5 Ways an Equipment Purchase Can Help Scale Your Business

Expanding businesses occasionally encounter capital issues that can make investing in new equipment seem challenging. Is it truly the appropriate moment to concentrate on equipment and technology, particularly if the existing equipment appears to be functioning adequately?

The answer is: yes, it’s always the right time to audit your equipment and figure out where strategic investments could create a healthier, more efficient, and more scalable business. When you continually invest in equipment, your business can spread the costs over time while reaping advantages and avoiding the disruptions that come with equipment failure.

However, the up-front costs of new equipment can overwhelm a business’ cash flow, which is where the right equipment financing partner can come in and help. With fast and flexible financing, your company can start realizing the productivity gains, efficiency improvements, and tax benefits of upgraded equipment at an affordable cost that preserves your working capital.

This Union Commercial Capital blog post discusses five ways that new equipment can deliver major advantages when scaling your business.

Enhance Productivity

Enhancing productivity and efficiency for a growing business can be effectively achieved by upgrading outdated equipment or investing in new machinery. Appropriate equipment can ensure that essential business processes become more consistent and robust, improve both the quality and quantity of output, and enable employees to make better use of their time.

Sometimes, new technologies can fully automate certain tasks. When machines handle low-value repetitive tasks, your team can dedicate their time to activities that utilize their skills effectively and add more value to your business and its customers.

Even if new or upgraded equipment doesn't drastically alter your business operations, consistently investing in your equipment can still be a wise use of resources. Many types of high-quality equipment maintain their value over time, enhancing your business's asset base and resilience. An equipment purchase today might be leveraged for essential financing for future growth.

On the other hand, letting your equipment become obsolete poses significant risks and disadvantages. Embracing an “if it isn’t broken, don’t fix it” approach might leave you caught off guard by downtime or a complete halt in your operations when crucial equipment breaks down. Sourcing support and parts for outdated equipment can be time-consuming and cause frustration for both your team and customers. In contrast, new equipment usually includes warranties, vendor support, and greater availability of replacement parts, providing more peace of mind and reducing headaches for your business.

Create a Foundation for Sustainable Growth

Technological, manufacturing, and engineering trends are advancing more rapidly than ever before. Using outdated, obsolete, or inadequate equipment can hinder your ability to meet evolving customer expectations and place your business at a disadvantage compared to competitors.

Investing in the appropriate equipment can enhance both the quantity and quality of the goods or services you offer to customers. This might even allow your business to expand into new products or services, resulting in new contracts, increased customer loyalty and engagement, and opportunities in new markets and regions. These new revenue streams and customer bases can contribute to a more diversified and robust business.

Of course, the economic uncertainty of the past few years hasn’t made it easy for businesses to invest in equipment. But flexible equipment financing from a trusted partner can help your business make critical equipment purchases and upgrades without massive up-front costs that could jeopardize your working capital. And as the economy stabilizes, businesses who have strengthened and streamlined their operations through calculated investment in equipment will find themselves in the best positions to grow and thrive.

Tax Incentives

For an expanding business and its leadership, tax expenses are always a consideration. As a business owner, you might already be aware that you can claim the depreciation of specific equipment as a business tax expense. However, did you know there are additional tax advantages specifically created to assist small and medium-sized businesses in acquiring equipment?

Section 179 is a tax incentive that allows businesses to treat qualifying assets as business expenses and expense the costs of those assets immediately. The potential write-off value under Section 179 is up to $1 million — and you don’t have to own the equipment outright. Financing agreements, loans, and leases can all lead to eligibility for tax benefits under Section 179.

In addition, a deduction based on bonus depreciation can help offset the up-front costs of equipment. This deduction allows you to “speed up” the tax deductions for depreciation of equipment, claiming a large portion of the depreciation value right away. In some cases, business owners can pair bonus depreciation with Section 179 to deduct the full cost of eligible equipment purchases from their business taxes for the year. Note that you must take the deduction for bonus depreciation in the first year that the relevant equipment goes into service, and there are various requirements and restrictions.

Attract New Employees

Labor is one of the most challenging constraints that expanding businesses encounter today. Companies in various industries are finding it difficult to fill their teams and locate workers with the appropriate skill sets. In this highly competitive labor market, it is crucial for businesses to provide their teams with an excellent working environment that enables employees to perform at their best. Having high-quality, up-to-date equipment is a vital component of creating that environment. Investing in equipment purchases and upgrades not only provides measurable bottom-line improvements but also enhances employee morale. Our financing specialists have consistently observed how acquiring new equipment or upgrading existing assets can generate enthusiasm within a company and make employees feel more engaged in their roles.

Improve Workplace Safety

Retaining old and outdated equipment can pose several risks to your business. In manufacturing, even well-maintained older equipment may lack the latest safety features, potentially raising the likelihood of workplace injuries. Similarly, outdated IT and technology equipment can make your business vulnerable to security breaches, cybercrime, ransomware, and various other digital threats.

As your business expands, the potential sources of risk and liability will also increase. A security breach or a serious workplace injury can damage your business's reputation, profitability, and employee morale. A single lawsuit due to outdated, hazardous equipment could potentially cost you much more than the expense of updating that equipment initially.

By ensuring your employees have the appropriate equipment to perform their jobs safely and efficiently, you set an example and demonstrate to your employees that their health, security, and workplace experience are important to you.

Talk With Union Commercial Capital Today!

At Union Commercial Capital, we take a consultative approach to every financing request. Our equipment financing specialists can help you get organized and gather information to secure the financing you need. You can use our easy online application to start the financing process now and let us guide you from there.

If you have questions that you’d like to ask before you get started with an application, fill out our online contact form or give us a call at  855-700-0057. We’re here to help.