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Connectivity technology is indispensable for any modern business that intends to survive in the digital era. From phone systems, laptops with internet connectivity, cloud storage solutions, software to printers, businesses depend on connectivity for seamless operations.
An effective connectivity system enables your business to efficiently reach customers, improve internal communication, run an online store, manage stocking levels, and more.
Apart from revolutionizing business operations and customer experience, a well-integrated connectivity technology can lower operational costs regardless of your industry.
Nonetheless, connectivity software and equipment can be expensive for small businesses. That’s when accessing a working capital loan becomes the lifeline of small companies with minimal capital.
In this article, we’ll look at whether small businesses should prioritize software or equipment and whether they should rent or purchase equipment. Finally, we’ll explore how you can finance connectivity devices for your business.
What Should Your Business Prioritize – Connectivity Software or Equipment?
Connectivity equipment and software are a critical part of the operations of any small business. Whether you want to automate client appointments, manage projects, keep records, or manage a phone system.
The basic connectivity equipment you’ll require is computers (or laptops), phone systems, gear for internet connectivity, a point of sale, and printers. From time to time, you’ll need to upgrade the equipment to support more advanced software.
There are numerous benefits of having updated equipment. They’re more versatile to meet emerging customer needs. Besides, they have better data security, are more efficient and durable, and they also provide a competitive advantage that can attract new customers.
That said, connectivity equipment is more adaptable to accommodate several software updates. You’ll therefore need to update your software more often than the equipment.
We’ll discuss purchasing vs. leasing later, but when it comes to software, it’s cheaper to buy than lease.
4 Factors to Consider When Deciding to Rent or Purchase Connectivity Technology
If you choose to purchase connectivity equipment, you should go for a working capital loan to avoid committing a substantial part of your working capital or cash reserves.
Here are four questions to help you decide between renting and purchasing connectivity technology.
Are You Planning to Expand?
For a growing business, invest in technology that can handle the projected growth. Acquired technology should satisfy increased volumes, new product lines, a new branch, extra staff, or new locations.
If not, you risk offloading your current connectivity technology at a loss and purchasing a new costly solution to replace it.
If you’re renting equipment, you’ll need to determine upfront what the upgrade process would involve and their implication on the bottom line.
Can Technology Withstand Obsolescence?
Technology is dated and can get obsolete pretty fast. If equipment has a longer useful life for your business, and you only use the elementary functions of the technology, consider purchasing in cash or with a working capital loan.
However, it’s more sensible to rent connectivity technology if it’s bound to be obsolete in, let’s say, 2-5 years. You pass the liability of obsolescence and maintenance to the company that’s renting the equipment.
Are Your Connectivity Needs Simple or Sophisticated?
There are businesses with simple connectivity requirements that hardly change years on end. That’s a perfect scenario to purchase.
However, if your business is in an industry that requires cutting-edge technology to have a competitive advantage, you’d give serious thought to renting. That way, you’ll afford to stay technologically abreast without having to invest in a whole new range of systems or devices whenever the latest technology is unveiled. A brilliant way to get rid of unwanted technology.
How Volatile is Your Business Industry?
When you’re in a highly volatile industry, you’ll prefer to rent equipment where you’ll enjoy predictable monthly costs.
Renting will free up your working capital rather than tie it up to expensive purchases and maintenance. Having working capital as a cushion could spell the difference between staying afloat or going under in a volatile industry.
How To Finance The Connectivity Equipment for Your Business?
Purchasing connectivity equipment by cash from your business is bound to affect your cash flow. You can finance the purchase of business equipment by seller financing or by way of business loans. Small business loans can come from credit unions, online lenders, commercial banks, and other alternate lenders.
By getting a business loan, working capital can be used to increase stock, bolster marketing initiatives, or shore up your cash position for any eventuality.
Conclusion
Connectivity technology is essential to running modern-day businesses. The decision to purchase or rent equipment requires sober consideration to ensure you acquire technology appropriate for your business. A business loan is an excellent financial option if you opt to buy connectivity equipment. A loan saves your working capital from developing the business further.