There is a great article written by SmartCompany.com.au on a tragic story of a successful business, whose director died, and as a result, the company has been placed into administration.

Not many people know, but if a director has personal guarantees on a loan, the financiers have a clause in the majority of contracts that if that director dies, they will call on the full amount of that loan immediately!

As you would agree, this is the worst time that this could happen for several reasons:

1. Staff morale would be low due to employment uncertainty (Eg; What’s going to happen now that the boss has died?)

2. Creditors withdraw due to the unkown (Eg; How are they going to pay the accounts now that the decision maker is gone?)

3. The estate from the deceased director comes calling - It’s the estate lawyers job to get as much out of the estate as possible for the surviving partners, so loans need to be paid, accounts tidied up, shares in the business attributed to the spouse or relevant party. (This is why a Buy/Sell Agreement is so vital alongside a structured Keyman insurance policy)

So have a think about what could potentially happen to your business and the value of it if the unknown were to happen. If you wanted it to be sold at time of death for your family’s sake, do you think that a worthy buyer would purchase it with the above mentioned points outstanding?

of course not! They would smell a ‘Fire Sale’ in an instant and the surviving spouse, who doesn’t particularly want anything to do with the business due to grief or ability, would just want it sold and pocket the money.

In that event, the remaining business partners will be left with a forced sale, or a partner who they never wanted in the first place.

All this can be avoided by a simple Keyman insurance policy being in place. Otherwise known as ‘Life Insurance’ for the business. you can Email me or call me on 1800 989 657 to discuss how easy it is to start the cover, and we’ll even shop it around with a range of insurers for you.

For something that is rather insignificant to set up, can save you from something catastrophic to your business and the impact on your family in the process.

Paul Davies

I read an article by Jason Del Ray at Inc.com which gives a great outline on how to advertise on Facebook. As a small business owner, you will find some good tips here.

These days, it seems everyone and his mother has a Facebook page. In the U.S., about 100 million unique visitors flock to the social network every month. Many business owners are among them, using Facebook profiles to promote their companies and create customer communities. For some entrepreneurs, social networks have also become a useful advertising platform. Ellie Sawits, CEO of Frutels, a New York City–based maker of chocolate candies used to treat acne, says ads on Facebook are an affordable alternative to the high pay-per-click rates for acne-related keywords on Google’s AdWords. “For me, the economics of Google just don’t work,” she says. But it’s not easy to make your ad stand out among the Facebook status updates, party photos, and comments. Here are four tips to help you get started.

1. Choose your target

People who use social networks often divulge a plethora of personal information in their profiles, which can prove useful to advertisers. Facebook lets you pick and choose which groups you would like your ads to reach. Companies can target ads based on a user’s profile information, such as age, gender, location, college, relationship status, and interests. You can choose to target people who are fans of your company’s Facebook page or friends of your fans. Or avoid your fans altogether, if your goal is to broaden your pool of customers.

You can also advertise only to Facebook users who mention certain words in their profiles or status messages. For example, Howie Goldklang, co-owner of The Establishment, a hair salon and spa in Milwaukee, occasionally targets young women in Milwaukee whose pages mention the names of pop stars such as Justin Timberlake and Lady Gaga. Zeroing in on a specific audience lets you get the most bang for your advertising buck, but be careful about narrowing your focus too much. When Chris Lindland, founder of Cordarounds.com, a clothing site based in San Francisco, attempted to target specific colleges in an ad campaign, he didn’t get many clicks. “I thought there was a chance to cordon off influencers in some way,” he says. “But I had to realize, everyone wears pants.”

2. Test, test — and test some more

Ad prices on Facebook are determined by auction, as they are on Google AdWords. You can pay based on either the number of times people see the ad or the number of times people actually click on it. The majority of Facebook advertisers choose the latter, says Tim Kendall, Facebook’s director of monetization. Still, it’s worth testing both payment types to see which is more cost effective, says David Berkowitz, senior director of emerging media and innovation for 360i, a digital marketing agency. He suggests spending about $20 or so for a small ad buy using both methods. “It’s incredibly cheap to run tests,” says Berkowitz.

Testing various target demographics is also a good idea, says Adam Golomb, the head of e-commerce at Eat’n Park Hospitality Group, a Pittsburgh-based company that runs a chain of 76 restaurants. Golomb launched an ad campaign last spring, hoping to draw more visitors to Eat’n Park’s Facebook page, where the company posts surveys, contests, and coupons. In testing, Golomb found that an ad targeting women performed better than one that targeted both sexes. “The click-through rate dropped dramatically when we went out to both,” he says. After he began advertising only to women, the company was able to add nearly 1,000 new fans over a two-week period.

3. Do your own tracking

Facebook keeps tabs on how many times your ads are shown and the number of clicks they receive. But it doesn’t track what users do after they click — did they make purchases or just browse and move on? That’s the largest drawback of Facebook’s ad service, says Lindland of Cordarounds.com. “Return on investment is not immediately trackable,” he says. Facebook’s Kendall says the company is working to include more information in its reporting tools. Until that happens, it’s critical to do your own tracking. “The beauty of microtargeting an ad buy based on location, age, and sex is the data you’re going to get out of that,” says Michael Kahn, senior vice president of marketing at the digital marketing firm Performics. “To not take advantage of that would be a terrible waste of an opportunity.” Sawits of Frutels uses two analytics programs: Google Analytics, which is free, and HitsLink, which starts at about $10 a month, to track which Facebook ads result in purchases. Sawits, who spent $50,000 on Facebook ads in 2009, says her rate of return is about 2 to 1.

4. Make your ads pop

Companies write their own ads, which may include a short headline, ad copy of 135 characters or fewer, and a small image. Ads must be crafted carefully, because it’s tough to get noticed. Typically, three ads from different advertisers run next to one another. And, of course, there are photos and messages from friends that compete for Facebook users’ attention. “It is a social network, so if you put up a traditional ad, you’re going to be pushed to the side,” says Goldklang. Edgy advertisements, he says, seem to work best for his hair salon, which caters to a young clientele. One advertisement that performed well last year proclaimed, “Springtime is here. Time to get waxed.” “I find just being irreverent and trying not to write in traditional copyspeak connects us the best with potential clients,” Goldklang says. Since he started advertising on Facebook a year and a half ago, the number of new clients who discovered the salon online has risen 20 percent.

Facebook will reject your advertisement if you use an image that is deemed too risqué or language that is deemed offensive or lewd. But it usually pays to push the envelope. Sawits says one of Frutels’s Facebook ads that includes a photograph of a woman licking a lollipop gets the most clicks.

For Facebook’s list of common advertiser mistakes, go to facebook.com/ads/mistakes.php.

Consider this: It wasn’t until 1997 that the Internet reached 50 million users in the United States. Facebook gained over 100 million users in the U.S. from January 2009 to January 2010, marking a 145 percent growth rate within one year, according to research by digital marketing agency iStrategy Labs. If you’re a business owner that hasn’t embraced social media networking as a major component of your success strategy, it’s due time to hop onboard.

“When you’ve got 300 million people on Facebook, that’s a huge business watering hole,” says Lon Safko, social media expert and co-author of The Social Media Bible: Tactics, Tools, and Strategies for Business Success, of the site’s global reach. “The profile is like an index to your company.”

While Facebook has become the most popular social media site, there are plenty of others for your company to explore. LinkedIn, for example, houses 55 million professionals seeking jobs, employees, or basic business or networking opportunities. MySpace, I believe has been left for those who paved the way such as Facebook, etc. but I doubt very much that it will make a return. It seems only good for bands at the moment.

The user profile is generally what distinguishes social networking sites from other social media platforms. It helps set the stage for building relationships with people who share the same interests, activities, or personal contacts, as opposed to primarily disseminating or digesting information feeds. This also means social networks enable companies to invite audiences to get to know its brand in a way that traditional forms of marketing or advertising can’t.

But what, exactly, are the methods that businesses should use to effectively leverage the burgeoning userbase of these sites as a tool to grow their companies? This post will detail what to do – and what not to do – in order to maintain a viable presence in the realm of social networking.

Developing a Social Networking Strategy

Before opening an account and becoming active, it’s important to consider what each site offers and how you can benefit from their resources. Figure out which tools are best for your demographic. Without a fully developed plan for your social networking activity, you could end up meandering throughout the sites and wasting a lot of time.

Here are a few basic questions to ask yourself when forming your social networking strategy:
1.    What are the needs of my business? Hopefully, you’re not putting your company name on a social networking account just to send messages back and forth to former high school classmates, so there has to be an impetus. Figure out what your needs are. Are you short-staffed? Is your advertising budget running thin?

2.    What am I using the site for? After you’ve established your needs, consider the primary goal of your social networking strategy. Do you want to recruit employees for a certain department? Do you want to market a new line of products? Do you want to connect to more people in your industry?

3.    Whose attention am I trying to get? Okay, so you want to market that new line of products, for example. You still need to know your target audience for that product, and with more than 300 million users on Facebook, you’ll need to narrow your focus.

Got those answered? Good. Now, consider these questions:
1.    Which sites do I want to take on? If you have enough staffing power to handle multiple social networking sites, that’s great. If not, it’s important to focus on one or two, or you could spread yourself too thin and fall victim to the “gaping void” perception, where you end up going days without activity. Your followers will notice.

2.    Who’s going to manage my page? Would your social networking activity fall under a current employee’s responsibilities, or do you need to bring on new talent? If you ever find yourself without the staffing resources to manage your page, don’t stick your head in the sand, says Safko. “Find some interns,” he advises. “In most cases, they’ll do it for free.”

3.    Who has access to my page? What type of trust level do you have established at your company? Will all of your employees have access to the social network account, or a select few? Take the time to assess the skills and character of those who can log into your page, or you may run into unsavory situations down the road – especially when dealing with former workers.

4.    Who’s going to be the personality of my page? Does your company already have a public representative that usually handles speeches, press, etc.? It may be beneficial to rein in that person as the voice of your social networking site. Just remember that people buy from other people, not from other companies. Try to pick someone, even yourself, to represent your brand. Many people do it successfully, such as Richard Branson, Mark Bouris, etc. But be careful, because some do it bad.

In the end, just enjoy the relationship between you and the customer because that’s how you will pick up their loyalty, by delivering quality and reliability.

Have you had experience with successfully generating business from social networking? Let me know below.

Paul

Every business has a Unique Proposition that other companies in the same space can’t offer, but how do you make the details of this offering available to the masses?

There is only so much money you can throw at advertising and marketing companies to make your business stand out from the rest. And in many cases, it is very hard to measure the success of each campaign.

With the advancement of blogs, Twitter, Facebook, Linkedin, etc, etc. More and more people are jumping online to digest their information and in recent surveys, they suggest that almost 80% of people are researching their purchase before they actually buy it!

Even if you are sceptical toward online advertising and social media (Which I am, by means of attracting new business vis Social Media), you have to acknowledge the need for an online presence. But how?

Google Adwords seem to be a waste of time, Facebook advertising doesn’t seem to attract much attention unless you are selling a ‘cool product’. But have you considered a Merchant Account?

What is a Merchant? Well, many times on blogs and websites, you will see advertising, and this site is no different to any other in that respect. In that advertising, if the reader clicks on it and either signs up, or contacts the advertiser, the person hosting that ad will be paid accordingly.

The advertiser is the merchant. They pay a fee each time the ad is clicked. After some research I have been doing for the past few months, I have come to the conclusion that there are only a handful of Australian Only accounts that can be targeted this way. In my opinion, Commission Monster is the best and offers a variety of support and your campaigns can be tracked and measured very well.

If you run a small business, that can be promoted online, especially within Australia, you need to consider trialing this service. I would love to hear some stories about how you have been successful with your online advertising. Please share below.

Australians need to look at long-term saving options that sit outside superannuation if they are to have enough money to maintain their current lifestyle in retirement, according to investment group IOOF Research from the firm has shown more than a third of respondents to its consumer survey believe they will not have enough money to maintain their current lifestyle when they retire, with only 29 per cent believing they could carry on as normal. More than one-third of survey respondents still plan to use superannuation as their sole source of income.

“It’s alarming to find out that many Australians believe compulsory superannuation will be enough to maintain their current standard of living, the harsh reality is that in many cases it won’t,” said IOOF’s investor solutions general manager, Renato Mota.

Mota added that those looking to top up their super through voluntary contributions would find their saving potential has been limited following recent cap reductions imposed on voluntary contribution levels. As a result, he advised consumers to look at a selection of investment vehicles as a means of saving for retirement.

IOOF’s survey, which was conducted by AC Neilsen, found 33 per cent of respondents saw retirement as the most important thing for which to save, however, almost one-third had yet to begin long-term planning. Shockingly, despite the lack of financial knowledge among Australians, almost 80 per cent of respondents had not sought professional financial advice for their retirement.

If you need help with determining how much you will n eed in retirement and how to get there, please feel free to contact me at super@protectmywealth.com.au

Source: Moneymanagement.com.au
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The December and January period is normally a slow time for small-to-medium sized businesses, with most customers on holidays, suppliers operating on skeleton staff and budgets on hold. An article from Australian Anthill offers five tips for surviving the Christmas slowdown.

“Hope for the best, plan for the worst.”

Business owners and entrepreneurs are notoriously optimistic about their businesses and that is often the key to their success — optimism creates the energy needed to tackle inevitable business challenges. But optimism should not come at the expense of prudent planning, particularly when it comes to seasonal slowdowns.

Here are some tips to help you start 2010 with momentum:

1. Stay on top of invoicing.
   There may have been a mad rush to supply customers prior to Christmas. Prompt and accurate invoicing is obviously critical to managing cashflow, particularly if your clients and customers are themselves going to be away over the holiday season.
2. Consider different scenarios.
   Many businesses are finding it more difficult to forecast in today’s dynamic and tumultuous economic environment. As a result, business owners should ensure that they consider a number of potential scenarios for how their businesses might operate over the holiday season. For example, ask yourself, if sales are 10 percent lower versus the same period last year, then what does that mean for us? Or, if the sales we expect to have in January are deferred until February or March, what will that mean for our cashflow? Often, planning for the worst-case scenario is the best approach. At the very least, it will help you sleep at night!
3. Know the availability of your key suppliers.
   It is important to know if your key suppliers and partners (including financiers) are available during the holiday season and into January. You don’t want to be caught out needing something from them only to find out that a decision-maker will be overseas and not able to give you the necessary support, without having a backup arrangement.
4. Consider financial alternatives.
   With traditional bank funding becoming all but non-existent for small business, SMEs should consider alternatives, of which there are a range of different solutions, depending on the need. At Christmas time, a more flexible approach can be attractive to small businesses because they may not need a long-term solution.
5. Implement mandatory annual leave.
   It may be too late to enforce this year, but companies with full-time staff should consider enforcing Mandatory Annual Leave during traditionally slow periods. Many Australians do not take their annual leave (see the Government’s “No Leave, No Life” campaign) and the accumulation of annual leave entitlements can become a problem. Businesses should consider closing down when activity levels are slow. The period between Christmas and New Year’s is an obvious time to consider closing. This will have a significant impact on cashflow for companies that carry contractors. As an additional benefit, it’s a great opportunity for the business owners to recharge their batteries

If you have a current income protection policy, and any old superannuation, you should consider rolling them together and having the super deduct premiums from your account. To find out more, please contact us below.

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Running your own company can be a risky business, and insurance is a great way to transfer the financial burden of these risks to someone else. Not only is this financially sound, but it will also help you sleep easily at night, knowing that you are covered.

As your business grows, it is important that you keep your insurance up to date. Using a specialist small business insurance broker will help keep your premiums down.

Types of insurance
The most common types of insurance are the following:

• Building and contents insurance (including fire and flood);
• Public liability insurance;
• Product liability insurance;
• Equipment insurance (including protection against IT failures);
• Legal expenses insurance for facing court proceedings;
• Health and life insurance for the owner;
• Key man insurance;
• Income protection insurance;
• Business interruption insurance;
• Transit insurance for goods;
• Travel insurance for business trips;
• Credit insurance for unpaid debts;
• Industrial special risk (ISR) insurance; and,
• Workers’ compensation.

We’ll look at some of these types of insurance in more detail:

Public liability insurance
This covers legal liability for injury to members of the public and damage to property arising from the business’s activities. It also covers economic loss arising from your negligence. Your liability from a successful public liability claim could be enormous and threaten your company’s survival and, if you are a sole trader, your personal finances and assets. This is one of the most essential types of insurance for any small business.

Equipment insurance (including protecting against IT failures)
This covers loss or damage to machinery or equipment as a result of a breakdown. You can also insure against the loss of food due to spoilage following a breakdown.

Key man insurance
The most important asset of a small business is the owner, and key man insurance (it is also sometimes known as the sexist key person insurance) protects the company (not the owner) from the loss of a key person within the business and the impact of this upon profitability.

In partnerships, key man insurance protects each partner. Upon the death of a firm’s partner the other partner(s) usually need to purchase the shares of the business from the deceased’s family. Insurance lets this be handled smoothly with the correct buy-sell agreements in place.

Income protection insurance
If someone is unable to work, income protection insurance protects them by paying their salaries.

Many business partnerships make it part of the partnership agreement that all the partners have income protection insurance. This is because the partners share the firm’s profits, and having income protection insurance in place for a partner who is unable to work means that profits are not diluted by the non-working partner drawing a salary from the business.

Business interruption insurance
This provides cover for loss of income, payroll and an increase in costs following a reduction in turnover or revenue caused by fire damage.

Workers’ compensation
Businesses with staff also need to register with Work Cover, statutory and state-based authorities that govern workers’ compensation.

With the rise of unemployment expected even further into 2009, there is no better time to scout for potential new staff who are experienced and willing to work. But how to find those valuable ones. Here are a few tips to help your small business attract quality staff.

Writing a job description

The first step is to write a job description. Always remember to include in the ad a clear description of the job you are advertising, including responsibilities and day-to-day tasks. It’s also important to mention any qualifications or experience you expect the candidate to have. The location of the job, as well as contact details and a deadline for applications are also a must.

It’s also an idea to develop a job description for the role, which you can share with candidates during initial interviews. Although it can be time-consuming putting together a job description, doing so helps you get ideas clear in your head about what you expect the person to do.

Being able to clearly communicate what you expect from the person who fills the role will ensure the person you employ understands their role, which will ultimately help them perform better in their job. You can search online for template job descriptions in your industry.

Too many applications!
A job ad posted on a recruitment website will usually produce multiple resumes. The downside of this is that you may have to sort through hundreds or even thousands of applications to find ones that are really relevant for the job.

The last time I posted a job for our business, we received almost 100 applications! Of course this was too much, so the unfortunate side of things is that we may have missed out on someone who was actually very suitable, but ended up in the ‘pile’ because we didnt have time to scour the whole lot. A way to get around this is to post your ad on more specialised websites.

For example, most industry associations have a section on their website for advertising positions vacant. This is a great source of staff for small businesses.

Dive into a big pool
With the unemployment rate at its lowest in almost 30 years, above all, says Julie Mills, chief executive officer of the Recruitment and Consulting Services Association, in the current job market it’s important for small businesses to draw on as wide a pool as possible when looking for staff.

‘Everyone is looking for staff at the moment. At every step in the recruitment process, businesses have to think outside the square and not necessarily expect a perfect fit – it’s important to accept the limitations of the job market and realise the candidate pool is shrinking,’ says Mills.

Broaden your search
‘Small businesses are actually well placed to tap into different candidate pools, like mature age workers, people with children and people with disabilities, because small business can really engage with these people,’ Mills says, using RCSA as an example. ‘Everyone in my office was once long-term unemployed.’

Mills says by tapping into this workforce, ‘you can also take advantage of government incentives. I had two-thirds of the salary of one of my staff paid by the government for three months,’ she says.

Another source of candidates, advises Mills, is what she calls ‘passive candidates’, or those who are not actively seeking work. ‘These are people who might have their profile on LinkMe.com.au but not be actively seeking work. Some of the best candidates are in this pool,’ she says.

Personal contacts
John Shein, a partner in boutique recruitment company Salt & Shein, relies on personal contacts and networking to find staff. He hired one staff member after hearing clients mention her name repeatedly. At the time he hired her, she was working for a competitor. After hearing her name mentioned again and again, Shein picked up the phone and offered her a job.

Shein says networking plays a key role in his approach to hiring staff. ‘We attend lots of industry events and we’re keeping our ear to the ground for our next couple of employees,’ he says.

The key thing to remember when hiring in the current job market is to act quickly. ‘If you don’t act quickly, you’re not going to find people,’ says Shein.

Businesses large and small are guilty of wasting precious marketing dollars. In almost every ‘wasted dollars’ scenario there is a recurring theme  – the lack of a robust and considered marketing strategy that guides everything from consistency of message to targeting, tonality, presentation and expectations.

Below are outcomes of a defined marketing strategy for your business – and if embraced will save you from wasting precious marketing dollars.

Have you ever placed an advertisement or run a promotion and received little or no response in spite of having a terrific product or service offer? Well you’re not alone. ! Nine times out of ten the reason is quite simple – poor targeting or the scattergun approach. Imagine a farmer sowing seeds widely across his whole field, taking no account of whether the soil is fertile, or having furrowed the field, or which way the wind is blowing. It will come as no surprise if only some of the seeds take root and flourish.

The same applies to promoting your business and its products – you simply can’t afford to waste valuable marketing dollars- in this manner. If you haven’t decided exactly who you want to reach with your message and how best to reach them you are unlikely to succeed and very likely to waste your investment in marketing. The marketer who tries to be everything to everyone ends up being nothing to everyone.

One of the keys to marketing success is knowing your customers and to target them well. Imagine them sitting in front of you. What do they look like? What do they talk about? What are they saying? What are their opinions? What influences them? Whose opinion do they value? And so on. By considering their mindset you have a better knowledge of what really motivates their decision making when it comes to buying your products or services. This is called Motivational Segmentation. This segmentation process assists with targeting because the better you understand what motivates your target audience, the more likely you are to strike a chord with them.

Every successful business and marketer has a deep and insightful understanding of the market they operate in and carefully segment that market. Here is an example of how motivational segmentation could drive a business. Nearly every shopping centre in Australia has an optometrist. But how do they differentiate themselves – other than the name of the company, chain or proprietor?  Rather than, for example, talking to everyone who wears prescription glasses, you might segment down to people who are more motivated by how they look rather than how they see. Further motivational segmentation might allow you to target fashion conscious women in a certain age group (rather than men and women or all women).

Now that you have a specific target audience in mind, you can really start to get into their mind – with motivational segmentation – and ‘bring this customer to life’. You can imagine what kind of brands they admire and align with. What your store should look like as a result. What kind of sales people you need (and how they dress and present themselves).  You could also now work with other marketers outside your category to present ‘bundled offers’ such as a makeover from the beauty shop when you buy a pair of X brand frames, for example.

Now imagine what your marketing dollars can do and how you’ll be able to decide where and when to invest them. Spring fashion season creates a whole new selling opportunity in this scenario when you have this kind of segmentation analysis sitting inside your Marketing Strategy plans.

Segmentation allows your company to ‘tailor your offer’ in order to become differentiated, more meaningful and relevant to a discreet section (or sections) of the total market. Having defined very clearly the benefits of targeting segments that you understand and want to communicate with, you’ll be investing marketing dollars and not wasting them.

Now let’s explore another area that is also very wasteful in terms of marketing dollars. Not surprisingly, many companies who operate without a marketing strategy use their marketing communications (that can mean anything from answering the phone to brochure presentation, from web site to direct mail, from advertising to sales presentations) as some kind of very expensive market research testing process. As a consequence there is no consistency of message. There is no consistency of tonality or look and a lack of consistency in ‘customer benefits’ communicated. All in all there is a lack of consistency for your overall brand. Customers are more likely to buy from you when they have a feeling of comfort from the messages and signals you send them.

Brands are like people. A brand needs to be liked and welcomed. It needs to be understood. It needs to be trusted. And the key to understanding and trust is consistency. In marketing this consistency is conveyed in what you say, how you say it, where you say it and in presentation (typography, brand colour palettes, tonality).

Consistency and repetition are the hallmarks of brands and companies. Those who build trust from their customers will have them coming back time and time again. This is because they consistently deliver, and as an outcome, their customers trust them. They are not one thing one day and another thing another day. Repetition builds reputation.

Do you know of any quality marketing companies that have helped you in your small business? I would love to get your feedback.

PD

First instincts are often to buy business computer equipment, but a careful weighing of the pros and cons can make leasing sound attractive. Buy versus lease. For most, hearing that phrase evokes a car purchase, but for more and more small business owners that term applies to computers.

It used to be that one’s first instinct would be to buy. Sure, you think, you can use the machine for as long as your want and you own something. Sounds good, right? There are several reasons to consider leasing instead of plunking down cash for an outright purchase.

Taking baby steps with capital

Leasing prevents paying out so much capital upfront. This can help a company’s cash flow management, particularly a start-up or rapidly growing company. So, instead, the cost of having the computers becomes an operating expense.

Another financial advantage is that by leasing directly from a manufacturer or vendor, a small business owner needn’t go to a bank or venture capitalist for a loan — with all the paperwork, business future strategy, and red tape that entails. Leasing provides you with operational flexibility that you don’t get from traditional sources if you have to pay cost for something.

Keeping up with technology

The usual lease runs about three years, which is about the same time that technology usually gets upgraded. Leasing computer equipment pushes you into more structured refreshing of your technology. That way, a company isn’t caught behind the times, hanging onto an out-of-date computer or operating system.

Leaving the patch work to someone else

Since many small businesses don’t exactly have a huge IT staff, they can’t spare anyone’s time, much less the money that their time is worth — to tinker on computers to get them up to speed. When you own a system, the biggest cost component is patching, update support and warranty issues. All the administration and effort to ‘keep this thing running’ far outweighs the cost of the system.

For example, for a $700 PC , about 15-20 percent at most is the total cost of ownership — and that’s if you have great support.

When you lease a computer, the company providing you the leased equipment is the party forced to always keep up with the latest developments –  leaving your company to focus on its primary business. “We are always improving individual components,” says Mike Maher, a spokesman for Dell Financial Services, which leases computers. If a company has a lease agreement, they can upgrade technology a lot easier and a lot quicker.

You don’t depreciate me

Computer equipment depreciates rather quickly — and it’s no fun pouring one’s money into an asset that loses value in order to update it, especially if you’re a struggling small business.

Sunny disposition

With the getting of something new one must also consider the getting rid of something old. Throwing out a computer isn’t the easiest thing. With leasing, the company you have the lease with takes care of disposal for you and even helps get your sensitive company information off the machine. Unless you are very savvy, you’ll really need a professional to wipe that slate literally clean. I would recommend this depending on your industry.

If you buy computer equipment, there’s arguably some value left in that old piece of machinery, but just how much can vary. You would be lucky to get three percent when selling it to a reseller.

However, you can get seven percent of your original expenditures if you wipe it clean and put it on eBay. But, as a small business owner, is that exactly a good investment of your time? For most small businesses, the answer is, “No.” You should be concentrating on growing the business.