If your business mantra is "if it ain't broke, don't fix it," you're probably operating with outdated equipment. Yes, the economy and good business practices dictate that necessity comes before wanton spending. However, even if your outdated equipment is still functioning, it might be in the best interest of your business to replace it anyway. Tiger Leasing understands it can be difficult to determine when the best time to upgrade your office equipment is. We've put together some tips so you know when the time is right for your business.
When productivity is affected
As technological advancements breed new equipment, bigger companies with higher equipment budgets will be on the cutting edge, snatching up the biggest, the strongest and the fastest tools of their trade. It is understandable that not all businesses have the means to keep up — nor should they. However, when new technology means the job gets done on a shorter timeline and with greater efficacy, business equipment upgrades are worth it.
To arrive at an unbiased decision, look at the situation from a purely mathematic point of view. Calculate how long the job is taking with your current equipment and the overhead costs such as labor that are associated with your current timeline. Next, estimate how much time would be saved if you had more advanced equipment. Compare these numbers in the long run. When would your potential profit outweigh the cost? Also consider opportunity cost — how many other projects could your business have taken on if the time it took to complete your projects was reduced by new equipment.
When new equipment means new business
Your business may have started out fulfilling a single niche in your industry. However, as equipment technology advances and competition gets stiff, you may need to expand the number and level of services you offer. Do an analysis of your business to determine if equipment upgrades can allow you to provide a unique skill set, thereby acquiring new clients.
When there are government tax breaks and incentives
Currently, as a result of the Small Business Jobs Act, small and moderate sized businesses can benefit from significant tax deductions when they buy or lease new equipment. Under Section 179, businesses that spend less than $2 million a year on qualified equipment can write-off up to $500,000 of their purchases. Additionally, The Small Business Jobs Act of 2010 extends a 50% first year bonus depreciation and AMT depreciation on new business equipment.
When your reputation is at stake
Are potential clients not taking your business seriously because your equipment is outdated? Are you not able to hire the most qualified employees because they refuse to toil on old equipment? Mull over these questions when deciding if new equipment will be a profitable move. Increased revenues based on your business's reputation can be difficult to measure, but that doesn't mean they don't require the same level of consideration as the other profitable facets of your business.
Equipment leasing allows businesses to upgrade their current equipment without tying up your cash and working capital. Preserve your credit lines and your business by acquiring the equipment you need through leasing and financing programs. Don't let your competition pass you by, lease the equipment you need to get ahead in your industry.