Tech Lease: A Smart Small Biz Strategy
In 18 years in business, the three computers Saulene Sutton has owned along the way have gone from being roadrunners to becoming dinosaurs.
Over the five years or so that she's owned each, the computers' processors and speed have increasingly lagged behind current models.
Then in January, while shopping for yet another PC after her current unit crashed several times, Sutton saw a TV ad for a computer-leasing program. So she visited Gateway Country in Sunrise.
Instead of dropping $3,500 on a brand new Gateway PC, Sutton instead decided to lease the unit. She got all the hardware, processor speed, memory capacity, software and features she wanted. She has on-site tech support, and the confidence of knowing that in three years, she'll turn in the unit and get a fresh start.
The cost: $116 a month.
"I'm paying a little more, but I have everything I need, it's fully warranted, and I'm staying closer to the cutting edge," said Sutton, owner of Chic Ideas Inc., a Plantation, Fla.-based promotional products company. "After my PC froze, I said, `Forget this, I don't want to worry about anything else.'"
Sutton is not alone. As with cars and other products, computer leasing is designed to take the worry out of getting a new PC. The commercial leasing industry will top $244 billion this year, driven by businesses' need to control costs and ensure products stay updated, said Ralph Petta, vice president of industry services with the Equipment Leasing Association of America, a trade group in Arlington, Va.
Small businesses are twice as likely to lease business equipment as purchase it as a way to benefit from predictable monthly payments and avoid fluctuations in interest rates and inflation, according to a study from the U.S. Small Business Administration. Today, information technology equipment is second only to transportation leasing as the fastest-growing segment of the commercial leasing industry, Petta said.
"The value with leasing IT equipment is that you can upgrade, get rid of your old box and get state-of-the-art technology," he said.
For her money, Sutton cherry-picked only the hardware and software that met her needs. The computer has the Microsoft XP operating system and the complete Office suite of software, 512 megabytes of RAM, an 80-gigabyte hard drive, and a Pentium 4 processor running at 1.6 gigahertz. She has a 19-inch flat panel monitor, a writable CD-ROM drive for backing up her data, a DVD player, and built-in networking.
She's also getting peace of mind. Because Sutton's business is home-based, she has no staff - especially no IT support staff. If anything goes wrong with her computer, the service plan provides on-site tech support within a day, she said.
When the lease is up, Sutton can buy the unit, or exchange what will then be an older model for what will be the latest cutting-edge computer, she said.
