Back to All Blog Posts

Your Small Business: Purchase Planning Challenges

Equipment Finance
Posted on 
September 1, 2023

Understanding the impact of today’s financial landscape on equipment acquisitions

Planning your budget for the year ahead always involves a little predicting of the future, and today it’s more challenging than ever. As a business owner, you don’t have to study the financial news every day (and most business owners don’t), but it’s important to be aware of the current economic and environmental challenges that will likely impact any plans you might have to acquire new equipment in the next 12 months.  

To plan for tomorrow, you need to have a comprehensive understanding of the economic and manufacturing data affecting your industry today. Supply chain issues, the current rate environment, and the Federal Reserve's anticipated strategy – you should consider all these factors when planning equipment purchases or financing.  

If you’re planning on purchasing new equipment or any other major purchases in the near future, here are some valuable insights to help you make informed decisions.  

Understanding Your Supply Chain

The supply chain is the backbone of any business, ensuring a steady flow of materials and products. For business owners who need equipment or are planning equipment purchases in the year ahead, it’s crucial to understand their supply chain and the various stages of production — from raw materials to the finished product — you can anticipate potential bottlenecks or disruptions that may impact equipment availability.

While keeping track of the ebb and flow of the supply chain may seem intimidating, it's key to stay informed about economic and manufacturing data in your industry. Regularly monitoring industry-specific news, publications, and reports will help you anticipate any fluctuations that could affect equipment availability or pricing so you can plan accordingly.

Plan B: Preparing for Equipment Shortages and Longer Wait Times

The global economy has endured significant disruptions in recent years, including the COVID-19 pandemic, trade conflicts, and natural disasters. These events have substantially impacted supply chains, leading to equipment shortages and longer wait times for businesses.

You can lessen the risks associated with equipment shortages by having a contingency plan in place. Explore alternative suppliers or manufacturers who can fulfill your equipment needs if your primary source faces difficulties. Diversifying your supply chain, or being ready to, can help reduce the impact of disruptions and keep your business running smoothly.

Furthermore, it's essential to maintain open communications with your suppliers and manufacturers. Establishing strong relationships will help ensure that you receive timely updates on potential delays or shortages, allowing you to adjust your plans accordingly. Being proactive and flexible in your approach will help you navigate unexpected challenges.

Factor in the Rate Environment and the Fed's Evolving Policy

Another essential consideration in planning for equipment acquisition is understanding the rate environment and the Federal Reserve's changing policy. The rate environment refers to the prevailing interest rates in the market and any anticipated changes which could significantly impact your borrowing costs and financing options.  

The Federal Reserve, as the central bank of the United States, plays a vital role in determining these rates through its monetary policy decisions. Business owners should keep a close eye on the Fed's announcements and any changes in interest rates since higher rates can make borrowing more expensive, potentially affecting your equipment financing decisions. You can make strategic choices by staying informed and understanding how changing interest rates will impact your current and future financial obligations.

If possible, you should also try to monitor the broader economic landscape along with the Federal Reserve's policies — this will help you anticipate potential shifts in the market. Changes in monetary policy can impact inflation, business investment, and consumer spending, which, in turn, may affect your business's growth prospects and equipment needs. By staying informed, you can make proactive decisions and position your business for success.

If you’re planning to purchase equipment, understanding your supply chain and the financial landscape is essential. Paying attention to economic and manufacturing data in your industry will help you anticipate potential equipment shortages and longer wait times. Stay informed, establish strong relationships with suppliers, and be proactive in your approach to equipment acquisition. Being prepared and flexible will help you adapt your plans and find alternative solutions when needed.

Furthermore, be sure to consider the rate environment and the Federal Reserve's policy when planning equipment purchases or financing. Changes in interest rates can impact your borrowing costs, while broader economic shifts can influence your business's financial plan for the coming year.

At Apex Commercial Capital, we help small businesses get the funding they need to purchase the equipment they need. Central to our way of doing business is keeping clients informed about the changing economic environment and potential challenges — including factors like supply chain issues, the rate environment, and the Fed’s changing policies.

Apex Commercial Capital is a full-service lender focused on providing commercial mortgages and equipment financing to small businesses. We understand that the borrower is more than a credit score – we consider all the relevant financial information when reviewing a loan request, looking beyond the numbers to understand each business owner's objectives in determining how we can best work together to achieve them.
Call (800) 262-APEX today to talk with our team of small business mortgage specialists.  


You might also be interested in