Many growing print shops are faced with the ongoing struggle of upgrading equipment necessary for taking the next step for their business. There is no single golden rule to running your print shop, and the same goes for buying or leasing equipment. Buying equipment can be very costly, and quite scary when you are still in transition. At the same time, owning your own equipment has a lot of benefits. Here are a few things to consider between leasing and buying equipment
Do I have cash on hand, and how do I want to spend it?
Cash is king – they say. While it is important to keep cash on hand to run your business, buying something outright means that there is little to no overhead added to your business! At the same time, you may have worked quite a long time to save up that money. Make sure you are financially able to shell out that cash before buying that new press!
How will my overhead change if I lease equipment?
Looking at leased equipment as adding another “employee” is a different way to look at your production costs. While doing that, you need to factor in the monthly expense of it, and how much more you will have to produce to pay the rent on that piece of equipment. If the volume is there, you can keep lease costs down to single digit percents. If you have to stretch every month to pay off that new auto, think again.
What are the tax benefits of buying?
Owning equipment has many benefits when you go to file your taxes. Some states allow you to depreciate equipment completely if bought within a certain period. This can be great if you are going to be very profitable. Other states allow you to depreciate equipment over time. If done correctly, this can really help you turn a hard tax year into a new DTG or embroidery machine! Talk to an accountant and learn about the tax benefits of owning equipment.
Will my equipment hold its value, and will I be able to re-sell it?
Buying and selling used equipment is very common in the printing industry. Getting a brand new piece of equipment could end up positive when you go to sell it down the road. Non-electronics and simple machines will hold more value than items that plug into a wall. Those used presses can be good for years if handled and treated properly, but that 54” printer with 10 years of use on it might not be worth much.
How rapidly is this technology changing?
A manual press is a simple machine, so is a dryer or a light table. It would be safe to say that the technology for them is not changing rapidly, so you won’t get stuck with an outdated machine if you choose to buy. With how new some equipment is in this industry, a direct to garment, automatic screen reclaimer, or a direct to screen system might be outdated in just a few years. It would be nice to lease those pieces so that you can easily upgrade when the latest and greatest come out!
Always remember to have a plan, weigh out the risks, and ask around if you are unsure what to do. Manufacturers of all products have seen shops in similar situations and they are there to support you!
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