Building Your Business Plan: Part 13 – Purchasing Equipment

5 mins read

This article is written to provide you with an overview of purchasing equipment for your business.

Do you find yourself unsure of how you are going to purchase new equipment for your business? If you are, don’t worry – you are not alone. Many business owners find themselves in this predicament. To assist you with this, here is an overview of some of the solutions that are available to you.

Section 14 – Equipment

In the previous section of your business plan, you already determined what products or equipment your business will require. In this part of the business plan, you will need to consider how you are going to obtain such equipment/assets.

A. Will I lease the equipment or purchase it?

To answer this question, you will need to look at the list you already put together from the previous sections, considering which option would work best for your business.

Leasing Equipment

Leasing will allow you to obtain the latest business equipment with a lower upfront cost and commitment. Depending on your available finances, you may not be able to afford the cost of purchasing equipment outright. Leasing your business equipment will require that you pay on an ongoing basis, which may increase costs over time. Depending on the type of equipment, you may also have specific term length obligations and service packages. If the equipment goes unused for any length of time, this could be costly.

Buying Equipment

If the equipment has long-term value and won’t need to be frequently updated or repaired, purchasing may be a good option. Owning your business equipment will also allow you to claim the assets for tax benefits. Depending on the equipment, it’s likely that you will pay less overall when buying equipment.

However, the large upfront costs of purchasing equipment can be a significant disadvantage depending on the amount of available capital or credit for the purchase. Another disadvantage is the potential for the equipment to become obsolete before you anticipate needing to purchase new equipment. High tech assets like computers and cell phones, for example, need to be updated on a regular basis to stay cutting edge and current.

You can always reach out to the network of business owners or advisors that you have developed a relationship with to assist you with knowing which direction works best for them. For further understanding, you can visit websites like Explicit Success or BDC.

B. What is the estimated cost of my decision?

Once you have determined whether you are going to lease or purchase the equipment, here is where you will put the estimated cost of your decision. Attach copies of the estimates/quotes and who the suppliers will be.

It would also be helpful to list out each piece of equipment’s description, model, cost, year manufactured, brand, and so forth. The more details you have, the more informed decisions on upgrading you can make down the road.

Now that you have determined whether you are going to purchase or lease your business’s equipment, and what the estimated costs for doing so, please stay tuned for part 14 of this series when we discuss Finance Assistance.

Download the Building Your Business Plan: Part 13 – Reference & Guide (zip).

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Visit our Resource Library for all available downloads.

If you require assistance with any of the guides, forms or templates, please contact a BIG representative.

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