9 Great Ways To Finance Assets And Not Break The Bank
Whilst many businesses might be able to extend their credit line and purchase the required assets, you may not want to take that option or might not even be able to. So, here are 9 alternative ways to finance assets and gain access to the equipment, property or vehicles you need to effectively run your business.
- Shared Ownership
- Cooperative Schemes
- Buy From A Dissolved Company
- Payment In Kind
- Borrow From Friendly Companies
- Outside Investment
In the wider world, trying to acquire new “things” when you’re a little tight on funds isn’t advisable. But this is a business. And in business, there are times when, the old cliché, “speculate to accumulate” is never more apt and becomes a necessary path to follow.
At other times, staying operational can only be achieved by replacing worn out assets, even if the company is experiencing a few cash flow issues at the time. If any of those 9 options sounds appealing and something you want to research further, they’re explained in full below.
Shared Ownership Of Infrequently Used Assets
Notoriously short on cash and always in need of high-maintenance in order to maximise every other area of the business, amateur sports clubs regularly share ownership of infrequently used assets.
Sharing the ownership of items such as ground scarifiers is common. They have a relatively pricey ticket price but only need to be used at the end of the season every 2-3 years. This means they’re the perfect shared-ownership item for a handful of local cricket, bowls and tennis clubs. In agriculture, think combine harvesters and how they move from farm to farm each August through September.
See if you can replicate this principle with other companies in your network and supply chain, whether the asset needs to be used more or less frequently than the example above. Every sensible business should be open to efficiency savings and will foster stronger partnership links which will benefit you in other areas too.
A variation of the shared ownership approach is to form a cooperative agreement with like-minded companies. They need to be companies who require assets from the same supplier as yourself and are open to purchasing them together.
This might take a lot of effort and serendipity to pull off, as well as being able to negotiate for a second time when it comes to purchasing the assets, but if you can triple an already large order size and achieve a financial saving, it will be worth it - especially under your circumstances.
Crowdsourcing is commonplace in creative and tech sectors, but there’s no reason it cannot be applied to other spheres. To make the method work for you, identify what tangible factor you can offer donors in return for helping you require this new asset.
A start-up fashion brand might give donors a lifetime 10% discount or a filmmaker might send a commemorative DVD and prints produced during filming, for example. Can you do something similar? What about a trial of your service, a free consultation, a fixed period of helpdesk support?
It might even open up further opportunities if you get lucky.
Something you have most probably already considered is to acquire second-hand assets. Clearly, they will be cheaper than new items, but if you trust the company you’re purchasing from, you can end up getting a real bargain – there may even be warranties, support and maintenance available if sourced through a dealer or manufacturer.
Be sure to take out as full and proper checking process as is possible, however. There will be some reason that a company is willing to offload an asset at a reduced price. This might be due to their changing circumstances, financial or otherwise, or it might be because the
Buy From A Dissolved Company
A greater unknown and impossible to predict when it will happen too far in advance is to purchase assets from a dissolved company. The Crown will take control of any assets and vultures will already be circling, so you may be in for a fight.
But if you operate in a particular niche industry there may not be many takers leaving the field clear for you in other circumstances you might be able to secure assets before the rest of the competition, if you are prepared and quick out of the blocks.
For more general items, such as computers and office equipment, a sign of the times (we’re due another recession in the near future, especially in the light of Brexit) is that these assets are more readily available from dissolved businesses.
Keep an eye on the press in your area, nationally and in your industry, then head to this Government website to find your relevant points of contact and to check the process.
Payment In Kind
Whilst this might sound like the reserve of local tradespeople when completing work for friends and family, business agreements can be made on the same principle.
Even if it means you offer your services, on a project basis, to a friendly supplier of the asset you need in return for a discount on the purchase price, it should still mean you get hold of your desired asset at a reduced cost.
Best case, the supplier, manufacturer or owner of the asset you require is happy for a straight swap: your service to the equivalent value of said asset. BY allowing your company to be a reference site for a new product might let you command that all-important discount.
Borrow From Friendly Companies
The overwhelming majority of assets will be transferable across companies and maybe even industries. If you have a friendly company in your network (in the literal sense and in the sense that they’re open to such conversations and aren’t a direct competitor) who can spare an asset for an amount of time, it’s worth approaching them.
At the ground level, it’s happening right now on construction sites, trading floors and in retail. Each and every time somebody borrows a drill, plugs into a mobile phone charger or heads next door for some more change, businesses are borrowing from each other.
The benefits will be bigger when it’s organised from the top down.
It might be time for your business to try and attract a round of outside investment. Whether you’ve been through this before or not, you’ll need to weigh up how much of your ongoing interest in the business you’re prepared to relinquish against how valuable it is that you acquire the asset you need.
If you haven’t approached third parties for investment before, it’s time to start planning but get ready for a long slog.
Just like in people’s personal lives, leasing is also hugely popular in the business world. And with good reason.
Assets of a quality which is just what you desire are available for you to treat as your own for a much lower cost than if you were to purchase them outright. And as this business model has become increasingly popular, the more competitive the lease providers have had to become.
What a competitive lease industry equates to for yourself is the opportunity to source some very favourable lease terms. Thus, you’ll have the best assets available to your business at a keen price and a period cost a fraction of the one-off purchase cost. There are also a plethora of benefits that leasing offers as an alternative form of asset finance.
But, be warned, there is always the potential to get burned by what appears to be a super-attractive lease agreement if your staff mistreat or damage the asset. And there can be hidden caveats which result in the final costs being even higher than purchasing it outright via business loan.
That said, leasing is still the most favourable option when weighing up the risk and reward of all the other options listed in this post – it can also be available to you now.
If you want to find out more about leasing and the benefits it offers, take a look at this free intro guide: