Short
Term Purchasing
Stunts Growth
Consider the case of our hero - Tommy Tunes. Faced
with the chance to capture $1,000 in new business this
week, Tom buys $900 worth of new equipment to cover the
additional bookings. Let's assume Tom doesn't pay anyone
to help him DJ, and that he spends no additional money on
little "extras" to get his new equipment up and
running.
He's now left with only $100 in net profit for having
taken on the extra work. That small amount will not go
very far toward growing Tom's DJ business, and he has
effectively passed up the opportunity to realize a better
return.
But Tom made an
investment of $900 in his company didn't he?
Remember that the new business was this week!
So unless his purchase is being put to good use again next
week, and in many more weeks ahead, Tom will
have succeeded only in freezing $900 of his funds or
credit in new equipment.
 Why would renting
the equipment be a better alternative?
First and foremost a dollar will rent much more than
it will buy. In Tom's case, what cost him $900 to buy
might have cost less than $50 to rent. He also may
have been forced to settle on lesser quality goods to
stay within his budget. The new equipment may not last,
and with only $100 net profit Tom may be strapped for
cash to run his business, or pay expenses.
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 Renting Improves Your
Cash Flow
Renting can help you grow
your business faster and with better fiscal stability. If
in our example Tom had rented the equipment to meet his
needs he would have been much better off.
Let's assume instead that
Tom spends as much as $300 on rented equipment to capture
that $1000 worth of new business. His net profit from the
extra jobs is much higher. That's $700 in Tom's pocket
right now that he can use to advertise, pay bills, or
hire an assistant for the extra work. His money will not
be frozen in under-utilized equipment. If he does elect
to buy new equipment he can now make smaller purchases of
better quality components over a longer period of time as
his company grows.
By renting to meet the
early demands of new business opportunities you maximize
the power of every dollar you spend. New systems can be
purchased after the business is in place to support them.
You can also find new profits by offering rented products
or services that would otherwise be too costly to own or
maintain. Lighting is a perfect example.
Quality light fixtures are
not only expensive to buy, but can be very costly to
maintain. Replacement bulbs for truly professional
fixtures range in price from $10 - $200, and many hidden
costs arise with the hardware, cables, and accessories
needed to properly operate a lighting system. Lighting
effects can also become obsolete in a relatively short
period of time. Renting can give you a quality edge over
your competition without committing you to additional
debt and antiquated equipment.
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