Starting a business involves making decisions at every turn, with the overall aim of building your company, improving your product or offering and staying afloat financially when everything costs money. If you need a vehicle, that is another decision to be made.

To buy one outright means making a significant financial commitment, cash upfront, whereas if you hire one, the blow is softened, but the vehicle is just an expense, not an asset. But you can have the best of both worlds with a rent-to-own (RTO) contract. With this system, you pay in manageable instalments, but at the end of the contract, you have a vehicle that is all yours.

Why New Businesses Struggle With Traditional Asset Finance

In the early days of a business venture, there are a lot of outgoings and very little coming in. Profit? In real terms, that only starts when everything is paid off. Until then, every influx of money, as welcome as it is, comes with the knowledge that there are needs that will gobble it up.

Paying for a rented vehicle is just one more expense, and paying cash up front is often out of the question. But in business, you have to play the long game, and with RTO, you’re getting yourself an asset on very affordable terms.

Preserving Working Capital with Low Upfront Deposits

As we’ve seen, buying a vehicle for cash is often out of the question because it would take too big a chunk of your working capital. With RTO, you can have the vehicle you need for a relatively small deposit – typically a few hundred dollars. That leaves money in the bank for all the other expenses that starting out imposes on you.

Aligning Vehicle Costs With Business Revenue Streams

The balance sheet is something many people don’t really encounter until they start a business, but if you’re going for a bank loan to get you started, they’re going to want to know you’ve thought this through, and it is feasible, not just pie in the sky. Show them you’ve worked out a way of acquiring a good vehicle without blowing a load of money, and they will sense you know what you’re doing. Then they – and you – can start to look at the trickling revenue streams less nervously.

In addition, when you own a vehicle, you are responsible for everything from routine maintenance and servicing to insurance. With an RTO contract, you may get help with these, so make sure you read the contract.

Benefits of a Flexible Financial Product for Growth

Flexibility is a wonderful thing in business, and with RTO, it is there from the start. You can opt for the lowest down payment or put down a bit more to reduce the contract term. There is also the possibility of switching to a different vehicle if your needs change – and that could mean a bigger vehicle because you’re doing well or a more impressive car as befits your growing status in your field.

Scaling Your Fleet With the RTO Model

If yours is the kind of business that may need extra vehicles as it grows, there are potentially deals to be done with your finances. RTO companies want you to succeed because they can provide you with more of what you need, and they may have their own ideas about how to help you. If you have an existing contract, go through the details to see if there is anything relevant in there. Otherwise, talk to the company and see what their best offer is. Even if you’re not a born negotiator, simply asking a question can lead to finding something favourable that you didn’t know was there.

Whatever your particular circumstances – and every business is different – getting your vehicle(s) on an RTO contract can make a lot of sense. At RentBuyIt, we support startups and growing businesses across Australia, including in Melbourne, Brisbane, Adelaide, and the Gold Coast.