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Using Equipment Leasing As A Competitive Weapon
By George A. Parker

Most great generals know how to design winning battle plans.
They also know how to use their resources to gain advantages
over the enemy. For these military leaders, getting enough
tanks, aircraft, ships and armaments into the hands of the
right personnel can spell military victory or defeat.

In the business arena, gaining access to certain resources and
getting them into able hands can also determine success. Many
successful business leaders have discovered that equipment
leasing can make a significant difference when competing in the
marketplace. In fact, equipment leasing has become a competitive
weapon for business managers who understand how and when to use
this helpful financing tool.

Here are some ways savvy business owners and managers use
equipment leasing to gain advantage over their competitors:

To Develop a Financing War Chest

Equipment leasing allows companies to finance more activities
to compete effectively. It supplements other forms of
financing, such as equity capital, bank debt, trade credit and
mortgage financing. Astute business managers understand that
access to a variety of useful financing affords them certain
options and gives them an advantage over competitors with
limited financing.

Maintaining State-of-the-Art Technology

Being able to acquire and use state-of-the-art equipment and
software can give many companies a noticeable competitive
advantage. This advantage can be particularly significant in
research, product development, marketing and operations. By
using equipment leasing, companies are able to better manage
technology turnover. Many managers use operating leases to
acquire state-of-the-art equipment for fixed time periods. At
lease end, they are then able to rid themselves of obsolete
equipment by returning the equipment to the lessors.

Stretching Equity Capital

Equity capital is often the most flexible form of business
funding. It allows companies to undertake high-impact growth
activities like adding key personnel, conducting research and
development, and expanding marketing programs. Equipment
leasing is dedicated financing. It permits companies to add
equipment efficiently. In this context, equipment leasing helps
to leverage and stretch a company’s equity capital by freeing it
up for other uses. When used properly, the overall impact of
equipment leasing is to leverage equity returns. High equity
returns attract investors and permit companies to source more
equity capital in the future.

Equipping Talented People to Do Battle

Using leasing to get the best software and hardware into the
hands of talented personnel is a competitive advantage.
Companies that quickly get equipment into the hands of talented
workers at every level usually compete more effectively in the
marketplace.

Accelerating Company Growth

Equipment leasing facilitates faster company growth. It allows
companies to add infrastructure faster by bringing in equipment
earlier and paying over time. In this regard, leasing affords a
competitive advantage over companies that wait to purchase
equipment outright.

Defending Working Capital

Sophisticated business managers have discovered how to keep
pressure off of their companies’ working capital. Compared to
outright purchase, equipment leasing has a low impact on
working capital. Leasing allows companies to avoid large
upfront outlays while spreading equipment acquisition costs
over an extended period. Using equipment leasing to manage
working capital permits companies to pay bills on time and to
operate smoothly. They are then able to gain a competitive
advantage over companies that haven’t mastered this technique.

Maximizing Tax Benefits

Sophisticated companies are able to maximize tax benefits by
carefully using equipment lease structures. By entering into
operating leases and being able to fully deduct lease payments,
companies that can’t otherwise use depreciation write-offs can
still realize tax benefits. Capital leases allow companies that
can use depreciation write-offs to take advantage of this
feature. Tax benefits further reduce the cost of acquiring
equipment. These benefits can often make equipment leasing a
more efficient means of acquiring equipment compared to other
methods.

Turbo-Charging Equipment Sales

For companies selling equipment, offering equipment leasing to
customers at the point of sale can help establish a significant
competitive advantage. Convenient equipment financing at the
point of sale can eliminate a major selling challenge— the
customer’s lack of financing for the purchase. Equipment
sellers offering leasing give their customers a means of
acquiring the equipment and realizing the full benefits of
equipment leasing. This sales-financing strategy represents a
clear advantage over sellers who let customers fend for
themselves.

Savvy business owners and managers understand the benefits of
equipment leasing. They also understand how to exploit leasing
for competitive advantage. The challenge for them is to
optimize leasing to realize the biggest gains and to compete
more effectively. It is no wonder that equipment leasing in the
U.S. has grown to over $ 240 billion annually and accounts for
more than 30% of equipment acquisitions. Consider equipment
leasing when designing your battle plans. Don’t allow your
competitors to use leasing against you to win the battle in
your market.

About the Author: George Parker is a Director and Executive
Vice President of Leasing Technologies International, Inc.
(“LTI”). Headquartered in Wilton, CT, LTI is a leasing firm
specializing nationally in equipment financing programs for
emerging growth and later-stage, venture capital backed
companies. More information about LTI is available at:
www.ltileasing.com.

Source: http://www.isnare.com