When an entrepreneur decides to open a new business, there is a lot of factors that have to be considered. Costs are one of the biggest factors and it is usually split between initial investment costs and operating costs. The initial investment is where most of the capital is required. More capital means access to biggest initial investments. However, investing too much capital can also have some shortcomings.
Depending on the business, a large portion of the initial investment usually goes to equipment and other tangible assets. There are a lot of trade-offs to consider; buying first-hand or second-hand, buying the latest model or an older one, but whichever equipment is chosen, the business will have to choose between buying it and renting it.
Why rent when you can buy
Even if the business has enough money, it is not always the best decision to purchase the equipment. It is a common school of thought that it is always better to purchase something than to rent it. The reason is that it is more expensive and obviously it is because the person who has to make a profit.
However, is it always a bad thing to be paying slightly more for something? Not necessarily, especially when it comes to starting a business. The expenses involved with operating a business are highly complex and not something to be ignored. By over investing in the initial set-up of the business, cash-flow problems can be experienced if the sales targets are not met – which is easy when a business is still new.
Instead of putting yourself at risk by overinvesting, renting some of the more expensive equipment is a suitable way to ensure you will have enough cash available to continue business operations until profitable.
Renting Sun Beds
Starting a new tanning salon can be a very cash-demanding endeavor. There is a lot of highly advanced equipment involved with indoor tanning and these beds are expensive. On top of this, there is a lot of risk about opening a new tanning salon at the wrong time. If the season doesn’t go as planned and summer continues longer than expected, fewer clients will visit the salon – resulting in cash difficulties until the winter months arrive.
To prevent this risk, businesses can rent a sunbed from bestsunbeds.co.uk, who ensures that businesses get a fair price until they are ready to make the capital investment. Best Sun also offers buyback agreements, which include them purchasing a businesses equipment and then having them rent it back. This can be a lifesaver for businesses that have already purchased the equipment, only to find that they will have to close down if they do not get additional cash-flow.
Instead of businesses putting themselves in risky situations, there are ways to decrease exposure. It isn’t always a bad decision to rent equipment before making large commitments, especially when the business is not yet fully established. Renting sunbeds could be the difference between success and failure.