01 15 2016

Equipment Financing and Leasing for Home Builders

01 15 2016

How Small Business Home Builders Benefit From Equipment Leasing And Financing

No matter what industry you’re operating in, chances are, as a small business owner you can take advantage of utilizing leased or financed equipment. Each sector must deal with its own obstacles and cash flow issues, which are unique and vary between every industry, but one thing remains consistent throughout all the various sectors, which is that just about every business operating within any of these industries can benefit from equipment leasing or financing.

As Construction Dive noted, the government recently redefined the size standards that determine how small a business can be to qualify as a small business. While the clarification of the company sizes varied from one industry to the next, and sometimes even within a particular sector, the SBA provided concrete quantifiers to make this determination, either based on revenue amount or the number of paid employees working for a particular company.

Home builders as small businesses

According to the National Association of Home Builders, using data from the most recent Economic Census, the association was able to determine that the vast majority of companies operating in the residential housing market are small businesses, which account for more than 81 percent of home builders and specialty contractors registered as self-employed independent contractors. Even a majority of those companies with a paid staff still constitute a small business, according to the report, as approximately 75 percent of specialty trade contractors and roughly 66 percent of home builders generate less than $1 million in annual business receipts.

As small business operations, managers and executives must be on alert for any ways to cut overhead and boost revenue. With more streamlined enterprises and fewer expenses, these independent contractors and small firms can hire more workers, expand into new markets and, ultimately, boost profits. However, locating the right course of action can sometimes be a trial-and-error process, which means every attempt to boost operations can potentially leave a trail of mistakes in your wake.

The benefits of leasing or financing equipment

There are several routes executives and small business owners can take when they want to cut overhead to boost profits. They can choose to cut back on inventory storage, trim the workforce or reduce marketing expenditures. However, each of these strategies can potentially be ineffective, thereby creating barriers to success, which can ultimately weaken the enterprise.

Fortunately, there are other ways small business owners in the residential construction market can reduce costly overhead expenditures and still optimize efficiency. One of the most effective to accomplish this careful balancing act between working capital inflow and outflow is for independent contractors to take advantage of leasing equipment for all of their construction needs. By leasing equipment, small business owners gain access to a wide array of technology and machinery at a reasonable monthly cost. Leasing construction equipment eliminates the need for independent contractors to gather up all the full price of this machinery, and instead it allows these individuals to create a payment plan that best suits their business model, based off previous and anticipated revenue streams.

In addition, leasing equipment provides small business owners with the latest and most up-to-date technology available, which eliminates the need for contractors to use old, ineffective machinery and helps owners gain that crucial competitive edge. Not only does leasing equipment give owners access to cutting-edge machinery, but in many instances, the leasing company will also include training courses for how to operate any complicated equipment. This eliminates costly downtime and ensures all employees are operating the machinery with the same knowledge base, which also reduces the chances of breaking or improperly using the equipment.

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