Small Business Opinion | Leasing to Stay Up in a Down Economy

As the new government settles into power, lots of people are looking back at what type of world the global economic downturn has left us with. I thought it apt to do similar.

There’s no denying that the downturn made life difficult for businesses of all shapes and sizes. However, for every cloud there is a silver lining.  In many ways the smartest and most prudent organisations run their operations as if they were always in a recession.

It’s always smart to scrutinise every area of your cash flow and expenditures; then assess just how hard your capital is working for you. One area in which many organisations can make their expenditures more efficient is the means by which they acquire technology.  In tough economic times, successful companies rely on technology to make their employees more productive, decrease travel expenses, reach new markets and elevate customer service. None of which are easily done.

HOW TO BUY

For a small business, calling or mailing your usual supplier for a simple purchase can often seem the easiest method. However, it might not be the most business-efficient option.

Consider, for example, the possibility that a business wants to acquire 10 PCs and network them together. The bill for the hardware could easily be around £5,000 to £7,000 assuming you don’t go for the most basic computers.

Such a purchase seems easy enough with a few credit cards. However, once you look at the interest on a corporate credit card, you might want to rethink whether that is a desirable means of financing a key purchase. A bank loan is another option, but given the current credit crunch, banks are less willing to issue loans, even to their best customers.

STRATEGIC SPENDING

Often a better way of funding technology purchases is to view them as an investment rather than a cost. Automatically you’re thinking of getting some sort of return, which wouldn’t be the case if you were planning to make a straight purchase and borrowing or saving the cash to do it.

However, before an acquisition can be truly part of a company strategy, you need to take certain actions:

  • You need to define an aim:  What exactly is the new technology supposed to deliver that wasn’t being delivered before?
  • Your staff needs to buy into the idea of change
  • You need to select the right technology
  • You need to deploy it correctly and upgrade when further business-related enhancements become available.

By this stage, many business managers’ heads may be spinning at the thought of the possible complexities, in my next post on this subject, we’ll look at working with a trusted partner to help navigate through the challenges.

David

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