Equipping Your Business

Your investment could be as enormous as a fleet of Mac trucks or as minimal as a scant desktop computer and a telephone line. As part of your business plan, you should have a solid idea of how much you will need to invest and how you intend to go about securing those funds.

If you are applying for an equipment loan, make sure you have the necessary financial records on hand when you approach your lending institution. According to NationsBank Vice President and Small Business Client Manager Nancy Limb, you will need to show a personal financial statement and two years of both personal tax returns and business tax returns.

If you plan on buying equipment through a loan, the lender will require some sort of down payment, usually around 20 percent of the equipment cost. Some lending institutions also offer the option of leasing your equipment and paying only the first month's payment up front. You can purchase the equipment for a percentage of its cost when your contract is up.

The decision to take on a loan or a lease depends on how much available cash flow you have. As with most forms of leases, the lending rate will usually be higher than that of a loan, but you avoid the large up-front costs. "Leases tend to be higher than loans," says Limb. "The bank is taking more of a risk because there's no money down."

Unfortunately for start-ups, most lending institutions will look for at least two years of establishment before granting traditional financing plans -- unless you can prove that you have an extremely good line of personal credit.

However, there are other options for start-ups, including Small Business Administration loans. Limb suggests you go to your lending institution and talk about what's available for your specific needs.

Finding the Right Equipment

Chances are, you will find a manufacturer who sells the type of equipment you are looking for in The Thomas Register of American Manufacturers, (online it can be found at www.ThomasRegister.com). This gigantic resource book contains information from 156,914 companies and 63,669 product and service categories. Statewide, you can also consult The Florida Directory and a number of local online services, as well as the trusty old favorite, the phone book.

Outside of your main operational items, you will also need to consider buying the equipment to do the business of keeping up with your business. Here we will examine the two biggest, the copier and the fax machine.

Both of these machines have dropped dramatically in price while skyrocketing in sophistication. The result: more options and more potential bang for your buck -- if you do your homework.

Sarah Garrett, owner of ADS Copier & Supply Distributors in Fort Myers, suggests you should consider the following characteristics when selecting your fax or copier:

**Volume -- Copier models are divided into segments based on pages reproduced per month. It is generally true that the higher volume of copies you make, the less expensive each page will be in terms of toner and service considerations.

Prices can begin the hundreds and travel up to the multiple thousands for sophisticated models capable of big jobs. Garrett recommends buying a copier that is above your estimated volume to avoid potential burn out during peek use times. However, don't be too conservative in your estimate, either. If you buy a machine intended for heavy-duty output but only use it on occasion, certain parts may dry out or become inactive from lack of use.

The considerations are similar for fax machines, which have become dramatically more affordable (prices begin in the $200 range) in recent years. How much you will use your fax will determine how much you'll want to invest. "If you're in an insurance office or some place that faxes every five minutes," Garrett warns, "you're not going to want a $200 fax machine."

There are a number of inexpensive multi-purpose business machines on the market designed to fax, copy and even scan from one place. Some home computers can also do the job. "On a small scale that's great," Garrett says. "On a large scale, you don't want to deal with a little fax machine."

**Quality -- The reproduction clarity and detail, as well as the speed that each page is reproduced, are directly linked to cost. The extra "bells and whistle" features, such as collating and sorting, also push up the price.

Garrett, who's been in the industry for 19 years, has seen the copier progress from a low-detail, black and white analog system to today's digital models, which are capable of reproducing even complicated graphics using laser printing. Fax machines have been no less amazing, with models that can quickly scan though a document in a few seconds, "memorize" it and then send it out later.

Some machines also tie in computer capabilities, hooking the fax/copier into your office network and onto the Internet. While pricey, into the $10,000 range, these machines are expected to lead the way to more affordable models in coming years.

**Budget -- If you don't want to make a large initial investment, you may want to consider buying a machine that has been reconditioned, which means a used machine that has been torn down and replaced with newer parts. The cost advantage, Garrett says, can be as much as 1/3 to 1/4 the price of a new unit -- big savings for a business that may just be looking for a unit to "get started."

Business owners can also have the option of leasing their copier or fax machine, with most lease agreements running for three years. Some leases also include a purchase option, where you may buy the machine for a percentage of its cost at the end of the contract. A $10,000 copier with a 60-month lease and a 10 percent purchase option and no money down, for example, would cost $216 per month for a total expense of $12960.

Garrett adds that most lease companies look for a business to be established for at least a year before offering a lease agreement. She further suggests that start-up entrepreneurs might want to try some of the smaller leasing companies for a more individualized approach.

**Service -- A good service contract becomes a very important consideration when your machine breaks down -- unless, of course, you happen to be a great repair technician. There are two basic service contracts: one that is all-inclusive, including supplies such as toner; and one that is only for major breakdowns, where you will be responsible for supplying regular maintenance "consumable" items.

When negotiating a lease, it is important to note that the service agreement is not the responsibility of the leasing company, but of the manufacturer. You can have a service clause written into your lease contract, but you will have to p