Before financing equipment: calculate what it needs to earn

The starting point

Equipment should add capacity you can use and support, beyond a payment that appears manageable.

Identify what limits operations

Is capacity missing, are breakdowns costing time or is there demand you cannot serve? Describe the problem with a concrete measure: backlogged jobs, downtime or declined orders. A larger machine will not solve a lack of customers or staffing.

Price the equipment ready for work

Beyond the purchase price, identify delivery, installation, facility changes, training, maintenance and insurance. For used equipment, ask about condition, warranty, parts and available service. Separate upfront costs from recurring ones.

Compare purchasing and leasing by total cost, ownership at the end, restrictions and exit conditions. Do not assume identical services or tax treatment; discuss the latter with your tax professional.

Calculate a simple operating target

Hypothetical starting-point example

Suppose the equipment adds a $900 monthly payment and $300 in fixed costs. If each additional job contributes $40 after variable costs, you need 30 additional jobs per month to cover that $1,200.

The calculation $1,200 ÷ $40 excludes taxes, unexpected costs and recovery of an initial contribution. It also does not prove demand exists. Use it to ask whether you have the space, staff and customers to do those jobs.

Review what happens if the plan changes

When do payments start relative to delivery and installation?
Who bears repairs and downtime?
What security interest or rights over the equipment does the provider retain?
What happens at the end of the agreement or with early payoff?

Bring a quote and explain the intended use. rédito can help put the need in context; the provider determines availability, amount and terms.

Your business. Your next step.

Use what you learned to explore a structure or start with your business profile.

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