Unstoppable!

I was having coffee with a potential client last week.  And as always, I asked him how he found out about Priority Leasing.  His answer was not at all what I was expecting!

He said, “I wanted to learn more about equipment leasing in Canada.  So I bought this book called “Unstoppable” by Beth Parker.   And you were mentioned in it several times.

And then, it slowly came back to me.   I remembered speaking with Beth probably 10 years ago as she was compiling stories for this book.

I forgot about it shortly after we spoke and never heard anything about it again.    But then, right there at the Purple Perk, I am told my thoughts on equipment leasing, are actually in print!

The book really has a great title.   Unstoppable!   And here’s why.  Because, about 25 years ago, lease brokers were considered bottom feeders who really couldn’t find a job with a “real” leasing company.  But we never stopped.  We started up small brokerages that grew.  We hired and fired. We celebrated and sobbed.  And we’re still here!    Unstoppable!

Gotta go buy me that book!

 

Smart finance solutions for your business!

Every business owner needs equipment and technology for their day-to-day operations. However, you do not necessarily need to own the equipment.

For instance, owning a photocopier can be a financial burden for many small businesses. Aside from supply costs and maintenance fees, coming up with the initial capital to purchase the copier can stretch operational budgets beyond profitable limits. Copier leasing helps ease the up-front monetary investment and may also provide a number of other attractive benefits.

Copiers depreciate over time, losing their value due to use and to the constant introduction of newer, better technology. If your business purchases a copier, you can only upgrade in technology by investing in another new machine. You would also need to get rid of the previous model, adding to your time expenditure.

Rather than pay cash up front, a finance facility can give you much more control and flexibility. Whether you need a piece of computer software, a pizza oven, a tractor or even a snow plow, it is available for lease.

Calculating your costs when starting a business
As you may know, one of the most common causes of a new business failure is not having enough cash to meet expenses, especially in the first six to twelve months after start-up. But if you identify and plan for these costs, this is less likely to happen.

Calculate ongoing and one-time costs
Ensure you identify which costs will be one-time costs and which will be on-going. Some costs you may never have to cover again, while others may recur annually or every couple of years. It’s important to identify and budget for this early so you don’t get caught out in the future.

Set realistic expectations
As well as thinking about your start-up costs, also consider how long it will take until your business will open its doors and you will be generating revenue. Don’t set unrealistic expectations. If you get this wrong, costs can escalate quickly and you can find yourself under pressure to meet new costs without an income stream.

Overestimate costs
It’s better to over-estimate than to under-estimate. Many experts recommend adding 10% on top of your total costs to cover any miscellaneous expenses and unforeseen blow outs.

As I wrote earlier, every business owner needs equipment and technology for their day-to-day operations. However, a business does not necessarily need to own the equipment. Rather than pay cash up front, a finance facility gives you much more control and flexibility. Whether you need a piece of computer software, a pizza oven, telephone systems or even a snow plow, it is available for lease.

Leasing offers several advantages. Short-term leases allow businesses to explore new avenues without having to purchase expensive equipment for pilot programs. Leasing allows you to trade in your equipment periodically, staying current with the latest technology and trends.

The advantages keep on growing:

  • you don’t have to pay the full cost of the asset up front, so you don’t use up your cash or have to borrow money;
  • you have access to a higher standard of equipment, which might be too expensive for you to buy outright;
  • you pay for the asset over the fixed period of time that you use it, which helps you budget for the future;
  • as interest rates on monthly rental costs are usually fixed, it is easier to forecast cash-flow;
  • the leasing company can usually get better deals on price than a small business could and will have superior product knowledge

Keeping business equipment up-to-date with rapid advances in technology can quickly drain your capital. The right facility can give you the flexibility to upgrade your equipment.

Understanding the tax and accounting consequences and treatment of a lease is of primary importance.

This information is designed to provide a basic overview; applicability to specific situations would need to be determined through consultation with your professional accounting advisers. For more information.

This paper, which was written by the CFLA, will introduce some fundamental Canadian taxation and accounting concepts specific to the leasing industry. How leases are classified for tax purposes as either a capital or an operating lease will be discussed in addition to how a financial statement would record a capital lease from the perspective of both the lessee and the lessor. As well, the capital cost allowance system of tax depreciation will be reviewed.

For some commonly asked questions, I’ve written a Guide to help you decide what is best for your business.

Cash flow friendly payments

Clever finance solutions will help you manage your cash flow. With regular fixed payments, it’s easier to predict cash flow, and business capital is protected as you can access the equipment you need without large cash or capital outlays.

Tailor made finance

Flexible financing is our greatest strength. No two businesses have the same needs, so we can tailor a finance solution to meet your cash flow, timing and capital budget requirements.

Needless to say, efficiency translates to increased profit and a greater return on your lease investment.

For more information, please feel to contact me.

Drive with peace of mind!

Last month, we were pleased to be a part of the expansion and equipment renewal project at Cochrane Image Autobody! A family-owned business with locations in Cochrane and Calgary, Cochrane Image Autobody is now using state-of-the-art equipment to restore damaged vehicles to the beautiful, pristine condition they were in before the accident.  It was a pleasure to meet Dave Fox, the owner of both locations and learn how his talented “artists and car surgeons” work hard to “sculpt” and “paint” a damaged car until it is efficient, perfect and roadworthy.

In the old days, when someone mentioned “leasing” everyone thought about cars.  Today we lease equipment to diagnose the cars, fix the cars, straighten out the bent cars and paint the cars.  Oh, and we still lease used cars!  If it’s a new car you need for your business, go with the dealership as they will have the best financing from the manufacturers.  Anything else – we’re your team!

NEARLY 8 IN 10 BUSINESSES USED FINANCING

equipAccording to the U.S. Equipment Finance Market Study:  2016-2017.  The survey also shows that 68 percent of the total value of equipment and software acquired in 2015 was financed and total public and private investment in equipment and software grew 4.0 percent in 2015, to $1.5 trillion.

Key Findings:

Overall Propensity to Finance Increased as Use of Leases and Secured Loans Grew, Share of Cash Purchases Declined.

Highlights include: 

•   Growth in investment in equipment and software is expected to accelerate slightly in 2017, growing at a 3.0 percent rate. By 2020, total investment in equipment and software is expected to reach $1.8 trillion.

•   The market for equipment and software financing is projected to reach $1.24 trillion in 2020.

•   Sixty-eight percent of all equipment and software acquired in 2015 was financed. Of that, 39 percent was leased, 16 percent used a secured loan, and 13 percent used a line of credit. This represents a major shift toward the use of leases and secured loans, which accounted for only 17 percent and 9 percent of the total value of financing in 2011, respectively. This also marked a significant shift away from lines of credit, which accounted for 29 percent in 2012.

•   While banks share of financing activity has decreased, they remain the primary lenders across all equipment types. Non-bank lenders’ share of equipment financing includes 30 percent for manufacturers and vendors and 16 percent for non-bank independent financing companies. .

•   Banks continue to focus their new financing efforts on companies with lower risk profiles. The share of bank financing of highly profitable companies (profit greater than 20 percent of sales). Meanwhile the share of bank lending to unprofitable companies declined to only 26 percent, as less profitable companies were forced to seek alternative financing options.

•   The share of cash purchases declined for companies of all sizes from in 2015. Low interest rates, strong competition among lenders and abundant liquidity have made financing equipment acquisitions especially attractive as lenders compete to offer the best rates to borrowers.

•   The 2016 Foundation survey confirms that larger ticket purchases are financed to a greater degree than smaller ticket purchases.

From computers and heavy machinery to complete offices, it is possible to lease almost anything for your business and as you can see above, more and more business owners are realizing the benefits of leasing their equipment.

“Buying things can feel good. We all know that.”

Many executives with knowledge of the leasing and finance industry indicated that customers are increasingly asking for managed solutions or bundled services and usage-based products. They understand that advantages include getting your hands on needed equipment without paying the cost up front.

Lines of credit stay freed up because the leases are not bank loans, and lease payments can potentially be deducted as a business expense. It is also possible to easily upgrade equipment once a lease expires.

Recently I was chatting to a business woman (a blogger) who had to upgrade her equipment.  She mentioned she paid $2,600 for a top-of-the-line Apple MacBook Air and then said to me “I already know that after a year or so I’ll get the itch to upgrade, at which time I’ll shell out another couple of thousand dollars for the latest model.”  I asked her if she ever looked into the benefits of “Leasing” her top-of-the-line computers.  She mentioned it was something she’d always avoided, mainly because she doesn’t like the idea of not owning her equipment.

I assured her I understood her “need to own” mentality but also reminded her how computers and other devices age quickly. When you buy, you’re stuck with outdated technology after a year or two. When you lease, you’re able to exchange a piece of obsolete equipment for the latest model once the contract expires.

I mentioned a few other benefits of leasing including the tax benefits which immediately caught her attention as a self-employed writer.  Often lease payments can be deducted as business expenses (without the messy depreciation calculations).  I also mentioned about “low costs in the short term”.  By leasing, you get the tools for your business without paying the full cost upfront. Payments are regular and fixed which makes budgeting easy.

After our conversation, she called back a few days later and said she had an epiphany. The question she will ask herself whenever it comes to acquiring new equipment going forward – will be…: “Would I buy this at a rummage sale five years from now?” More often than not, the answer is no. And if that’s the case, it’s not something I need to own (but if I still want it, maybe leasing is the way to go).

She added “Buying things can feel good. We all know that. But now that I’m armed with a more businesslike approach to my purchasing decisions, I can hold my impulses in check whenever there’s something I need (or simply want) for a job or contract but will likely never use again. Done right, this approach should leave me with more money in my retirement account–and a lot more space in my office storage room.”

Businesses‘ choose Priority Leasing because they can acquire the capital equipment they need at a low, fixed monthly payment. With Priority, you choose the equipment and vendor – we provide the financial support. We have the resources to make the process simple for you and beneficial to your budget!

Contact us today to see how we can help you!

 

Keeping your Eye on the Bottom Line.

optical_machine_1
Whether you are in your last year of optometry school, or already practicing, opening your own optometry practice may be on your mind.

Fast facts*

  • The average Canadian optometrist in practice earns $70,000 to $80,000 per year, excluding benefits;
  • How long does an optometrist stay in the career? Typically life-long, until retirement;
  • There are approximately 3,000 practising optometrists in Canada.
  • Building an Optometric practice from the ground up can be the challenge of a lifetime. You’ll most likely have to borrow capital in order to start your new practice. This includes funding for build-out construction, equipment, inventory and working capital. The true cost of opening an optometry practice varies tremendously, usually equipment costs will be higher, depends on new vs used, purchase vs lease. Some costs to consider are:
  • size of your venture
  • number of exam lanes
  • equipment needed
  • inventory
  • number of employees and much more!

Starting your own practice can seem like a daunting feat. While there is no handbook that guarantees you success, there’s no shame in starting with less than what you may imagine for your ideal practice. Diagnostic technology can and should be added over time, based on your patient volume.

Many pitfalls can take a new business owner by surprise. Regardless of how long you’ve been in practice, recognizing and avoiding potentially costly errors is essential to laying a strong foundation for financial success.

Buying Too Much Too Soon 

When setting up shop, it can be tough to resist going on a shopping spree for the latest equipment, especially with the number of advances in eye care technology over the past decade. You’ve just finished studying about what equipment is out there, including:

·        Autorefractors

·        Fundus cameras

·        Tonometers

·        OCT Imaging systems

·        Digital test charts

·        Topographer

·        Keratometer

·        Lasers

·        Combi units

·        and Blocking / Edging equipment.

As a start-up business, which (if any) of these expensive pieces of equipment is needed in your new practice? Overspending on equipment is probably the biggest draw on start-up capital.

Start-Up and Overhead Costs:  When starting up a new practice, usually start-up costs include: capital costs for equipment and leasehold improvements. The majority of overhead costs arise from the inventory of lenses, frames, contact lenses and lens solutions.

Revenue Sources: Optometrists are paid at the time services are provided. An optometrist’s earnings are determined by several factors including: coverage under provincial medical programs, fee schedules, hours worked, practice location, services provided and patient population.

Based on initial patient volume, what is the cost vs. return and will it justify the expense? Will delaying the purchase of such equipment impact the long-term success of your practice?

Overspending on equipment is probably the biggest draw on start-up capital.

In fact, adding more equipment as the practice progresses may provide a great opportunity to reconnect with your returning patients.  However, it’s also important that you don’t go to the other extreme by investing as little as possible in frame inventory. It may lower your start-up costs, but it could also affect how patients perceive your practice and stunt your revenue growth.

As a growing company I’m sure you are constantly investing in new technology and equipment, but do you have an ongoing refurbishment program?

As a practice owner, you are essentially an entrepreneur. You need to take care of managing and marketing your business in addition to practicing optometry and maintaining good relationships with your patients.

The best businesses are usually run by people who are innovative, entrepreneurial and also have a keen understanding of how to look after their money and how to make it work for them with as little risk to them and their businesses as possible.

Buying vs. Leasing – What’s right for your Practice? 

It is as crucial to understand both when to invest and when to save, as how to invest and how to save. Study your options. Purchase vs. Leasing?

Obtaining state-of-the-art retinal imaging devices to incorporate into your practice sounds like a no-brainer. Right? Wrong. While it’s true most eye care professionals (ECPs) want to keep up with the latest technology and offer their patients the very best in diagnostics, it’s also true that these machines can be expensive. All of which begs the question: Is it worth buying or leasing?

If you are in the market for new retinal imaging devices you need to be careful with your selection. Does your purchase have trade-in value if newer technology arrives? Are there maintenance costs? Will you obtain enough return on investment and improve efficiency with this new technology?  These are important questions to ask yourself before you invest your capital.

Devices that are likely to become outdated or that have poor software upgrades are not ones you want to purchase.   Ranging from the acquisition or relocation of a practice, a shop fitting revamp, new technological equipment, or simply a loan to meet your tax demand we have a solution to help. Contact us today to discuss how you can keep your “Eye” on the bottom line by learning which option is the best for you!

*Source: http://uwaterloo.ca/optometry

 

The Quick Quote and Other Fairy Tales

On many websites including ours, you will see the opportunity to get a “quick” quote. I apologize on behalf of all leasing companies because the chance of you getting the number you’re quoted are about 37%. Here’s why. A good equipment leasing agent will pepper you with questions just like a good defense lawyer. And then, also like a good defense lawyer, she will prepare your case to present to a credit manager who will then say yah or nay and slam down the gavel. Once approved, your request is applied to a pricing matrix that spits out a number totally unique to your company.

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Cross border shopping?

Cross border shopping?

Sometimes clients ask about purchasing equipment from American vendors.    In most cases, this is easy to do.  Where we have challenges is the American vendor often wants to be paid before they ship the equipment across the border.    Depending on the strength of your company’s credit, we may be able to send them up to 50% of the equipment cost but generally no more than that.  AND, you have to agree to start the lease.   If you’re planning on travelling down this road, be sure you know your American vendor well because once they have their 50% and the lease is started, it is non-cancellable.

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Oh, the Things You Can Lease!

PL-constructionWhen thinking of “lease-able” equipment to list on our website, the challenge was to be brief.    In reality just about any type of equipment including software, can now be leased!    After writing equipment leases for the past 25 years, I have come across many interesting, lease-able assets.   For example,  I have leased a grand piano to the Chateau Lake Louise.    Another medical company leased an ambulance from us.   Then they leased all the equipment on the ambulance.  And finally, they leased all the drugs on the ambulance.   (Think dopamine and epinephrine)

Continue reading “Oh, the Things You Can Lease!”