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How to find the right financing plan for your small business

October 10, 2013

It’s October again and that means a few things: the weather is starting to cool down; it’s almost time to carve pumpkins and it’s SMB Week/Month (depending on who you ask)! We’re kicking off SMB Week/Month with part one of a four-part blog series focusing on preparing small business owners for their next technology upgrade.

For part one, I thought we would start at the beginning of any business purchase, financing.

To learn more about the right financing can help your small business, register for our October 30th Cisco Capital webinar.

Financing blog photoIt’s quite common to see a small business’ big technology idea be restricted because of budget. Finding the right financing plan for your information technology (IT) project is critical because often, simple upgrades can provide the framework your business needs to reach its goals.

A good financing plan will allow you to align your IT assets with your business initiatives. It can help you adopt new technology that will increase profits in the long run and your immediate cash flow can be invested back into your company. Here are five tips on how to find the right financing plan for your small business:

Make a plan

Before looking at financing options, you must decide what technology you need to achieve your business objectives. While setting these goals, ensure you are being realistic in regards to your financial realities. If your budget is slim, allocate your resources to what you predict will be the most important and rewarding project. Once you have a plan you can browse your financing options while being educated and targeted, not wasting any of your – or your business’ – time.

Start with a flexible contract

In today’s fast-paced world it is important to ensure you are signing a contract that will allow you to stay current with technology innovations. By starting with a flexible contract you are able to control your IT investments when new business or technology is introduced. When starting a business, cash flow can be volatile so having a flexible payment plan in place can deter additional fees or unforeseen costs. In order to achieve this stability, choose a company that offers captive financing rates. And here’s another tip: some types of institutions are supported by their parent company, and not impacted by banks’ fluctuating rates.

Look for the ability to upgrade

The issue with purchasing IT hardware is that technology can become obsolete before you teach all of your employees how to use it. Having a contract that requires you pay off old hardware before purchasing new can severely affect a small business’ cash flow, so when evaluating financing plans look for companies that offer the ability to refresh the technology you have by replacing old hardware and software with newer versions. Some plans offer to purchase back your existing equipment before leasing you a new asset. It is also beneficial to investigate which plans include environmentally-friendly disposal of your old technology. These features are more commonly found in financing plans that come from the technology provider itself.

Request an adjustable lifecycle

Most technology has a suggested lifecycle, based on the optimal time to refresh your system and services. While these suggestions are usually accurate and timed to when new products are set to be released, it is still important to have the ability to refresh when you feel it is necessary. Your IT and business needs may not change on the same timeline as your technology. Unpredictable events can happen, so look for a product suite that will offer an adjustable lifecycle to fit the needs of your small business.

Decide what to finance

Lastly, it is important for you to dictate what you want to finance and what you are prepared to pay for upfront. Implementation, servicing and maintenance costs can all be incorporated into your financing plans, lowering the cost of ownership while giving you time to establish your business and optimize the return on investment (ROI) of your solution. Find a plan that allows you to bundle operating, maintenance, service solutions, technology migration, sales and leaseback services, depending on your needs.

Tune in next week for part two of our series, where we discuss mobility and how you can determine when your business is ready for a mobile workforce. To learn more about what Cisco offers SMB’s, visit our website.

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