How to Make Decisions on Your Next Big Purchase
Posted on May 22, 2018
There are two big decisions when making your next big capital purchase in your cosmetic medical practice or medspa. The first one is whether to buy or lease machines. The second one is whether to choose a brand new or used machine, with pros and cons for each side. Making sure to evaluate them is key!
First, there are pros and cons for buying the devices in your practice. The first pro is when you buy are taking advantage of certain tax credits, meaning you may not have to pay local tax fees. The next pro is that you can pay back the interest on the amount borrowed only in which you can also pay a lower amount at slower times. However, you are out a large sum of capital if you buy. With that being said, the down payment for the regular financing will be more.
Next, there are multiple leasing pros and cons as well. When leasing, you don’t lay put out a large sum of capital upfront. With leasing comes two different main types of leases. These two different types of leases are the operating lease and a capital lease. With an operational lease, the pros are that you will have a simpler balance sheet and you can lease for shorter terms. However, the capital lease pro is that there can be a buyout at the end of payment for the lease and you can save in taxes and excess payments in the acquisition year. The cons for both operational and capital leasing is that leasing normally costs more in the end. Either way, when it’s all said and done, you do not have the assets to generate the revenue.
Furthermore, the final decision that comes is whether you would like new or used equipment. With new equipment (and a smart contract), you are covered by a manufacturer’s warranty and covered by federal guidelines for equipment warranties. However, the price tag will always be high because there will always be a limited availability.
Meanwhile, used technology perks include the fact that they are severely discounted in price and can be a great investment. However, you won’t know the maintenance history of a new machine. Another con is that the manufacturer may only allow you to purchase parts from a certified vendor. In this case, you could lose thousands.
Click here to read our article in Modern Aesthetics magazine, “Decisions, decisions: Does your next big purchase make sense and cents” to read our full article.
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About Shorr Solutions:
Shorr Solutions is an award-winning practice management consulting company with offices in South and Central Florida. We work with aesthetic medical practices in all 50 states of the U.S. to help them strengthen the operational, financial, and administrative health of their business. With decades of industry experience, our father-daughter partners, Jay Shorr and Mara Shorr, lead our knowledgeable team of experts to assist practices in the aesthetic medical fields increase efficiency, increase revenue, and decrease their costs.
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