Smart Equipment Leasing Strategies - It's In The Fine Print

Source: EzineArticles
LeaseSpeak.com

The U.S. Department of Commerce continues to cite what business owners and financial managers already know: rapidly changing technology and cost-containment issues have spurred phenomenal growth in the equipment leasing market. Despite current economic difficulties, Global Insight, Inc., predicts that over $1.15 trillion in equipment will be acquired during 2009. More than $672 billion will be financed using loans, leases and other financial instruments.

Eighty percent of U.S. companies lease equipment to add or upgrade and stay in step with the changing landscape of business, especially in the area of technology. Fifty-nine percent of all businesses that finance equipment report they will lease computer equipment and 37 percent say they will lease software. Digital printing equipment is the most common equipment leased in every printing company.

However, not all equipment leases are the same. How can you protect your company? Whether your company is small, midsize or large, avoid technical obsolescence without overspending by learning to bring financial and technical matters into line with the business issues. By trimming hidden fees, it is possible to cut five to 15 percent from the cost of leasing equipment, whether it is a laptop or desktop computer, molding equipment, printing press, fork lift or digital copier.

The first step to paring costs is awareness. You hold the power of negotiating financial terms in any lease agreement; in turn, you hold the power to save hundreds, thousands--even millions--over the life of the lease.

Here are eight smart leasing strategies to save time and money.

1. Find a natural fit. There are many types of leases and leasing companies. All offer variables that affect the bottom line, and all contain benefits as well as potential pitfalls. Shop for the company that helps you get what you need when you need it--at the right price. In theory, the leasing company wants your business and will not jeopardize the relationship because of a few fine points related to financing. The manufacturer's leasing source may not offer the best priced financing package it often is an easy option to choose.

2. Reduce up-front costs and monthly payments. Focus on the best price for the equipment, not the monthly payment. Always negotiate with the equipment sales person as if you are a cash buyer. In that way you are assured that you remain focused on the asset price. The financing negotiation will follow later. The best monthly payments and terms are driven by the purchase price you negotiate.

3. Adjust the payment schedule. After the cost of equipment is negotiated, payment terms are also key to cost savings. Request the payment plan that fits your cash flow projections, whether it is monthly, quarterly or annual. If equipment operators experience a learning curve, structured lease payments may be helpful. Consider lower payments during the first three to six months.

4. Understand buy-outs. You may believe you can buy equipment at the end of the lease for "about 10 percent" while the lease states "in-place and in-use fair market value." The difference can be significant and costly.

5. Avoid hidden penalties. Penalties as high as 60 percent that lurk in return provisions, upgrades, deadlines, cancellations and automatic extensions are negotiable and avoidable.

6. Beware of the "Perpetual Lease." Chances are, you will not be notified that the original lease term has ended. The lease may automatically extend or renew, trapping you in added payments or a costly "Evergreen Lease."

7. Ask an expert. Consult a lease review expert to bring financial and technical matters into line with legal issues--before you sign.

8. Never too late to negotiate. Even if you are in a lease, there are still negotiable items such as late payments, end of lease purchase prices, relocation fees and return fees.

Look For Equipment to Lease Now

Used car dealers adapting to changing market

The following interesting article appeared in a USA newspaper. After reading it please provide your comments on whether you are holding on to your vehicle and just making repairs, or you are taking advantage of the incentives provided by new car makers, or you ar finding the best deals on used cars, trucks, SUV's or lease takeovers.

By GARY PINNELL
Highlands Today
Published: May 13, 2009

SEBRING - In a poor economy, new car sales decline, but used car sales improve.
Well, that was the traditional thinking. This is the new economy.

"These times are so tough that consumers are even discouraged from buying used vehicles," said Dale Buss, who blogs for industry watcher Edmund's Auto Observer. "This may be the worst year in two decades for used car sales."

There are two reasons, both linked to the recessionary economy:

•With a few exceptions - new car sales are down from 30 to 50 percent, according to a Reuters analysis.

•New car deals are so generous, they're actually cheaper than the one-year-old used version of the same model, said Edmunds.com CEO Jeremy Anwyl. "This is an unusual economic event," Anwyl said. "It can actually be less expensive to purchase a new car than a used car."

Economic adjustments

Used car dealers aren't giving up, they're fine-tuning. "We're lightening our inventory," admitted Jeremy Leach, a salesman at McPhail's Auto Sales, a lot on U.S. 27 in north Sebring. Used car sales are down 30 to 50 percent, Reuters said, a figure Leach agreed with. "People are fixing their used cars instead of trading them in," Leach said. "That's what I'm hearing from them."

Even so, a good used car is getting harder to find. "If you want something that's nice and clean," Leach added.

Used car dealers rely on new car dealers to call when they take a trade-in with too many miles. But because new car sales are down, there are fewer trade-ins.

Calls from new car dealers are down 50 percent, Leach estimated, and Alan Jay Wildstein said rental companies are holding their cars longer, too. Also, new car dealers - who sell used cars as well - are keeping used cars that were considered marginal in the old economy. "And cars are so much better than they used to be," Wildstein pointed out. He owns new car dealerships in Sebring and Avon Park.

Years ago, a car with 60,000 miles was considered near the end of its life, Wildstein said. Now Kia and Hyundai, for instance, offer a 10-year, 100,000 mile warranty. "We are wholesaling less vehicles," Wildstein said. "That being said, we're not keeping the secondary cars." "We want to have some higher mileage vehicles for customers who can't afford a one-owner, low-mileage car," said Stanley Wells, co-owner of Wells Chrysler in Avon Park.

At the same time, customers are shopping for older cars these days, Leach said. In previous years, McPhail relied on one- and two-year-old cars. Now, they're selling more three- or four-year-old models. "That's what customers want, so that's what we're carrying," Leach said. "Most of our inventory is under $10,000."

Better times

Two events have improved sales though, Wildstein said. Gasoline is $2 per gallon cheaper than it was six months ago, and as a result, customers have returned to buy light trucks and SUVs. And their trade-ins are worth more. "They were upside down," Wildstein said. Interpretation: when gas was $4.25 a gallon, even gently used SUVs and trucks often were worth less than was owed to the finance company.

"They don't have negative equity anymore, so that's made the market better on the truck side," he said. And because the market is stronger, dealers are again keeping used SUVs and trucks.
"Compared with new vehicles sales - which are at lows unseen in decades - the used car market is doing well," said Buss, observing another new economy trend. "Desirable used vehicles are becoming harder to find, pushing up their prices, while today's new cars are heavily discounted."

Smart Meter Ban Boggles Supplier

Attention Residential Tenants: The following article appeared in The Star and we would like to have your opinion on whether you agree or disagree with electric sub metering for your unit.

TheStar.com April 29, 2009
TYLER HAMILTON ENERGY REPORTER

Delay needed to protect tenants from landlords while ground rules developed, Smitherman says. Hundreds of green jobs will dry up or flow out of the province if the government doesn't act fast to lift a ban on installation of smart meters in apartment buildings, industry proponents are warning.

But Energy and Infrastructure Minister George Smitherman said that, without proper ground rules, the ban is necessary to protect tenants from opportunistic landlords.

One company feeling the effect is Almonte, Ont.-based Triacta Power Technologies Inc., which manufactures building sub-meters and was on a hiring spree until sales into Ontario's apartment rental market came to an abrupt halt last month.

"We have certainly had to put our growth plans on hold," said Rob Brennan, president and chief executive officer of Triacta.

Brennan said the impact is spreading beyond manufacturing to installers and electricians. "For Triacta and our partners, it would be in the order of 100 jobs, and it's probably four or five times that when I look at the rest of the industry."

Electricity in most apartment buildings is centrally metered. The total cost is shared by all tenants and included as part of rent, meaning tenants who use less electricity end up subsidizing those who use more, such as those who operate home businesses.

Smart sub-meters allow a landlord to track electricity use by tenant and charge for power use on top of rent that has been reduced accordingly. Individual tenants pay for what they use and, according to the industry, can benefit from incentives offered through conservation programs if they can reduce their energy use.

"Roughly 60 per cent of tenants end up paying less in total than they were previously," said John Macdonald, president and CEO of the Consumers' Waterheater Income Fund, which supplies sub-meters to landlords through its subsidiary Stratacon.

Brennan calculated that about 50,000 rental units in Ontario have had sub-meters installed over the past two years, on the assumption that new regulations would be introduced to protect tenants.

Those rules were considered but never passed, meaning installations have never been technically legal under the province's Electricity Act, at least according to Brian Hewson, chief compliance officer for the Ontario Energy Board.

Hewson issued a compliance bulletin March 24, calling for an immediate cease of sub-meter installations in apartments, at the same time confirming that installation in condominiums is permitted.

Tenant advocates argue the temporary ban is justified because some landlords were having the sub-meters installed without tenant consent. Where there is consent, "often it appears that this consent has been obtained through high-pressure sales tactics and misleading or incomplete information," according to briefing notes to the government from the Advocacy Centre for Tenants Ontario.

The group said rules must be in place to ensure that landlords are reducing rents fairly and getting proper consent, and that they don't off-load the cost of running inefficient appliances onto low-income tenants.

Mike Chopowick, manager of policy with the Federation of Rental-housing Providers of Ontario, said there have been "concerning" complaints against landlords but that's no reason to shut down the entire market. Chopowick pointed out that 26 per cent of Ontario's rental housing has always had sub-metering, going back to the 1940s and 1950s, so halting deployment now makes no sense.

If the government is serious about province-wide energy conservation, then it needs to get smart sub-meters into apartments, otherwise tenants won't be able to do their part, he said.
"We've been pressing for a while now for the government to have some sort of workable rules or framework in place."

Recently, the industry put forward a voluntary code of conduct in hopes of having the ban lifted until formal regulations are in place.

Smitherman said the government is working "longer term" to get those ground rules in place, but said he won't sacrifice consumer protection by rushing.

"Absent of good rules that have been developed with the interest of tenants, the government will not be encouraging the willy-nilly implementation of sub-meters," the minister said.

Brennan said he doubts such an approach will help the government reach its goal of creating 50,000 green-collar jobs over the next three years. Triacta now has some decisions to make, he said. "We're at a crossroads regarding where we grow next and where we go next."

Credit Crunch - Can you get out from under it?

If you’re concerned you won’t qualify for a lease, we believe that these fears can be easily overcome.

There are leasing agents/companies that have in house credit repair departments who will work with you to clean up your credit score and rating. After all, it’s in their best interest to do so. They want to do the deal…that’s how they make money. Next to that, they aim to provide comfort for their lenders to get paid every month. This is a very good option and well worth looking into.

If you don’t want to use their services and would rather handle the issue yourself, before you apply for a lease you have some choices:

Negotiate with your Credit Card Company;

Negotiating with a credit card company is not impossible to do. However, you must remember that they have company guidelines and their primary objective is to collect what is owed to them.

Many credit card companies have become flexible with adjusting the monthly payment they will receive due to the current state of our global economy. However, there is no guarantee that they’ll work with you. It will largely depend on what kind of customer you’ve been in the past.

When you contact your credit card holder stress the fact that you have been a model customer and that this is a temporary measure, and that you have every intention of living up to your obligations. Ask for a reduction to your interest rate so that you can actually make progress with paying off the debt. If they’re stubborn and won’t help you, ask to speak with their supervisor or be passed onto a department that can help you.

Debt Consolidation with a Home Equity Loan;

If you own your home and have available equity you could approach your lender to consolidate your debt and roll it into your mortgage. The lender will likely give you a blended rate but check out all your options. Don’t be afraid to talk to your lenders. They don’t want to lose your business. If they can work with you they will.

Credit Counseling Companies;

Consider working with a well known credit counseling service. Only use a reputable firm, preferably a not-for-profit company - check them out thoroughly! Lately, several stories are surfacing in the news about people paying so called “debt reduction” companies who pocketed their monthly payments due to the creditors/lenders.

A reputable credit counseling firm will negotiate directly with your lenders to get you lower interest rates and lower your monthly payments. They will collect money from you each month and pay your lenders. More often than not, a good credit counseling company can help you pay off your debt in just a few years rather than over a much longer period of time. This will save you a ton of money in the long term. What's more, they’re not establishing a new loan, but helping to repay what you already have in place.

Bankruptcy;

As a last resort you could opt for bankruptcy. This is probably not the preferred course of action; however, it will give you a manageable way to repay some of your unforgivable debts, even if you lose most of your assets. The terms of your bankruptcy will depend on your regional bankruptcy laws. Speaking with a local trustee will normally get you the answers to all of your questions.

Unfortunately, going this route, there really isn’t anything you can do to save your credit rating from disaster. Take heart though, over time it will get better and until then you will be considered a much higher credit risk and you’ll likely have to pay a higher interest rate on some things (for a while). But don’t let that stop you from leasing the item you want or need. Our recommendation would be to first speak with the leasing company’s in-house credit repair dept. and from there (if necessary), you can accurately determine the next best course of action.

Have you ever tried negotiating your debt? Have you ever used the services of a leasing company's in-house credit repair department?

Tell your story so that others can learn from your efforts.

It Pays to Lease a Used Lift Truck

Perhaps it’s hard to imagine making a significant acquisition in these tough economic times. Stocks are down everywhere, companies are folding, and layoffs seem endless.

Although, at times like these, most business owners will be focused on reducing overhead costs and scaling down to the bare bones, it’s equally important to ensure the best possible throughput with the business at hand, and this being the case, there is one business expense that can pay for itself quickly and multiple times over.

The addition of a used Lift truck can instantly enhance the productivity and employee morale for many different business types, and without breaking the budget.

A lift truck is a versatile piece of equipment (see different types below) that serves as a safe and efficient means of handling all sorts of products and materials for various businesses, ranging from construction, warehouse supply, landscaping, commercial storage and retail uses to name a few. They’re made to lift and transport heavy or awkward items, such as shipping containers, boxed pallets, or even loose objects like landscape boulders.

Based on the type you choose and the purpose use, (interior or exterior, light or heavy duty lifting and manoeuvring capacities), you should be aware that all lift trucks come with hydraulics for lifting, lowering and perhaps side to side shifting placement of loads, and may be available in different fuel types; natural gas, propane, diesel and regular gasoline, and currently the most environmentally friendly, “battery electric”. With basic preventative maintenance, a good quality used lift truck can provide years of reliable service without any problems.

Perhaps the most obvious benefit from any lift truck is the ability to increase throughput by enabling (with ease) the movement of bulk or cumbersome items, loading trucks, stocking tall shelves, quickly filling customer orders, and minimizing needless back injuries, employee lost time, insurance claims and premiums.

No need to worry if the cash outlay isn’t there, you don’t have to take out a bank loan to purchase a good quality used lift truck. Frankly, the best, quickest and simplest solution is to lease it and write the lease cost off as a full business expense. Besides, it may not have much (if any) remaining book value. And, all other related costs can be put into a monthly payment plan that fits with your operational budget. Since it’s used, applicable taxes are usually much lower and can be spread over the term of the lease in your monthly payments, along with all delivery, training and preventative maintenance contract needs.

Couple this with the many benefits of using the equipment for all your businesses material handling needs and it becomes very clear why you should lease a used lift truck rather than purchase it. It’s all about your return on investment (ROI).

Good quality used lift trucks are available through a variety of sources, including private sellers, wholesale dealers, manufacturers’ pre-owned inventory, and FREE to post online classified ad sites where all of these sources are likely to be found.

The general rule of thumb for shopping is no different than it is for any big ticket item, and that being the need for doing your homework (product research) before venturing out to acquire a quality used lift truck. Of course, the internet is the best and first place you should go for consumer reports and user forum comments to find out the preferred brands and why, compare prices, get different model specs and features etc. And, as with any significant acquisition, it’s important to read through all the fine print, as some deals may appear much better than others.

Lastly, when introducing a lift truck into your workplace, ensure that all your employees receive proper training (mandatory in some states and provinces). Check online for material handling equipment training courses available in your area. Remember, this is a cost you can most likely have built into your equipment lease.

Again, a good quality used lift truck can make a huge difference to your business. Not only with improving productivity and throughput but with increasing the morale of your entire workforce. And, without a doubt, leasing makes much more sense than buying.

Design types

The following is a list of the more common lift truck types. It is arranged from the smallest type of lift truck to the largest:

• Hand pallet truck
• Walkie low lift truck (powered pallet truck, usually electrically powered)
• Rider low lift truck
• Towing tractor
• Walkie stacker
• Rider stacker
• Reach truck (small forklift, designed for small aisles, usually electrically powered, so-named because the forks can extend to reach the load)
• Electric counterbalanced truck
• IC counterbalanced truck
• Sideloader
• Telescopic handler
• Slip Sheet machine
• Walkie Order Picking truck
• Rider Order Picking truck (commonly called an "Order Picker"; like a small forklift, except the operator rides up to the load and transfers it article by article)
• Articulated Very Narrow Aisle Counterbalanced trucks (commonly called "Flexi Truck")
• Guided Very Narrow Aisle truck - 'Man Down' (a type of reach truck designed for aisles less than five feet wide) and 'Man Riser' Combination pickcle Picker/ Stacker truck
• Truck Mounted Forklift / Sod Loader
  

Look for Lift Trucks now.

This article was written by LeaseArrangers.com, a FREE to post classified ad site for B2B, B2C, and C2C buyers and sellers of big ticket items like Equipment, Real Estate, Transportation and more. Lease – Rent - Buy - Sell

Rules for Business Survival

How Your Business can Survive Tough Times

In a state of mass economic turmoil it’s crucial for your business to live by these three primary rules. And, by doing so, even at the very worst of times, your business will prosper.

1. Keep Overhead Costs Down:

Minimize overhead expenses everywhere you can. You’ll be surprised by how good it feels to “tighten the belts” and how quickly you and your staff become accustomed to working with less and in the long run understanding that “Less equals More”.

One of the largest expenses for most businesses is leased space. In this economy, many landlords are quite willing to renegotiate and make amendments to existing leases, especially if you’ve been a good paying tenant in the past. After all “a bird in hand is better than two in the bush”.

It’s not uncommon for a Landlord to let you pay only the additional rent portion for a 6 month period and add the base rent portion to the back end of your lease, or quite possibly lower the base rental rate for the next year or two by extending the term.

If you’re uncomfortable approaching your landlord, there are reputable tenant representatives who, for a very reasonable fee, and on a “pay per performance” basis, can either assist you with renegotiating your lease or they’ll do it for you. Obviously, the latter is at a higher fee, but in many cases, worth every penny if you have a difficult Landlord.

Remain flexible

If your lease is about to or has already expired and you need to find an alternative place to conduct business, in this economy it’s best to first consider subleasing (lease takeover) or any other short term options like sharing space with a strategic partner. Or, if you’re searching specifically for office space, consider executive office suites with all amenities and services included. This approach will keep you flexible with a quick early out.

Other areas to quickly reduce overhead costs could include renegotiating the lease or rental contract you have in place on your photocopier, computer systems, or heavy equipment like forklifts or special machinery, and quite possibly your cellular phone contracts. You can also approach your credit card companies and negotiate a reduced interest rate in order to keep the outstanding balance payments low.

On the other hand

If you find that you no longer have a need for your business space, equipment, machinery, or even a vehicle of any kind, a great option is to place an online ad to either have someone take over your lease or buy it outright. At LeaseArrangers.com you can post your own FREE ads related to items available and wanted for lease, lease takeover, sale, and rent.

Most leases are easily transferable, however, there may be a processing fee attached. It’s always best to check first with your lessor on the transferring details. Alternatively, if you find yourself in the market for additional equipment in order to capitalize on your competitor’s lack of performance, or you see a growth opportunity that you can’t pass up, you should consider taking over a lease yourself or leasing a used item rather than going with new.

Some leasing agents and companies have repossessed or off-lease inventory listed on their site or you can find a wide range of items available on FREE to self post sites like LeaseArrangers.com. And, you can even get a FREE lease quote from them on most items posted for sale over $5,000. The rule of thumb is; if it’s over $5k and can be registered on title, it can be leased.

2. Be Customer Selective:

By listing your current customer base; determine who's profitable, and who's not. If some are draining your resources, either raise their prices or get rid of them. Just like low to mediocre performing employees, you can't afford to carry unprofitable customers. The primary objective is to be lean and mean without sacrificing the quality or level of service everyone knows you provide.

This approach will force you to identify your ideal customer and to be much more selective of whom you want to do business with. Remember, your customer pool is always where your busy competitors market their products or services.

Unfortunately, in any tense economy it’s not a simple task to attract and secure new customers. Why?

The internet has made it far too easy for your new and existing customers to find your competitors. Although there’s more than enough room for everyone, you need to take a close look at how your products or services can be seen before your competitors, and directly in front of your target market!

Keep marketing

For many businesses, next to the leased space and employee salaries, advertising and marketing is the next biggest expense. When the economy weakens, the knee-jerk reaction is to do the exact worst thing - slash and try to go forward with very little or without altogether.

However, numerous studies have shown that companies who maintain (or better yet, accelerate) marketing activity in weak economic times reap the rewards in droves for the long term.

Statistically, a potential customer needs to actually see your brand a minimum of 7 times before you stand a chance of them becoming your customer. Can you really count on one person going back to your website 7 times? Not likely, but if they keep ending up on your site because they were on another site then I would venture to say 7 times will go by quickly.

If you have a specific product or product line you’re selling, the first thing you need to do is find a FREE (to post) site other than your own to put each of these products on display (preferably in different relevant categories).

Also, web feeds today can take a product for sale on your site and make it an ad on “their site” – a great example of this is LeaseArrangers.com. As they in turn promote their site to their various target markets, your products are found again and again by your potential customers.

And, if you don’t presently have your product items displayed on your website, LeaseArrangers.com is a place where after you post 10 or more items, they can transfer these ads to appear syndicated on your site under a linked “Our Product Inventory” heading that looks like it was always meant to be there.

Promote wisely

A very wise and cost effective approach to market your business products and services is to find a good website graphics student to create a series of electronic flash & still banners that promote your company, and then pay a small monthly fee to strategically place them in key category positions on various classified sites.

Banner ads that link back to your website, or directly to your product or service demo video can be a very smart and inexpensive way of promoting your company. Especially, if placed on “Next Generation” up and coming niche market websites where they offer a variety of local to national exposure positioning options.

When it comes to the big guns like MSN or Yahoo, unless you’re a fortune 100 to 500 company looking for some added brand exposure, the cost of placement and positioning on these sites will unlikely make financial sense.

Nonetheless, get pricing from numerous sites even if you think you can’t afford it. Use social networking sites like Twitter, Facebook, mySpace, LinkedIn etc. for back linking to your business blog. Make a video about your product or service with your webcam and put it on YouTube linking back to your website. Use your local board of trade or chamber of commerce to get your message out. Attend networking events and don’t be shy to promote yourself behind your brand!

Regardless of the economic times, don’t be afraid to ask your current advertising suppliers for better pricing or longer terms. And, despite what your advertising and marketing budgets may be, you need to maintain good existing customers and attract and secure an abundance of new ones.

3. Continuously Improve:

Ask any successful business owner what their secret is and they’re likely to tell you “hard work and dedication”. Very true, however, this is tied directly to their commitment to continuously improve their business model and quickly adapt to change whenever necessary.

Ultimately, at all times every business leader needs to get the most from their work force, and openly communicating and planning every goal and objective with them is the key to a successful business.

That being said, instilling realistic performance measures and linking everyone’s compensation increases to the company’s achievements will drive a team approach that ensures the company will be agile enough to manoeuvre through the tides…smoothly!

Think creatively

Remember, salaries and wages are the single largest expense for most small businesses and during recessionary times there are many talented people looking for work.

If you've been muddling along with non team oriented employees, take note that they're likely dragging your business down, or at the very least, restricting it from improving and getting better. If you can't quickly bring their performance level up to where it needs to be, do the difficult thing and make some drastic changes. In this economy, there’s at least five others with an equal or better skill set waiting to take their position…tomorrow morning!

Constantly be attentive and on watch for fresh ideas and opportunities. Stay abreast of all press releases, news and trends related to your business industry and activities. Interact with a wide variety of entrepreneurs to get a clear picture of what they're doing. Learn from what's going on around you, and be poised to jump on good strategic opportunities when they come your way.

When the going gets tough, keen success driven business leaders really get going. Always be prepared to make changes in a proactive frame of mind. Your business can not only survive the recession, but also gain from it, provided however, you live by these fundamentals.

Post or Search for Equipment, Real estate, Transportation and More

This article was written by LeaseArrangers.com, a FREE to post classified ad site for B2B, B2C, and C2C buyers and sellers of big ticket items like Equipment, Real Estate, Transportation and more. Lease – Rent - Buy - Sell

Need to Lease Space for Your Business?

Here are some important facts before you do!

You’ve worked extremely hard to get your business off the ground from home and your efforts have finally paid off. You’re now ready to make the ultimate commitment: to establish your first real place of business.
For every small business owner, it’s both exciting and frightening at the same time.

Whether you supply a professional service, have a wholesale or retail goods operation, or you’re a food service company of sorts, finding and securing just the right location can be a wearying task.

Obviously, the logical first step is to Lease the space you need, rather than purchase it. This enables you to reserve your capital to fund your business growth and provides greater flexibility for expanding your operations as the need arises.

In today’s fast-paced, quick-thinking business world, a prudent entrepreneur very much understands that “growth” and “risks” are synonymous. And, beyond this, the road to success is paved with opportunities that can easily crumble if little attention is given to the risks and liabilities that get assumed along the way.

With this in mind, and prior to contending with the numerous land mines in any Business Tenant Lease Agreement (Lease), here are some important facts you need to keep in mind before venturing out to secure your new business location:

1. Typically, real estate agents are paid for their services directly from the Landlord, in the form of a commission fee (usually between 3% to 6% per cent) of the total Net Lease amount over the Lease Term. This definitely means that your agent must fully understand your facility needs and show you all available locations (and hopefully those coming available) which meet with or come very close to meeting with your needs. Before looking at anything that might work, it’s best to provide your agent with a list containing (in order of priority) the top seven (7) most critical features for best accommodating the operation of your business – for today and with looking ahead over the next few years (this list will then represent your search criteria);
   
   
2. Signers beware! There are several provinces, states and municipalities where a signed Offer to Lease constitutes a legally binding agreement between the respective parties. An Offer to Lease should never be signed without first having it reviewed by an independent and knowledgeable professional;
   
   
3. The formatted Lease you receive to sign will be the Landlord’s. You must keep in mind that it was skillfully prepared by very astute professionals working in the best interest of Landlords – not Tenants;
   
   
4. While the provisions within each Lease can vary from one Landlord to the next, all are complex contracts that contain serious risks and liabilities ready for the anxious business Tenant to assume. One of the biggest and most common mistakes a business owner can make is entering into a Lease without first having it properly assessed by a professional, and preferably the same person who provided impartial skilled help with the Offer to Lease;
   
   
5. As a young enterprise that’s never leased business space before, and whether you’re a sole proprietorship or an incorporated company, it’s not uncommon for any Landlord to request a personal guarantee from you regarding all responsibilities and obligations of the Tenant per the Lease. Even though this is certainly open to negotiation, very few business owners will pursue removal or even limitations to this dangerous provision, and usually for fear they won’t meet the Landlord’s requirements to secure the space. Remember, the golden rule; do everything you can to keep your business and personal obligations separate;
   
   
6. Unlike the residential sector, there is no governing body that actually regulates the rights and obligations of the commercial Landlord and the business Tenant. Therefore, what’s stated in the Lease is what determines how the relationship between the two parties will function;
   
   
7. According to statistical survey, a typical commercial or business lawyer spends a very small portion of their time actually structuring and negotiating Lease contracts. It’s been said that many lawyers prefer to apply their energies toward much more lucrative matters such as Landlord & Tenant disputes.

In conclusion, Lease Agreements have become very complex and hazardous contracts, especially for young businesses. To be sure you get what’s best for your business, it makes a lot of sense (and cents) to use the help of professionals dedicated to protecting the needs and rights of Business Tenants. These experts are thorough, responsive and very cost-effective, and they work entirely in your best interest. It’s their ultimate goal to ensure you get the best possible Lease and the peace of mind and freedom you need to focus on growing your business. After all, isn’t that what’s most important?

Article Provided by Lease Arrangers
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To Lease, or Not To Lease?

For most business owners and their financial officers, leasing versus buying the big ticket items required for day to day operations i.e. Equipment, Real Estate or Transportation related, has always been a topic of much debate.

Simply put, the common rule to follow should always be; when any item you need to generate revenue for your business has the ability to continuously appreciate in value (regardless of the economic conditions at the time), definitely purchase rather than lease.


And, by this common rule, many think that Real Estate is a sure buy.

However, if your business is just starting out or at a critical stage of its development, despite what your R/E agent may suggest, the ownership approach should be put on the back burner for a while. The strategy (rather mandate) should be to conserve cash and focus all efforts on creating strong, stable growth for achieving true business success.

Vital expansion needs and the ability to remain flexible for exiting at the same time is why early ownership of your business workspace doesn’t make sense. Although, it certainly would if there’s oodles of surplus cash to comfortably dole out a sizeable down payment (30 to 35%) and the business is consistently generating positive revenues to support paying the mortgage payments and all operating costs, including without limitation; property and income taxes, maintenance, insurance, utilities and a monthly budget of about 10% of the total monthly costs for applying to unforeseen issues. Not something most business owners can expect to accomplish during weak economic teams. Nor should they try!


Using your Equipment is what makes you money, not owning it!

Since your business equipment depreciates in value from the first moment you put it to work, there’s no justification whatsoever to own it. Essentially, wear and tear and technology obsolescence are the key reasons. From computers to cooking ranges, furniture to forklifts, vehicles to voice mail systems…you name it, 98% of the time, the value of your business equipment plunges by 25 to 30% within the first year to 18months. This is precisely why equipment and transportation leasing has become the most favored approach.

Almost 85% of all SME’s to "Fortune 100" companies lease some or all of their equipment. And why not; when monthly lease payments can be tuned with projected revenues, tightening budget constraints, and there’s no up front tax to pay. No need to increase bank borrowing capacity either. And, many equipment and vehicle leases can be structured with no money down, even with declining monthly payments as the goods devalue. And, the ability to qualify for funding relative to getting a loan is a very quick and painless process. As well, it’s much easier to get out of an equipment or transportation lease by transferring it to someone looking for the same items under a shortened term which saves them serious money.

In summary; To Lease or not to Lease is not the question....it should be, What’s your best Lease rate and terms?



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