Of course, you cannot have a successful gym or fitness business without the right fitness equipment and machines. But many business owners face the question of whether to buy or lease them. If you have just started your business, you may only have the funds to buy second-hand equipment, but if it wears out quickly, replacement will be expensive. If you want to expand your business, you may want to upgrade equipment to make your business more attractive and keep current members happy. So how will you pay for these upgrades?
There are affordable options for both leasing and buying fitness equipment. Read on to find out which option suits you best.
Leasing fitness equipment
Leasing fitness equipment is like paying rent. You apply for the lease through a lender or finance company. They buy the equipment, and you use it under the lease terms as though you own it, while making monthly payments. At the end of the lease period, you can choose to renew, return the equipment or buy it at a reduced price.
If you plan to replace equipment regularly, leasing is probably the best option for you. Some larger fitness machines, such as treadmills, cross trainers and bikes, also need regular maintenance. With a lease, you are not responsible for repairing or replacing damaged equipment. A lease option is often less expensive than an initial loan payment, and you can update your equipment every year if you wish. This keeps money in your business while also allowing you to offer members the most up-to-date equipment.
There are also tax benefits to leasing. A lease is a property right and can therefore qualify as a business asset. Rental costs are consequently fully deductible from profits, taking account of an addition for private use.
However, when you lease, you do not own the fitness equipment. If you need to recover costs, you cannot sell your inventory. You will probably also be unable to claim the fitness equipment as assets on your balance sheet, although some leases allow equipment to be recognised as assets.
If you decide a lease is right for your business, you must follow a regular maintenance schedule and keep the equipment clean and free of damage. Failure to comply with the lease terms can result in substantial penalties. Make sure you carefully review the agreement’s details and small print.
Buying fitness equipment
Although leasing works for some, buying your own equipment has advantages. If you plan to use your own equipment for many years and do not expect to need regular updates, buying may be the best option for your business.
Some advantages of buying your own fitness equipment include:
- It provides an asset for your business.
- You can sell the equipment to reduce upgrade costs.
- You can modify your own equipment where necessary.
However, many small business owners do not have the capital to pay these amounts in 1 instalment upfront. There is always the option of applying for a loan and using that money to buy the equipment yourself.
Think carefully about your current and future equipment needs and how they may grow with your business. Buying equipment is a major investment, so do your research and think carefully about where you see your business in the years ahead.
Equipping an existing business
If you are investing in new equipment for an existing business, first clarify your vision so you have clear expectations of how the investment will benefit the business.
Then look at occupancy. If your most popular classes and time slots are full and have long waiting lists, extra fitness equipment can help optimise revenue. If you plan to expand your offering, consider leasing new equipment so you can try it before fully investing. Another option is to lease some and buy the rest, getting the best of both worlds.
Deciding whether to buy or lease can feel daunting. But by carefully considering all available options, you can find an approach that makes sense for your business at every stage of growth.
