Coffee Beans and Counting Beans

Business loans are good things for small start-up businesses and larger outfits alike. Usually, it’s the larger people who come to talk to us about setting up novated leases for vehicles or taking out a business loan to purchase some new equipment. And we know how to handle that. We also know how to handle things if we’re approached by one of the little people (and we don’t mean habbits) about business loans to get a vehicle for a small business.

Now, with a number of small businesses, you can use your usual vehicle for most of the work, and you might need to have a chat to a friendly accountant about what you do regarding claiming expenses back against tax, GST and all that sort of thing. But there’s one small job that offers a lot of flexibility and fun that requires a vehicle to get started: mobile coffee baristas.

Mobile coffee baristas are becoming more and more common, and the job usually requires having a special vehicle set up to do this. Not many of us have a spare car of the right sort sitting around ready to convert into a mobile coffee shop, so if you want to work for yourself, are keen about coffee and like getting out and about in your community, you are probably going to need to borrow a bit of cash so you can buy the car and kit it out with all the bits and bobs needed to make great coffee.

You’re going to need a fairly sizeable vehicle to start up a mobile coffee service. For a start off, you need something that has a fifth door so you can open up the back and make the coffee, but a little hatchback just isn’t going to do the trick. You need something with a bit more space than that. Nor will a ute do the trick, as it’s best to have all your stuff under cover  you’re going to need paper cups, remember. The best thing to look out for is a large MPV, an SUV or a 4×4. You might want to consider getting signage on the side of the car, so don’t forget to include the cost of this when you think about the amount you want to borrow.

You also need the coffee making equipment. Naturally, this means a caf quality espresso machine and probably a small bar fridge as well to keep all the milk in (and maybe the flavourings so you can offer flavoured coffee options). These will need to run on something, so look out for a vehicle that has power outlets sprinkled around the place.Petrol/diesel generators are pretty noisy and are likely to put your customers off, and although we get a lot of sunshine in our part of the world, you probably aren’t going to be able to power your equipment off the size of solar panel that can fit in or on a large car  assuming that you can fit one at all.

After these basics, it’s up to you. You probably need a good supply of paper cups and tops to go on them, ordinary milk, trim milk, soy milk, sugar, chocolate, marshmallows, tea and possibly some herbal tea into the bargain. You might also want to sell biscuits. Don’t forget a chalkboard or whiteboard to advertise your prices!

Where do you go with your mobile coffee machine? Just about anywhere that people gather: sports matches, markets, skate parks, malls Where two or three people are gathered together, somebody probably wants a coffee!

Bigger, Better, Brighter and Cleaner

A lot of people who want to start off their own businesses look at cleaning services and starting their own contracting service. After all, everywhere gets dirty and needs a clean!There have been a number of stories about people who started off small but who ended up with big companies that take care of some of the big commercial cleaning jobs around the city.

But too many people don’t make the transition up from regular house cleaning services to bigger commercial services. There’s one reason for this: capital. You see, if you want to tender for a bigger commercial job, even if your first big job is as a school janitor or cleaning your local sports club, you probably need some better equipment than what you’ve already got. Sure you can start off with just a few brooms, mops, dusters and vacuum cleaners and they’ll get you enough to feed your family and pay the bills if you put in the work. But the time may come when you’d like to go up a notch or two and go for the bigger jobs. For this, you’ll need some heavy-duty equipment and if you don’t have the money in the bank account, this means that you’ll need to apply for an equipment loan.

So what are your options when you want to add some industrial cleaning equipment to your toolbox? Sure, if you have the option of getting an equipment loan for your small cleaning business, it might be tempting to try for a loan that’s big enough to get the lot. However, it’s always to grow slowly and not to over-commit yourself with the repayments. Sure, you’ll get more business with the new machine, but you don’t want to be stuck with massive weekly repayments that mean you’re in a tight spot if something goes wrong one week  there’s always that client who’s a bit slow to pay and you’re still going to get sick and want a holiday now and again. Just start with one or two items of heavy-duty equipment and pay them off before you get a third.

We’re loan brokers, which means that the ultimate decision about what new industrial cleaning equipment you should get is really up to you. You’re the professional and you know what sort of thing is most in demand. But if you’re still just at the stage of thinking about it, here are a few suggestions to get you thinking:

  • Water blasters: Best used outside and are great for cleaning off moss and mould on house exteriors as well as on driveways and patio areas.
  • Carpet cleaning machines: Deep cleaning carpets is one of those things that every household and every office should do annually, but carpet cleaning machines aren’t your average piece of household equipment. This service is bound to be in demand. Look out for units that have spot cleaning and upholstery cleaning attachments to really broaden the spectrum of services you offer. These range from small pull-along machines (cheap) to large truck-mounted units (expensive).
  • Polisher/scrubbers: A must-have for anyone tendering for office or school cleaning contracts, as these places tend to have acres of hard flooring which needs to be scrubbed and polished on a regular basis.
  • Vacuum cleaners: We’re talking industrial strength vacuum cleaners here, not little dinky domestic ones that have to be emptied every ten minutes. One thing you might want to keep an eye out for is a wet/dry model, meaning that you can do wet areas as well as carpeted areas, or backpack models that make it easy for you to do stairs safely without lugging a heavy thing on wheels up behind you.
  • Chimney cleaning rods, etc.: People still have wood fires so chimney sweeps are still in demand, especially in the cooler parts of the country.

Whatever you decide on getting so your fledgling business, don’t forget to talk to us before signing the dotted line for any loan. Ask us questions, even if they seem dumb. Do your homework. And we wish you all the best for your future success.

Let’s say that a few years ago, you started out as a small-scale contractor doing things like lawn mowing, window cleaning or home cleaning. And so far, your business has been doing pretty good. But you know that you can reach a bit higher and provide more services  and do a better job of what you do  if only you had an extra bit of equipment. You might want a stump grinder, a ride-on lawnmower, a set of scaffolding or an industrial strength steam cleaning machine (or whatever piece of equipment suits the next step you want to take with your business). You could go for the big commercial contracts and you know that the demand for what you want to do is there.

But there’s one small snag preventing you from taking that next step. Your business has been doing well, but you haven’t got that much stashed away in the account for purchasing a new asset for the business. This is where you need to start shopping around for an equipment loan so you can borrow the money you need to finance the new step. Well, you’ve taken the right step by coming here and reading this article.

Getting out a loan or a lease for business equipment is the same as getting out any other loan, really. You need to do your homework and ask all the questions before you sign on the dotted line. You need to make sure that you (or in this case, your business) can manage the weekly, fortnightly or monthly repayments (don’t forget to work out which of these would suit your situation best). And the usual rule about having a generous deposit so you don’t have to borrow as much applies.

You also need to ask a few questions that relate to business finance  have a yak to your accountant and do a bit more homework. If this is the first piece of big equipment that you’re buying for your business, you might need to work out what to do with assets and depreciation when it comes to accounting. You also need to ask about what is and isn’t a business expense that you can claim back against tax. And if your business has enough turnover for you to worry about GST, you need to find out what to do about that when you purchase your new asset.

And I know it’s not pleasant to contemplate, but you also need to work out what you’re going to do about your loan and whether you can manage it if your new business venture doesn’t prove to be as profitable as you thought it would be. Will you be locked into a lease agreement for ages? Can you re-sell the asset to raise the funds to pay back the outstanding amount? And can you manage the repayments now with what you are currently earning rather than relying on the extra you’re pretty sure you should be able to earn with the new piece of equipment?

Of course, there’s a good chance that your new venture will succeed, especially if you persevere and do a good job. We wish you the best of luck with it, whatever it is.

Motorbikes for your business?

OK, so you know about the benefits of owning a motorbike when it comes to personal use and pleasure. But what about using a motorbike for business purposes? If you’re part of a company which is looking to widen or upgrade its commercial fleet, have you stopped to wonder if motorbikes would make a useful addition to this fleet?

Of course, a motorbike may or may not be suitable to form part of a novated lease agreement, although this will depend on the employee you want to set up the agreement with. But you never know  some people love motorbikes and would consider this a real job perk. So, this is a matter for discussion and negotiation.

But what about the fleet proper rather than vehicles that are involved in novated leases? Will motorbikes work for your company? This will depend on your business, but in some cases, a motorbike has a few advantages over regular cars. Here are a handful:

  • Parking space: if your company building is located in the middle of the city or even if it’s in a business/commercial hub in the suburbs, you probably only have limited parking space dedicated to your team. Motorbikes will help you make the most of this limited parking space, as you can get two, three or even more motorbikes into the space taken up by one car.
  • Speed: Motorbikes can nip past queues of traffic and don’t add to congestion as much as cars. They’re also very manoeuvrable. If your business requires an employee to take paper documents, samples, small pieces of equipment and similar items across town, and you need to do this in a hurry, then motorbikes are just the thing for the job. What’s more, motorbikes don’t have the parking hassles at the other end when they’re doing the drop-off or pickup. There’s no spending time looking for a park, or hardly any, as it’s usually easy to find a space for a bike.
  • Economy: Motorbikes don’t use as much fuel as four-wheeled vehicles, especially in the case of small scooters and lighter bikes (large cruisers such as BMWs and Harley Davidsons are another story, but these are not very likely to be added to a commercial vehicle fleet  but you never know!). And if you get hold of electric bikes (i.e. battery powered bikes), the fuel bill is even lower. With the way petrol prices and even diesel prices are going, this is certainly worth considering.
  • Image: Motorbikes fit very nicely into the image of being energetic, funky, friendly and down-to-earth, and possibly a bit eco-friendly, too. These are qualities that a lot of companies would like to project, so this might be another reason to add them to your fleet.

Motorbikes don’t just have to be used for courier purposes by commercial companies. Other businesses can also make use of motorbikes: security work (especially if the job involves patrolling an area), deliveries of any sort (as long as the things to be delivered can fit into the pannier bags) and anything than involves house calls or face-to-face visits.

So will a motorbike suit your business? Well, that’s totally up to you, but if they are and you need finance to add them to your fleet, pick up the phone and have a chat.

Finance Terms to Remember

In this day and age of the internet and moving market prices on everything from milk to homes it is sometimes wise to sit back and revisit the basics. This is true in the motor vehicle financing area as well. When we decide that we need a new vehicle we also have to decide how to pay for it. This can be confusing if you dont know what each of the basic financing terms mean to you and your situation.

A CAR LEASE (or FINANCE LEASE) is a commercial finance product which enables you to have use of a vehicle and all the tax and personal advantages of ownership, while the financier actually retains the ownership of the vehicle.

The entire price of the vehicle is leased in this situation. Generally there is a residual value payable at the end of the term which has the effect of reducing the monthly payments when compared to a secure loan. This residual should be similar to the value of the car at that time. Be aware of falling for too high a residual. This may have the effect of lowering the monthly payments, but there is nothing worse than having a payout of say $20,000 when the value of the car is $12,000 because you will have to come up with the $8000 difference! Far better to have a lower residual and higher payments and if you cannot afford it, buy a cheaper car!

In terms of tax deductions, your claim is generally for the monthly payments

A COMMERCIAL HIRE PURCHASE (CHP) is a commercial finance product where you hire the vehicle from the financier for a fixed monthly repayment over a set period of time. At the end of the term when the total price of the vehicle (which includes all interest and/or residual (called a balloon payment in this type of finance)) is paid you take ownership of the vehicle.

A deposit can be used in a CHP to reduce the payments or final payouts.

In terms of tax deductions, your claim is generally for the interest paid and the depreciation per annum.

A CHATTEL MORTGAGE is a commercial finance product where the customer takes ownership of the vehicle (chattel) at the time of the purchase after the Financier advances funds to you for the purchase.

The financier takes a mortgage over the vehicle as security for the loan, by registering a Fixed and Floating Charge with the ASIC. When the contract is complete the charge is removed and you have clear title to the vehicle.

People/companies who are registered for GST can claim the GST in their BAS and there is no GST applied to each monthly payment.

A NOVATED LEASE is a method of salary packaging a car, which an employee leases a car which the employer agrees to pay the monthly payments in pre-tax dollars while they are employed with the company.

This leasing option allows for finance mobility for the owner and control over the maintenance and fuel purchasing.

A PERSONAL LOAN is simply that personal finance product where the financier lends the customer unsecured funds to purchase a car for a set period of time with either fixed or variable rates.

This product is best for those looking to finance a vehicle out of the normal lending criteria’s (used vehicles, small value vehicles and private use vehicles).