why do it that way? Virtually all classes of commercial equipment lose value. You wouldn’t knowingly invest $50,000 in a stock you know is going to be worth $25,000 in five years. But time after time business owners drop huge down payments on their commercial equipment or pay cash outright. Even if you produced 3x the revenue for equipment cost, what’s your return on that investment? There is no real merit to owning 100% of an asset worth half of what you paid for it in the near future and when the upgrade comes…it hurts.
Ease Your Pain
What if you just pay for what you use? A simple monthly payment that budgets every month for the use of equipment you’ll pretty much always need. And when the equipment is ready for replacement or upgrade, you just get the new model and keep the monthly payment stream going. Even mobile phone companies have caught on to this. With the introduction of no down payment monthly financing of your phone, nearly 40% of cell phone users are now on the monthly plan. Rather than it being a $200-$500 hit to personal cash flow every few years or when your phone goes swimming, customers just pay their $25 per month. And then every few years pick up the new model. Taking this approach to commercial equipment will ease your pain as well.
At LEAF, we help businesses with a simple, painless and affordable way to handle the constant need for upgrades. In fact, our programs can keep you on the cutting edge of technology while taking the surprise out of the budget. And we keep it uncomplicated. If you’d like to reduce some pain in your upgrade cycle, let’s talk.