Who Is to Blame When the Love Affair Ends?

Friday, November 30, 2012

It all starts as sweet as a honeymoon escape to an exotic island. They walk into the sunset, in love, for the next five years.
What the Buyer (Margaret) Remembers
Charlie, the sales guy, introduced us. It was love at first sight.
My old one was just not working out anymore: too slow, always in need of repair and unpredictable. Or maybe "IT" had become technologically obsolete. "IT" could be a copier, phone system, fork lift, over-the-road tractor and trailer or printing press.
Margaret thinks... this new, shiny, fabulous creature will fit in perfectly. There's enough room in our operation for it. "IT" is affordable, sleek, flashy and flexible. This will help us attract new customers, will always work perfectly and be more productive than my best employee.
Charlie showed Margaret how easy the lease would be to get in and out of. All "you'll have to do is write the check for the first payment and sign the four-page contract." Margaret thinks... what could possibly go wrong? Margaret thinks this is a marriage made in heaven.
Unlike a real marriage, this one is for 5-years. At the end of the 5-year lease, the options are to return the old one and trade up to a new unit, no fuss, no hassle. In a perfect world, that is how it is supposed to go.

Divorce Court
Unfortunately, this is how many business owners and managers remember the simplicity of starting a lease. Cost justification logic may disappear. The love affair between a business owner and their equipment is complicated. I've seen "Yellow Iron Romance" in all industries. It matters little whether the fascination is for a dozer, an 18-wheeler, a big name digital copier or a high-tech software solution.
3 Pieces of Matchmaker Advice
If you are acting as the "Matchmaker" either in a role of recommending the solution or selling the solution, you have a big responsibility. The job does not end when the commission check arrives. The relationship may not be a happily ever after thing. What can go wrong?
  1. Equipment does not work as promised. Who is to blame? Stay connected to your customer and intercedes with the service people when necessary.

  2. If the lease renews automatically, an Evergreen Lease, remind your customer in plenty of time before the end of lease notice is due. You'll help them avoid an automatic lease renewal.

  3. If the fair market value purchase price is ridiculous and the customer feels lied to, you are the one who introduced the leasing company. Mediate for your customer.
7 Buyer Tips to Save Money
  1. Keep your long range plans in mind. New and shiny may not be what you need. Idle equipment does not pay lease payments.

  2. Evaluate financial options carefully. Leases are easy to get into and have low up-front payments. Is a lease the right financial tool for this specific machine, solution or situation?

  3. Call your bank for their financing options. Their financing options may surprise you.

  4. Read and understand the lease contract BEFORE signing. Negotiation is more difficult after the lease commences.

  5. Know and understand the definitions of all your end of lease options. That means talk to the leasing company, not just the equipment sales person. Equipment sales people are not leasing experts. Their job is to know their equipment, service or solution.

  6. If your lease does not have 3 options at the end: Buy, Renew or Return, negotiate these in.

  7. Negotiate! Negotiate! "Everything is negotiable is only you ask."
There's much more to an equipment sale than the sizzle. It's hard work. And just like a real marriage, when it works, it's a beautiful thing.


Post a Comment