For all businesses, but especially small- and medium-sized enterprises, keeping track of finances is absolutely crucial. All spend needs to be accounted for, all outstanding invoices need to be chased, employees and bills need to be paid, and setting aside money to improve, enhance and expand the overall operation must also be considered a priority. At some point nearly every growing business will come to a crossroads; there will come a time when a significant purchase – a new warehouse, office space, piece of equipment or product order – will have to be made, and this will likely cause a significant dent in the business’ coffers. It is therefore vital to get such a purchase right. So, when is the ideal time to commit to such a purchase, and how should you go about it?
1. Plan ahead
No major purchase should happen without it having been planned for long in advance. You should be very aware not only of what you want to spend your money on but how it will help the business advance, whether it will be a solitary purchase or if supplementary items will also need to be bought, and whether it will impact the current day-to-day running of your operation.
2. Consider it an investment
You need to adopt the right mindset prior to committing any serious amount of money to one specific venture. Always remember that you are not spending frivolously; you are investing in the future of your business and ensuring that it will continue to thrive going forwards.
3. Do you have the processes in place to make the best use of the purchase?
If you are buying a new piece of equipment to speed up the creation of products, for example, do you have all of the materials in place? Can your current suppliers match the demand? Will you have to hire new staff? Only once you know the answer to these questions should you go ahead with any major purchase.
4. Is finance an option?
Do you really need to make the purchase outright? Can you afford to spend a significant sum of money just to say that is it yours? Finance might well be a more affordable, achievable, reliable and beneficial option, so do not dismiss it. For small businesses, especially during this current period of financial uncertainty, finance may well be the most apposite choice when it comes to business expansion.
Making a large business purchase – where to find out more
To find out more about your financing options, contact us at Tower Leasing today. We offer a wide range of business finance, including ways to finance the purchase of a significant asset. Visit our Alternative Finance page to find out more about funding options.
Get in touch to discuss how we can help you to finance your next large business purchase.