Customers want the best and you want to give them the best. That means upgrading to the latest in beauty tech.
For example, the ModiFace AI, recently acquired by L’Oreal, gives users an Augmented Reality representation of their face so they can “try on” different make-up and cosmetics in real time using apps or even in-store mirrors. It involved over 70 engineers publishing over 200 scientific papers and filing over 30 patents – we aren’t sure how much it costs but with those kinds of numbers, it doesn’t come cheap.
Other machines and applications, including Intense Pulse Light or LED machines, such as the Slimlux can cost $20k second hand, while a 2016 Cynosure Sculpsure can go for over $60k! If you really want to take your offering to the next level, consider a 2021 Candela GentleLase Pro & Zimmer Cryo-6 for a cool $125,000.
It is no understatement then that innovative rejuvenation techniques all add up. So how can you get the latest and greatest in tech to serve your clients? You should consider commercial equipment finance.
What’s the best investment?
We talked to industry leaders about what kind of machines or technologies are worth investing in early last year; we concluded skin rejuvenation, body contouring and skin tightening tech is lighting up the market at the moment. Pigmentation and hair removal machinery is also popular due to clients chasing that perfect “Instagram look.”
You should also conduct some internal market research with your own clients – what are they looking for that you may not have? What are the demographics around your area, and what do they prefer?
Types of commercial finance
There are two main areas of equipment finance you can access – loans and leases. The common type of loans are called chattel mortgages, which are secured against the property. You can set variable loan terms from 12 months to seven years, include balloon payments, borrow more than 100% of the asset’s value, and claim tax breaks such as the GST paid, interest, and depreciation on your activity statement.
You can also rent or lease equipment. A hire purchase or equipment rental sees a lender purchase the equipment on your behalf which you “hire” off them for a set period. You either get tax breaks passed on by the lender or you can claim them directly. At the end of the hire purchase or rental period, you can purchase the equipment outright, hand the equipment back, or start a new lease with new equipment. This can be helpful if you need access to the latest and greatest equipment.
Savvy Managing Director and commercial finance expert Bill Tsouvalas says that your salon or treatment centre needs to figure out what equipment it needs and its accounting methods before committing to a loan or a lease. “Leasing and renting means your equipment are considered ‘off the balance sheet’ so they’re classed as operating expenses. These have certain tax advantages such as claiming rental costs as a business expense. But you should talk to your accountant to see what’s best. The fact is, leases give you more flexibility – but buying outright means you own the equipment fully.”
Are you eligible for grants and write-offs?
Businesses of all types are eligible to write-off part or all of their equipment purchases using the ATO Instant Asset Write-Off, worth up to $30,000.
NSW businesses effected by the three-week July 2021 COVID-19 lockdown may also be eligible for up to $10,000 in grants to mitigate lost revenue. Grants are calculated relative to the proportion of revenue a business has estimated to have lost over the lockdown.
Business can also deduct 50% of the cost from an eligible asset upon installation, with the remainder subject to the existing depreciation rules under the Backing Business Investment – Accelerated Depreciation rules with the ATO.
Businesses with an aggregated turnover of less than $500 million in the year they are claiming the deduction may claim. The deduction is available in the 2019–20 and 2020–21 income years. You can find out more here.
“There are lots of options out there,” Tsouvalas says. “Talk to your accountant or a business finance broker to discuss what’s best for you first.”
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