5 Reasons to Invest

In New Equipment

Regardless of what industry your business works in, the odds are very good that your work involves some form of expensive equipment. Whether it’s a four-thousand-dollar espresso machine or a four-million-dollar construction crane, however, nearly all heavy equipment presents the challenge of financing. Small business owners tend to understand and value the importance of top-notch equipment in today’s market–but fear that the costs of an upgrade are prohibitive. This is unfortunate, because the alternatives to investing in new equipment–purchasing sub-par equipment or renting–ultimately end up being far more expensive while limiting the potential for future growth. When it comes to the tools that help you work, investing in quality is almost always worth it–even if it means finding an outside source of funding. Here are 5 reasons why:

1. New equipment spurs growth.

Though the initial investment may be significant, new equipment tends to start paying for itself the moment it is put to use. Increased efficiency, waste reduction, higher quality production, better customer service, and increased employee satisfaction are just a few of the most typical benefits that new equipment offers. Depending on your situation, new equipment may even be a necessity: perhaps it enables you to meet demand, or replaces a broken machine, or keeps you compliant with the latest safety regulations. In short, new equipment is often a catalyst if not a prerequisite for growth.

2. Tax advantages

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased from their gross income. This measure was created in order to encourage businesses to invest in themselves–and it means that spending on new equipment can result in some serious savings come tax time. You can learn more about the section 179 deduction on the IRS’s official website. Even if your equipment doesn’t fall under section 179, however, there is still a good chance you can save on your taxes–because the official value of new equipment depreciates upon purchase, you are eligible to file for a substantial depreciation deduction as well.

3. Go green

Due to a convergence of better technology and more environmental conscientiousness, new equipment tends to be far more environmentally friendly than old equipment. This offers a slew of benefits for business owners. First of all, investing in green technology could open the door for even more tax benefits. Secondly, you will likely be reducing your own operating costs: using less energy tends to result in lower energy bills, after all! Thirdly, in a world that is increasingly aware of our environmental footprint, going green is a move that many potential customers and clients will respect. And finally, you will have the peace of mind knowing that you are doing your part to create a better world for tomorrow.

4. Keep up with the competition

If you don’t invest in new equipment now, you can be sure that at least one of your competitors will. This means that you will risk falling behind in today’s competitive economy. Investing now means you can begin offering better products, faster service, or both paving the way for success both today and in the future.

5. Build Credit

Finally, investing in new equipment is a valuable opportunity to build credit. Should you seek outside funding for your investment, you will be building your financial reputation by proving that your company can be counted on to pay its debts in a timely manner. This will allow you more financing options in the future. In the grand scheme of things, the cost of investing in equipment is much lower than some other investments you may hope to make in the future say, adding a new location, for example. Small investments now can mad those big investments easier in the future. (After all, both your chances of approval and your interest rate will be determined, in part, by your credit score.) This is just one more way that an investment in equipment can keep on paying off for years to come.