Growth · 2 min read ·
Before you buy that equipment, look at these numbers
Buy, lease or finance: the question is what the business can carry, not what the dealer offers.
The dealer has a payment that fits. The salesperson has a spreadsheet that shows it paying for itself. Neither of them will be there when the payment is due in a slow month. Before you sign, run three numbers of your own.
What it earns, not what it saves
Start with the revenue the equipment lets you take on that you cannot take on today, or the cost it removes from every job. Be specific: hours saved per week at your loaded labor rate, or jobs per month you are currently turning away. If the honest number is 'it would be nice to have', stop here.
What it costs per month, all in
The payment is one line. Add insurance, maintenance, fuel or power, storage, training, and the down payment spread over the term. Then compare the all-in monthly cost to the monthly earning from the first section. The margin between them is your cushion for the months when the machine sits.
Buy, lease or finance
Buying outright uses cash you might need for payroll or growth. Financing keeps cash but adds a fixed payment that does not care whether you were busy. Leasing costs more over time but moves the risk of the asset losing value to someone else, and it matters if the technology turns over quickly.
There is no rule that fits every business. The right answer depends on what the business can carry in its worst recent month, not its best one. That is the number we look at with owners, alongside the tax treatment, which is a conversation for your CPA before you sign, not after.
The question to ask before any of it
Could you rent it, or subcontract the work that needs it, for the next six months? If the demand is real, you will know by then, and you will buy with evidence instead of optimism.
What to do with this
- Count what it earns, in dollars per month, before what it costs.
- Price the all-in monthly cost, not the payment.
- Test the payment against your worst recent month.
- Ask your CPA about the tax treatment before you sign.
- Rent or subcontract for six months if you are not sure.
Questions this answers
It depends on what your cash can carry in a slow month, how fast the asset loses value, and the tax treatment your CPA recommends. Run the all-in monthly cost against the monthly earning first, then choose the structure.
Write down the specific revenue it adds or the cost it removes each month, compare that to the all-in monthly cost including insurance and maintenance, and make sure the payment fits your worst recent month.
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