Leasing a T Shirt Printing Machine
Sell just 31 Shirts per month and make your finance payment.
Leasing is a great alternative to the outright purchase of a DTG Printer, also called a “garment printer” or “t shirt printing machine”. There are many reasons why leasing is an attractive option both for startup companies as well as ones expanding into the custom printed t-shirt business.
What are the advantages of leasing over direct purchase?
Why would you want to lease if you have the ability to buy a new DTG Printer set up?
This is the number one reason our new business customers lease a DTG Printing machine from ColDesi. The math is pretty compelling, and while it’s covered in detail in our T-Shirt Printing Business ROI article, here are the basics.
This makes it EASY to cash flow your business! In fact, with lease prices as low as $430/month, you will not have to sell many custom direct to garment printer t-shirts to make your monthly payments.
What is a Lease?
According to Wikipedia “a lease agreement is a contract between two parties, the lessor and the lessee. The lessor is the legal owner of the asset, the lessee obtains the right to use the asset in return for rental payments”.
When you lease equipment with a specified buyout at the end, like the $1 buyout option or the 10% option, you have a guaranteed path to ownership at the end of the contract. The advantage of a lease is typically in low financing payments though, so the majority of people that lease equipment like a DTG Printer end up turning the machine in for a new model and just continuing with a lease payment. Cash flow on leasing a DTG printer is excellent, so this is a very profitable option!
Cash Flow vs Cash Purchase
One school of thought for starting a small business is to start debt free. The advantage of starting a debt free business is that you have the comfort of not having to worry about making a monthly payment. If you have a bad month or it takes you some time to generate sales you don’t have the burden of a big payment at the end of the month. Once you DO start selling the money you earn goes right to you and/or the bottom line.
The drawbacks of the debt free approach to starting an embroidery business or custom t shirt business usually outweigh those advantages above, which inspires many ColDesi customers to Finance or Lease equipment instead.
Note: The “Compress Rip” software is different than the “Compress Designer” software. Compress Designer is a unique application that also comes with every Compress Printer. To learn more about Compress Designer, click here to learn more.
Better equipment = profitability Leasing equipment usually means that you can afford more or better systems. That’s why so few people pay cash for a vehicle, for example. Let’s say that you can afford to only buy 1 dtg machine in cash. You will likely be able to afford to lease 2 or more machines and use the cash as a back up to bolster you against slow months. With two dtg M2 machines you can literally double the about of money you can make in an hour because you can produce twice as many shirts. So you get the advantage of having cash in the bank for safety AND doubling your potential for profit.
One of the things that kills many small businesses is getting a really big order. It sounds counterintuitive, but when you get a very large order for the first time you will have to purchase the blanks and pay for those up front, they will take some time to arrive, then you will actually produce the job, which may take weeks if it’s a very large order, then there’s delivery time and, in the end, you’ll have to wait for payment. If the job is for a public school or large company that payment may not come in for 30 to 60 days. So your cash is tied up for that entire time.. what if you get ANOTHER order? Or your car has issues? Or your equipment needs repair? If you’re leasing you’ll still have cash reserves to survive your success!
Our leasing partners at Adia Capital can speak to you at length about this and of course you should consult a tax professional, but there are significant tax advantages of leasing equipment. There’s a reason why most very large businesses lease vehicles, copy machines and even computers and that reason may apply to your small business as well. Taxes are going to be a big part of your financial success – learn more early for more future success.
What is Section 179?
Section179 is a part of the US Tax code relating to equipment purchases and how they impact the amount of money a business will pay in taxes. Also called “Protecting Americans from Tax Hikes Act of 2015” (PATH Act), it sets a tax deduction limit in the current year to $500,000.
Section 179 can provide you with significant tax relief for this 2016 tax year, but equipment and software must be financed and in place by midnight December 31, 2016 to take advantage of it because all the numbers get reset every year.
This image is from a popular SAMPLE Section 179 tax savings estimate calculator. As you can see, your potential savings is HUGE!
Need More Advice On Leasing?
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