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What You Must Know About A Lease Vs Buy Business Finance Decision For An Equipment Lease
Business owners and financial managers in business finance are always faced with the same decision in acquiring an equipment lease, namely should we buy or lease. Technically this is referred to in the finance books as the infamous ‘ lease vs. buy ‘decision.Let’s examine some of the key points and facts you need to consider in that decision. Naturally the good news is that an equipment lease can be used to acquire almost any type of equipment or asset – that includes equipment, machinery, buildings, etc. More often than not it pays to seek a business financing advisor who is well versed in the benefits and nuances of equipment finance.Working capital and cash flow tend to be the main drivers of the lease vs. buy decision when we talk to clients. It goes without saying that most Canadian leasing companies probably have a lower cost of capital then your firm based on their borrowing capacity and the way they are funded. Therefore that lower cost of capital becomes a positive advantage in the lease vs. buy decision.In many cases the lease vs. buy decision will be very close and the actual non financial benefits of an equipment lease will drive your final decision. For example, although you might be in a position to construct a favorable buy versus leasing model you might not want to use business lines of credit to access the cash needed to acquire the asset.Also one of the key tenets of finance is that you should use long term funds to fund long term assets – that just makes common sense. Simply speaking you don’t want to purchase an asset as opposed to l easing it and find out you might not be able to make payroll on Friday because your line of credit is maxed out!As we said, some of the pure mechanical decisions around the lease vs. buy tool (there are numerous on line calculators which are references as lease vs. purchase analysis tool) can often be over ridden in your analysis by non financial considerations. For example, let’s say you clearly don’t want to keep the asset at the end of the term of its useful economic life. That’s where an equipment lease makes total sense, as it gives you the ability to return, extend, or even purchase the asset if in fact you end up deciding to purchase and keep it if your circumstances change.Business owners might want to consider talking to their accountant or a business financing advisor on larger capital asset acquisitions. Some of the inputs required in the lease versus buy model include items such as the actual interest rate the lease company is charging you, your tax rate, the projected increase in profit via use of the asset, the depreciation expense you can take on the asset and your overall cost of capital which is calculated by analyzing your debt and equity in the business. Whew!! That’s some fancy accounting and it can best be left to your accountant or advisor on larger asset financing acquisitions. However the good news is that a simple computer spreadsheet handles all this for us nicely!In summary the leasing versus buy tool in business finance can be a great asset in your financing decisions for new assets. Adopt Warren Buffets key approach, which is simply to determine if the asset financing opportunity delivers a solid return on equity for your business.Yes our tool we outlined is important, but at the end of the day use business common sense to analyze the equipment lease opportunity and blend it into your overall business financing strategy.
Is Buying Reviews an Ethical Business Practice?
As soon as you throw around words like “Ethical”, I get ready for a lecture on morality and religion. That is not the intent of this article. However I will provide you with a sliding scale and you can impose your own sense of ethics and morality to determine which end of that scale you are comfortable with. I am quite convinced that ethics is a sliding scale affected by Risk, Reward and Motivation.· Risk = Likelihood of punishment· Reward = Size of the prize· Motivation = Emotional drive derived from positive or negative circumstances.As an example, if you ask most people if they would eat food from a dumpster, most would say “Hell No”. However, as your hunger grows and your options for something better recede, your willingness to partake of the dumpster dining experience will grow.When it comes to reviews there is the obvious question of what will reviews do for me. I believe there are four primary benefits for reviews:1. Ego boost for the business owner. “They like me!, They really like me!”2. Social signals to the search engines that people are engaging with your company. This tends to effect ranking to a small degree.3. A visual indicator that makes your business listing stand out. In the instance of a Google listing, the 5 yellow stars show up after you get 5 reviews and that makes your maps listing more noticeable and more likely to get clicks or calls.4. Positive affirmations to your new potential customers that others have found what you provide to be of value.Obviously, the fourth is the primary factor of interest. 60% of online shoppers look at reviews before making a decision. Refer to link at the bottom.Most business owners already know this. So, reviews are something that business owners want. However, I’ve seen a lot of confusion about where the reviews should be placed and how much value and weight they carry. The primary value is based on credibility from potential customers and possibly search engines. Here are where most of the reviews end up and the value that they carry.· Company Website: Written Review – This type of review carries no weight with search engines and very little credibility with potential customers because everyone knows you control the website and you can put anything you want on their regardless of the truth of the statement or if the customer is a real person or not.· Company Website: Video Review – This carries more weight with your potential customers because people can see that it is a real person and not just a creation of your imagination. They still don’t know if this person is actually a customer of yours or just a good friend that owes you a favor, but it looks more realistic. Many times these types of reviews are great for a specific product page or the page that discusses a service you provide.· Google Plus: This tends to carry more weight with potential customers because they know you can’t delete a bad review and it is slightly difficult to fake the reviews.· Yelp: This tends to carry more weight than Google reviews because it is even harder to fake these reviews and you cannot delete bad reviews from this forum. This review platform carries a lot of credibility with Google as well. Yelp has a loyal following and there are a lot of people who use that instead of a search engine.· Facebook: It is good to have the stars and a written review on Facebook because there are loyal Facebook followers that give this platform credibility. Although you can’t delete bad reviews from Facebook, it is not a well-known fact.· Yellow Page or Dex: It is good to have at least one review on this platform because it tends to influence that group of people who like to use this search tool.· Other places that you may want to have reviews include: Citysearch, Manta, Superpages, Kudzu, Best of the Web, and Better Business Bureau. If you can get reviews on Angie’s list those are pretty solid because they are nearly impossible to fake.Now that you know the value of reviews and where to put them it’s time to address the original question of should you “pay” for them?As you may know, it is against Google’s terms of service to pay for reviews: “Conflict of interest: Reviews are most valuable when they are honest and unbiased. If you own or work at a place, please don’t review your own business or employer. Don’t offer or accept money, products, or services to write reviews for a business or to write negative reviews about a competitor. If you’re a business owner, don’t set up review stations or kiosks at your place of business just to ask for reviews written at your place of business. “https://support.google.com/business/answer/2622994?hl=en&rd=1Yelp doesn’t even want you to ask customers for reviews!Those are some of the more strict rules for reviews. Most of the other business listing sites where you can put reviews are much more liberal in their policies.To keep this simple, let’s just use these categories regarding ethical standards.1. Morally Ambiguous – You bribe, cheat, steal and take blackmail photo’s to get any and every review you can squeeze out of people that are not even your customers.2. You “encourage” clients to give you a review on the part of the web that will benefit you the most.3. You just let karma take care of you by allowing whatever happens to happen.Option 1 might work for most areas on the web, but not Google, Yelp or Angies list. Those three review areas will either not let it happen to begin with, or they will delete your reviews or your business listing completely.If you think nobody will find out, try putting your offer in print and find out how quickly your competition sends it to Google or Yelp.Option 2 is the grey area that should be looked at in more depth.Option 3 will most likely result in not much happening at all, because people are busy and more often than not can’t be bothered. The exception to this rule is foot and drink. For some reason everyone wants to tell you what they had to eat. The other thing to consider is that when a customer is happy with you they will tell nobody and when they are mad at you they will tell everybody. So, negative reviews will take care of themselves.Regarding option 2, there are a few things that people have done to get reviews.· Offer a discount for services if the customer does a positive review before they leave. This is an effective process, but nothing will stop them from deleting the review after they leave. As for the ethics of this, I’ll leave that up to you.· Ask the customer for a review via email. It is fairly common for a business to email their list of clients requesting a review and offering instructions on how to do it.· Asking for reviews through social media. Same as above, just different delivery.· Getting a customer to give a review on their cell phone before they leave. Very effective.· Having a drawing for a gift if the customer can prove they did a review. Although this is in violation of the terms of service, you can decide for yourself if it is ethical.· Offering a gift if the customer gives you a good review before they walk out. Same as above.· Asking the customer how they feel about your service before they leave and getting them excited about the result before they leave. Then ask them to help you out by giving you a review on the platform of your choice.The most useful thing a business owner told me about reviews is, “Excited customers give reviews, and satisfied customers do not”.So, whatever ethical course of action you choose, I would recommend a high level of excellent service and don’t be afraid to encourage your customers to share their experience online. It doesn’t hurt to ask and most people are way too busy to just do it on their own. Some will ask you for help because they don’t know how, in which case, you should have a written walk through you can give them that illustrates the process.Just a brief warning: Do not have a person use your internet connection to give you a review on Google. They will see multiple reviews coming from your IP address and will delete them. Also, do not get 10 reviews in 1 day. Google will also delete those as well.http://conversionxl.com/9-things-to-know-about-influencing-purchasing-decisions/Steve Tamulewicz 7-21-15