One of my favorite business stories comes from a long-time veteran of the leasing industry. Early in his career he called on Fortune 500 companies, trying to sell them on the idea of leasing office fixtures and other business equipment. After months of trying to get a meeting with a prominent Cincinnati company, he was finally sitting across the desk from the CFO in the beautiful downtown headquarters. He gave the CFO his “pitch” and was quickly dismissed by the man who said, “We pay cash for everything.”
He paused for a minute and thinking quickly on his feet complimented the CFO on how nice his office was. The CFO smiled with pride and began to open up a bit. After a few more exchanges he asked the CFO, “Do you own this building?” The CFO said that the company did not own the office building, but leased it. My friend then responded, “Imagine what your balance sheet would look like if all these years you had leased your equipment and bought your building.”
Right now I’m guessing that some of you are thinking about your company’s balance sheet.
There are many sources of capital and they are best thought of as tools in a tool box. Yes, you can use a hammer for many things – but sometimes its not the best tool for the job. Leasing isn’t necessarily a fit for all things, and may not even be a fit for your company. However, the time to diversify your sources of financing is when things are going well and you have the luxury to do so.
Now might be a good time to take a look and see what’s in your tool box.
*Special thanks to a wonderful teacher, Bob Humber of RCH Financial, for sharing this and so many other insightful stories with me and countless other CLFPs.