Business owners, managers and executives often struggle with balancing the budget while also investing in the future. On the budget side, it’s often a matter of what’s available after all expenses have been paid and day-to-day operations have been provided for. Many businesses do not plan for growth-related investment in their monthly operating budgets, simply because there is insufficient cash flow to do so. Investing in the future is often seen as an important activity, but not a very practical one.
This is unfortunate because investing in the future is how a business grows. Trying to squeeze the last drop of usable life out of machinery and equipment comes at a cost – aging production, technology or operational assets can have a profound effect on both productivity and profitability. By continuously upgrading machinery and equipment, a business can compete and grow more effectively.
The same thing applies to the appearance of the business itself. For businesses that serve the public directly, maintaining a fresh, well-maintained operation is essential to customer satisfaction and loyalty. Nobody wants to eat in a tired, worn-out restaurant and nobody wants to shop in a dingy, rundown store.
Businesses that don’t have customer-facing facility requirements need to maintain appearances and efficiency in order to retain the best and brightest talent. Top employees don’t want to work with outdated technology and spend their days in threadbare offices. Continuously upgrading furniture and fixtures is an important step in remaining competitive and developing both customer and employee loyalty.
The question, therefore, becomes how to balance the need to upgrade and modernize a business within the confines of a sometimes-limited cash flow and against a competing list of other required and sometimes more urgent expenses. The predicament becomes how to get the needed funds to purchase new and necessary equipment.
Many owners, managers and executives are reluctant to part with hard-earned cash, even if there is a surplus, preferring instead to hang on to it in order to hedge against an uncertain future. Lines of credit are often established as a working capital “bridge” used to fund inventory or to smooth out seasonal fluctuations in the business, so they are not really a viable source of investment funding either.
In order to get around these limitations and still maintain a healthy level of investment in the business, many companies turn to other people’s money – the OPM method. They do this in the form of equipment financing that facilitates the investment in needed equipment, software or other business assets without affecting cash reserves or reducing existing lines of credit.
The best source of financing for business equipment, software, furniture, fixtures and just about anything else that a business needs is a company that specializes in this type of investment. A well-established finance company can offer a streamlined application and funding process that makes it very easy for a business – with good credit – to get the investment capital they need when they need it.
Equipment financing of this type is often provided in the form of a flexible lease that can be specifically structured to the individual needs of the business. With this kind of financing, a business can protect against obsolescence of the equipment, not have to worry about what happens when the equipment is no longer usable and can easily upgrade to newer equipment before the contract expires. The equipment doesn’t even have to be new – most finance companies will also include used equipment on a contract.
A prudent and ongoing investment in a business is an important component of any well-considered growth strategy. Many business finance companies will be willing to assist a business with its long-term planning by helping to define the financial requirements and then creating a separate credit line specifically for the purpose of funding needed purchases during the planning timeframe. The best way to tap into this source of financing is to build a solid working relationship with a good finance company and then take advantage of all the resources the company has to offer.