Winery Expanding Manufacturing through Equipment Leasing with TEQlease Capital
Oak Mountain Winery, located in Temecula, California, has recently secured equipment lease financing through TEQlease Capital for new champagne tanks and will also be adding new bottling equipment. With the new equipment in place, Oak Mountain Winery will be expanding their winery business even further and will be offering their winery manufacturing services to three local wineries. You can learn more about the wines they offer at http://www.oakmountainwinery.com/.
Banks More Competitive For Commercial Loans
A quarterly survey of senior loan officers by the Federal Reserve found that in the April survey, a “modest” number of banks reported having eased their lending standards and having experienced stronger demand over the past three months. Standards on commercial loans to large, middle-market firms, and small firms, were about unchanged. However, a “moderate” number of banks eased many terms on commercial loans to firms of all sizes, with most indicating that they had done so in response to more aggressive competition from other banks or nonbank lenders. Fewer than half of the banks that reported having eased standards attributed the change to an improved or less uncertain economic outlook.
Banks also reported an increase in demand from firms of all sizes, for the second straight survey. Banks also reported that the number of inquiries from potential business borrowers regarding new or increased credit lines increased. Banks reporting stronger demand cited shifts in borrowing from other bank and nonbank sources, as well as increases in customers’ funding needs related to inventories, investment in plant or equipment, accounts receivable, and mergers and acquisitions as important factors underlying the increase. Banks reported that their credit standards on commercial loans to both large and middle-market firms and to small firms were little changed over the first quarter of 2012.
It is no secret: banks are competing for high grade loans, and rates are low. While this continues to be good news for high grade borrowers, less-than-perfect borrowers are seeing only little relief. Now if I could only figure out how many banks constitute a modest versus a moderate number as far as the Federal Reserve is concerned…and credit crisis solved.
Schools Can Stretch Their Budgets by Leasing IT Equipment
It’s not a secret that school systems across the country have been struggling with their budgets over the last four years. Unfortunately, many schools have been forced to continue to use aging and outdated equipment for financial reasons . However, by carefully weighing the pros and cons of leasing IT equipment including desktops, tablet computers, iPads, servers, laptops, wireless networking solutions and more, many schools may find they can stretch their budgets further and get the equipment they need now by leasing.
Here are issues to consider in the lease-versus-buy analysis:
- There is an implicit cost of money component to leasing which should be factored in to the analysis. Obviously leasing isn’t free. However, today leasing certainly is cheap. With interest rates at historic lows, a school districts cost of funds is also very low, making the decision to lease often even more attractive.
- Leasing is a good way to stay current and refresh technology. With a lease with a $1 purchase option, the IT equipment tends not to be refreshed. But with a lease with a fair market value purchase option, the refresh decision has to be made.
- Consider fair market value leases (which tend to be cheaper) for equipment with a limited useful life (like notebooks), but $1 purchase option leases for IT infrastructure.
- Ideally, negotiate an end-of-lease option that allows a purchase option for some items but not others – defer the decision so you can truly evaluate the equipment throughout the lease term.
- We find that many students want to buy their notebooks at the end of the lease rather than return them, even if the notebooks are 3-4 years old. Some students don’t. Negotiate a fixed price end-of-lease option for this if you can.
- Be careful of extended warranties. Some don’t cover liquid spills, cracked screens and drops.
- In almost all cases we recommend that schools customize lease terms. Most leasing companies—including TEQlease Capital–can and will provide a leasing solution customized for what your school needs.
What questions do you have about leasing? Please contact us and we will walk you through the options.
Consumer Confidence at Highest Level Since 2007
Regardless of high gas prices, U.S. consumers are more confident about the economy than they have been since late 2007, according to the latest consumer survey by Thomson Reuters/University of Michigan.
The survey also reported that more households are describing the most improved financial situation in the last four years and are the most optimistic about employment prospects. Perhaps even better news for businesses, the data from the survey indicates “inflation-adjusted personal consumption expenditures can be expected to grow by 2.3% in 2012.” Consumer spending drives two-thirds of the economy.
The U.S. Commerce Department also weighed in and said “personal spending rose by a bigger-than expected .8% month over month in February, the largest monthly rise since July.”
All the upbeat consumer news is tempered by a warning from the survey director Richard Curtain, “Gas prices of $4 are no longer shocking, if they approached $5, the impact would be widespread and substantial.”
Personal Cloud Will Replace Personal Computers by 2014
If the launch of the iPad didn’t cause enough of a stir with predictions of the imminent demise of the personal computer, Gartner recently announced, “the reign of the personal computer as the sole corporate access device is coming to a close, and by 2014, the personal cloud will replace the personal computer at the center of users’ digital lives.”
Questions to think about include how will this impact your business, the products and services that you deliver, and whether your business will be ready?
According to Steve Kleynhans, research vice president at Gartner, “Many call this era the post-PC era, but it isn’t really about being ‘after’ the PC, but rather about a new style of personal computing that frees individuals to use computing in fundamentally new ways to improve multiple aspects of their work and personal lives.”
The consumerization of IT has been taking place for nearly a decade. However, Gartner believes the next wave is starting to place as the following factors come together:
- Users are more technologically savvy and have very different expectations of technology.
- The Internet and social media have empowered and emboldened users.
- The rise of powerful, affordable mobile devices changes the equation for users.
- Users have become innovators.
- Through the democratization of technology, users of all types and status within the organizations can now have similar technology available to them.
How will your business respond?
5 Tips for Replacing and Financing Technology Equipment
This week Michael Lockwood, President of TEQlease Capital, wrote an article for Up and Running Blog titled “10 Things to Consider before Replacing Business Equipment“. We are including an excerpt from that article below. You can read the entire article at the link referenced above.
With the end of the first quarter in sight and with economic indicators continuing to look positive, many businesses may finally be ready to pull the trigger and replace their worn business technology equipment. Regardless of whether you are looking to move your business computing to the Cloud or to upgrade your computers, servers, smart phones or any technology equipment, before taking the plunge we recommend that business owners follow the tips below.
- Carefully research the technology you are considering. Make sure to invest the time into reading reviews of the equipment you are considering from analysts and professional reviewers such as CNET, PC Magazine, Small Business Computing, eWeek and Consumer Reports.
- Remember the cheapest solution may not be the best fit. If you are planning on keeping your technology for three years or more, make sure you opt for the “best solution” for your needs. Determine what it will be worth in 3 to 5 years.
- Choose your equipment vendor wisely. With all the easy comparison shopping that is available online make sure to compare costs and warranties across multiple vendors. No one wants to pay a high cost and neither does your financier.
- Understand Section 179 benefits. Section 179 allows businesses to deduct the cost of qualifying businesses equipment placed in service in 2012 up to $125,000. In 2013, the deduction will drop significantly to just $25,000 unless Congress acts.
- Carefully investigate your financing options. To learn more about equipment leasing and its benefits, you can read our post “Eight Equipment Leasing Tips” or contact us .
How to Avoid Customer Backlash over Price Hikes
2011 was certainly a water shed year for customers taking to social media and other channels to vent their frustration over price hikes. Backlash from angry customers forced Verizon, Bank of America and Netflix to reverse their planned price hikes. We wrote about price hike push back from customers in our post “The Most Annoying Fees of 2011.”
However, with business picking up in many sectors, Rafi Muhammed writes in his article for the Harvard Business Review, “Don’t Let Customers Freak Out Over Price Hikes”, “chances are that your company will consider a price increase this year.” Rafi is a pricing strategy consultant and author of The 1% Windfall: How Successful Companies Use Price to Profit and Grow.
According to Rafi, a CFO advised him, “The key is not to let a price hike become emotional to customers, because that’s when they become irrational and ultimately leave.” In order to avoid the backlash that Verizon, Bank of America and Netflix faced from their customers, Rafi recommends businesses follow the five tips below.
- Employ Bedside Manners. Make sure to explain to your customers why you are raising prices.
- Offer Choices. According to Rafi, customers don’t like to be “cornered” and are more agreeable if there is an “option to save money.”
- Keep Your Word. Again, customers will be more agreeable if you leave their existing deal intact and only raise prices “to new purchases and renewals.”
- Emphasize Value. If you are offering a good deal even with the price increase, demonstrate to your customers how it is a good deal.
- Everyone Else is Doing It. Let your customers know that competitors are also raising prices but again, show how your prices are a better deal.
Hopefully, by following these tips, when it comes time to increase your prices you will not be met with angry customers.
What is a $1 Purchase Option Lease?
A $1 Purchase Option Lease is one of the two most common leases that businesses use to acquire equipment today. The other is a Fair Market Value Lease . Each type of lease is useful, depending on the type of equipment and the type of anticipated use. A $1 Purchase Option Lease is often used by businesses or schools when they know they will still be using the equipment for an extended period after the end of the lease term.
Here are three things to know about a $1 Purchase Option Lease:
- Provides businesses the ability to purchase the equipment for a $1 at the end of the lease term.
- Monthly payments are higher than a Fair Market Value lease because the lessee is now financing 100% of the equipment cost.
- Provides additional financial benefits that may include depreciation and interest expense benefits for tax purposes.
Not sure which type is best for your business? Please contact us and we will walk through the options with you.
U.S. Businesses Stepping Up Spending
According to the Wall Street Journal, American businesses stepped up their spending going into the New Year, propelled by an economic upswing that has yet to lift much of the housing market.
New orders for U.S. durable goods—those lasting longer than three years, such as automobiles and kitchen appliances—rose 3% in December from November, the Commerce Department said. The data suggest that business spending on equipment climbed for the first time in three months, indicating renewed confidence among companies.
While the housing market has much ground to regain, corporations are poised to boost production in coming months, powering the U.S. recovery as other parts of the world slow down. Several factors are at play. Demand for automobiles has taken off as Americans who put off purchases during the recession and early in the recovery are now replacing cars and buying new ones. In addition, manufacturers—who saw business slow over the summer—say demand is picking up.
The durable-goods numbers, along with indicators of a brighter outlook among employers, signal pockets of strength in the American economy even as Asia loses momentum and the euro zone teeters toward recession. There were gains in every major category, from primary metals to machinery, with the exceptions being electrical equipment and defense products. Orders for nondefense capital goods excluding aircraft—a proxy for business spending—rose 2.9%, after two months of declines.
Overall, good news for the recovery.
Should Your Company Be Thinking Like a Startup
If “startups are hothouses for creativity and innovation, while large corporations are too jammed up with bureaucracy” is it time for companies of all sizes to “think like a startup”?
In Emily Heyward’s article for Fast Company this month “How Any Company Can Think Like a Startup,” she takes a look at what startups are doing right that businesses of all sizes can learn from. Heyward finds that:
- Startups are flatter. Heyward believes this is an important trait because in a startup the people at the top are more engaged in the creative process and are “collaborating with us on strategy.” This is important because everyone is “on board that there’s never a question of whether or not the best ideas will move forward.” However, in a larger business, the higher ups generally are not as involved in the creative process and may shoot down ideas that have been closely worked on only to have to start again.
- Startups have tighter timelines. Startups don’t have time to waste and belabor or second guess decisions. Tight timelines can help move the creative process along and ensure everyone is meeting their targets.
- Startups value disruption. According to Heyward, the “best ideas, the ones that everyone remembers, are always disruptive.” Heyward argues that businesses can learn a lot by startups by embracing and valuing disruption.
Could your business benefit by acting more like a startup?
