Lease Purchase or even Rent

[Dave271069]

not sure where to put this,

Anyway April i start my business on a part time scale, at the moment i do very little marketing other than Facebook and website and word of mouth. This week i received a email (like thousands others) from Xpress, the heading that caught my eye was "LEASE A VERSACAMM" now that got me thinking, Does anyone Lease rather than pay out right? could they be Rented? if so does anyone know who does this,
My hobby / business is growing, but not to the extent that i could justify purchasing one, but if orders continue like the way they are i would love to start doing my own print and cuts than sourcing them out.

Thoughts / debates pros and cons please
Dave

[socialgiraffe]

Having done all forms of machine purchase over the years I personally prefer rental. Every time I have purchased instead of renting I have always lost a considerable amount of money.

I find with rental that a) you have a much lower outlay and b) its almost as if you can see what you need the machine to earn each month to stay profitable.

In terms of back up, most rental schemes include a service plan of some description which will give you piece of mind should something go wrong. You can purchase these without renting but most don't. Also, most rental schemes give you the option to purchase at the end or upgrading to the latest model, which in this industry can be very useful.

As an example, Roland have their desktop UV which I have been very impressed with. I did speak to Roland about the machine and they have indicated that it would be possible to swap it over with my VS. I have decided against it, but that is the sort of flexibility you get with rental.

In terms of cost, I worked it out that with the deal I got, the machine will cost me an additional £100.00 per month over purchasing outright. This did not take into consideration any interest earned on the money that could have been in my bank and not theirs (not that I had the money to purchase outright anyway!)

Lastly, if you are going to rent I would imagine you would need to be VAT registered and a limited company. And if you are going to rent a Versacamm then I would go direct to Roland in my opinion.

[Dave271069]

Vat Registered , ltd company!
you had to spoil it ! lol
maybe by the end of the year though.

[swimwivsquid]

We used to lease purchase high end photographic equipment when we had our Pro lab in UK and we weren't limited. We were vat registered but a partnership and had no problem with leasing. In fact one of the advantages is that you can put the whole of the lease payments against tax in the current tax year which helps to offset the cost a bit. Have a word with the manufacturers and a leasing company to get an idea of cost.

[logobear]

there are 2 very different business decisions here.
The cost of the equipement,
AND
the cost of the finance to pay for the kit.
There are different tax implications for each!
FIRSTLY, do not think for 1 minute that if you enter a 'rental' scheme that you can finish it early if your situation changes.
If it is a 3 or 5 year scheme, than you are signing up for the whole term! - EVEN if you quit or your business goes pear shaped!
Business finance is not usually the cheapest form of money, BUT - it does come attractlievly packaged, and can be easy to get.
With a lease/rental program, you can write off all payments as expence without getting into capital allowances and depreciation etc, BUT - there is 100% right off on cap spends of upto 50k pa (i think) so it is same same. (ask your accountant)
Look at the total cost of ownership for the full term, if a maintenance contract is included, is it good value? - would you buy it otherwise ? Do you need it?
If you need the kit and cannot fund it otherwise, then it is good, but if you can find the money ANY other way, that is probably best.
REMEMBER - if you rent/lease, you never own the asset, so cannot sell it at any time.
ME ? - I buy outright now, even if it does go on the mortgage!

[John G]

One question that hasn't been suggested yet is "can you generate the workload" for this machine.
These type of printers need to be going pretty much constantly, if not, and it sits unused, you'll be asking for trouble with its operation or just wasting your money on the lease.

Get the work in, sub it out, then put your little % on top - no risk, no money tied up.
When the situation changes, and you know you can generate enough work, go for it.

Just my 2p worth.

[Dave271069]

One question that hasn't been suggested yet is "can you generate the workload" for this machine.
These type of printers need to be going pretty much constantly, if not, and it sits unused, you'll be asking for trouble with its operation or just wasting your money on the lease.

Get the work in, sub it out, then put your little % on top - no risk, no money tied up.
When the situation changes, and you know you can generate enough work, go for it.

Just my 2p worth.

hi John
that is what I'm doing now, building up my clientele and subbing out, I'm also in the process of completing my business plan and in it is the part when I stop subbing out and own / hire / lease my own machine. The problem I'm having now is planing how much I will actually save as I know the prices of what they cost me to recieve from sourcing them out but I don't know how much they would cost me to produce myself. So next step is to be nice to socialgiraffe and ask him how much he is making on me each time I buy my prints off him, ( hello Simon, your such a great guy ) .
anyone want to pm me a cost to produce a average breast logo and back logo feel free, it's only for my business plan over the next 3 years.
dave

[socialgiraffe]

Hi Dave

No secrets here mate and to be honest, I do not make that much on small runs, its more about getting some spare cash in for a beer or two

I purchase from Grafitype (www.grafityp.co.uk) and use Siser films. There are several different types of print and cut but in general expect to pay about £4-5 per meter at 500mm wide. On a print and cut you will lose about 40mm on the width. You would also need to factor in the transfer film which from grafitype is £1.65 per meter at the same width. Siser do say that you can use the transfer film up to five times, but I personally would only use it twice maximum.

Stickers are my main source of income on this machine, where the material is £1.00 per meter at 762 wide. As I have a minimum charge of £30.00 and most companies only want 500 50mm (for example) circles (or special shapes etc) is about 2-3 meters so £3.00 plus ink.

Ink is a bit more complex when calculating. The cartridges are £80.00 each for 400ml (White is £80.00 for 200ml and Metallic is £160.00 for 200ml). As an example the last order for the back transfers used 0.33cc of ink

I rent my machine because of my clients, they are prepared to pay a premium for the service I offer (as an example I have 504 mugs that I need to deliver to the O2 tomorrow), if I were concentrating on one item (for example garments) I would personally go for TMT's white printer, Its considerably cheaper to run and maintain and in my opinion the quality is slightly better. I would never go for a DTG but that is because I deal in bulk and DTG's are not quick or cheap enough (running costs) to compete with screen print yet.

I agree with JohnG about "can you generate the workload", but that is not the question you asked so have not gone down that road. Bear in mind that a Versacamm can do a heck of a lot more than just garments, for example Stickers, Vinyl banners, Car Wraps, Posters and the list of medias available is growing all the time (I love the glo in the dark paper) but it is all down to how you position yourself in the market. Do people come to Dave because he can print garments or do people come to Dave because he can sort it? I am of the later company hence I currently have 2000 rosary beads that China attached the logo to upside down and the customer has asked me to fix. I have never done anything like this and all the companies know I am a mug printer, but they send the work to me to sort out because I get it done. Most of my competitors would turn the job down, but my customers know that they can come to me with weird stuff and I manage to get it done.

Good luck in your business plan. Personally I have never done one as my business plan has always been, if you get the orders and customers and deliver on time everytime you can not fail. Look at Yodel versus City Link. Yodel are two or three pounds cheaper, but I would never touch them with a barge pole because of the bad reputation they have

[Dave271069]

Thanks simon. More than enough info to get me started