Dell Small Business 360 - Technology Investment

Dell Small Business 360 - Technology Investment

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Buy or Lease? Answering the Age Old Question for Technology Purchases

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For many small businesses, technology purchases come at the expense of other capital improvements. Maybe you are looking to increase office space, launch a new marketing campaign or hire a new employee. How can you manage those investments while keeping your technology infrastructure in line with the growth of your business?

As an accounting firm, you may have these considerations for your own business or be advising your clients on their technology purchase decisions. When determining whether to lease or buy new technology for your office or when advising others, there are a few factors to consider.

First, when you purchase the technology, you may own it outright, but that investment is often too large for a small business budget to handle. And there may not be the available capital you need to implement the right IT strategy.

Second, once the purchase is made, that technology has to last a period of time in order for the company to reap the full value. With today's technology innovations changing at a faster rate, technology can become obsolete quickly. Purchasing the technology outright can hinder your ability to refresh and update your business' infrastructure in a cost-effective manner.

What Are the Options
What do you do once you've decided to make a large technology investment? Small businesses generally have two options above and beyond a simple cash purchase: Leasing or Credit. The beauty of leasing falls into three areas — it allows you to conserve capital for non-technology purchases, operate with new technology and shop in one place for all your technology needs.

For example, if a small business has a $5,000 first-year annual budget for new technology, they can either buy three PCs or lease nine*. Knowing they can have more for less money enables these businesses to invest in other areas to grow the business — be it personnel, marketing or other office improvements. The terms of the lease are usually flexible as well, offering fixed monthly payments across 24, 36 or 48 months, and various end-of-lease options. As you know, the lease payment may even be tax deductible.

Leasing also allows small businesses to improve performance by instilling a disciplined technology rotation. At the end of the lease term, small businesses replace the technology, obtain the latest equipment and avoid technology obsolescence.

At the end of your lease, there are a variety of options to help you make the best decision for your business. In general, you can renew the existing lease, begin a new lease with upgraded technology, purchase the equipment according to the lease terms or return it.

Buying with a credit card allows you to purchase and own your equipment immediately, but doesn't offer the benefits of leasing, including a low, fixed monthly payment spread over a term to meet your cash flow needs. What's more, many new business owners use personal credit cards for business purchases, which could jeopardize their personal credit should their business get into trouble. A benefit of credit is that you can purchase on an as-needed basis, without the minimum transaction size required by most leases.

Leasing with Dell
Dell Financial Services offers a one-stop shopping experience for small business customers. You can obtain your technology and financing all in one transaction, with comparable rates, various seasonal promotions and direct customer service. Dell Financial Services offers two leasing options to best fit your business needs: Fair Market Value Leases and $1 Buy-Out Leases.

Fair Market Value Leases are best for small businesses looking for a low, fixed monthly payment and regular upgrades to the most advanced technology. This enables small businesses to conserve and budget cash flow accordingly and ensure the technology will scale with business needs. One-dollar Buy-Out Leases are better for small businesses that would like to own the technology eventually, but need to take advantage of lease options due to budget constraints. This lease provides fixed monthly payments, and the option to purchase equipment for $1 at the end of the lease term.

If leasing isn't right for your business, a Dell Business Credit Account gives small businesses a way to purchase technology as they need it, without investing a ton of available cash. There is no minimum transaction and you have the option to pay off the balance prior to any payment due date without additional fees. In addition, this allows you to preserve your bank lines of credit for investments in other parts of your business. Dell also accepts all major credit cards.

"We know sometimes our small business customers don't have a ton of capital to invest in technology purchases," said Robert Kalok, director of Dell Home & Small Business payment options. "That's why we've developed leasing and credit options offered through Dell Financial Services that allow them to get the technology they need now, with the option to buy later when they may have additional capital available."

Many small businesses today are evaluating leasing and credit options from their technology providers. Dell customer Davis & Wilkerson, P.C., an Austin-based law firm, leases its desktops, notebooks and servers from Dell with its most recent lease agreement for more than 50 OptiPlex desktops. The firm has represented major corporate, institutional, and individual clients throughout Texas for the past 22 years and relies on a continually upgraded technology infrastructure to best serve its clients and manage firm operations.

"I like the flexibility of leasing because I can add systems to the lease as new attorneys join the firm or as more migrate to mobile solutions to take advantage of the productivity gains," said Mary Smith, operations manager, Davis & Wilkerson. "Plus we're able to stay up with the latest and greatest technology, so we can provide our clients with the most efficient and professional service possible."

For more information on the right financing option for your small business, please visit www.dell.com/smb/financing.

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