Maximize Profit in Your Forestry Business
If you’re in the market for forestry equipment, you know there are a lot of options. Then, once you select what you want, you still need to decide if you’re going buy outright, get a loan, or lease.
Here are 5 tips to help you make your decision:
1. Forestry Equipment is Hard to Afford
But you already knew that. When you buy outright, that is a huge chunk of cash that suddenly disappears. Even if you get a loan from the bank, you’ll most likely have to pay a large down payment.
Equipment leasing, on the other hand, gives you a more manageable option. Rather than intimidating upfront costs, you’ll have affordable payments that work with your cash flow.
In fact, often your profits each month will outweigh your payments!
2. Beware of Buying Cheap to Cut Costs
You might think that buying cheap forestry equipment is the way to go but beware. Buying a machine that is breaking down or insufficient for the job is definitely going to cut the efficiency of your equipment.
By leasing, you can afford the equipment you need and know it will work for you. While it’s inevitable that your equipment will break down occasionally, by leasing you can obtain higher quality machines thereby ensuring these delays will be much less frequent.
Bottom line: the more efficient your equipment is, the higher your profits will be.
3. Forestry Equipment Wears Fast
It doesn’t take long for forestry equipment to wear. The terrain is rough and the job is tough. You want equipment that works hard for you and isn’t constantly breaking down, but at those high prices you can’t afford to keep replacing and upgrading your equipment. Or can you?
If you buy your equipment, you may tie up too much of your business cash. Which makes dealing with unexpected emergencies and breakdowns difficult.
If you lease, you’re free to upgrade to a newer piece of equipment at any time. Plus you are more likely to have the business cash in case of emergency.
4. Increased Flexibility in Payment Structure
Forestry can be dependent on the weather and there are times when your business slows down, or in many cases, comes to a complete halt. If you bought your equipment outright, this won’t be a problem because you don’t need to contend with monthly payments; however, if you have a loan, you will have to make those payments even though you aren’t actually taking in any money.
By leasing, you can get the best of both worlds. Many leasing agreements can be structured to account for your down months by increasing your payments when you’re making a profit. This way, you don’t owe anything when business is slow.
5. Extra Savings if You Lease
If you lease, you’ll most likely find some surprise extra savings:
- Lower monthly payments: Not only will you avoid a hefty down payment associated with loans, but your monthly payments will likely be lower too.
- Higher Tax Savings: You can use your lease payments as a write-off on your income taxes because they are viewed as an expense. Not to mention, the sales tax will be spread out over the course of your lease term.
- Your Debt Load Won’t Increase: Unlike a loan, your lease payments usually don’t affect any future loans.
Conclusion
There’s a time to buy and a time to lease, depending on your business needs. Considering how forestry equipment is hard to afford and how hard it has to work, leasing is often your best option. Rather than tying up large amounts of your cash flow, you are free to use that money to invest in attachments and upgrades that allow your business to continue to grow.
Find out how affordable forestry equipment leasing is for your business. Get your 60 second lease estimate from Thomcat Leasing to see your payments.
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