Interesting way to look at it Chuck. I have this simple aversion to acquiring debt. If the customer pays a capital fee up front to cover equipment costs, but never really owns it, I never have to pay lease charges. I own all of my towers so pay no rent there. I have not entertained leasing other equipment, but may a vehicle next year. APs and network equipment are cheap enough these days we just buy them and depreciate them on our Federal return.
Of course, I may change my mind once everything has been depreciated and I end up paying more taxes. The hope is customer count will increase by then and that paying more taxes becomes a "high class" problem. Mike At 09:35 PM 11/8/2009, you wrote: >Let me ask you this though... > >Would you rather > >1) Buy $5,000 worth of Canopy equipment per month at 25 installs per >month (new $1,250 in revenue at $50/mth) > >- Or - > >2) Obtain a lease at $3,000 per month for 100 installs per month ($5,000 >in revenue at $50/mth). Essentially, you are putting $2k in the bank >after paying $3k on the lease for 12 months then $5,000 per month after >that. > >Take this as being done over 2 years. > >Option 1 has 600 customers paying $50 per month at $30k per month and is >debt free. After two years, if you were to attempt to value your >company at $500-600 per sub, your company is worth 360k. > >Option 2 has 2400 customers paying $50 per month at $120k per month and >is in debt (based on a rotating amortization schedule) in debt only >$110k (doing it in my head, it's approximate). After two years, if you >were to attempt to value your company at $500-600 per sub, your company >is worth $1.2 Million with a debt of $110k net $1.1 Million. > >These are based on $50 per month averages, some of you are more, some of >you are less. I learned this lesson from a friend of mine who told me >the local cable co. is leasing every piece of equipment that goes to a >customer. That way they are never operating on negative cashflow while >maximizing available customers. Before I started leasing, I was Option >1. After leasing, our available cash has increased greatly offering >many company benefits, like increasing our footprint, new vehicles, etc. >We pay for about half our monthly equipment by leasing. > >Regards, >Chuck Hogg >Shelby Broadband >502-722-9292 >ch...@shelbybb.com >http://www.shelbybb.com > > >-----Original Message----- >From: wireless-boun...@wispa.org [mailto:wireless-boun...@wispa.org] On >Behalf Of Mike >Sent: Sunday, November 08, 2009 10:16 PM >To: WISPA General List >Subject: Re: [WISPA] CPE - who buys it? > >Oh heck no. My balance sheet looks awesome; no debt; positive cash >flow. > >Mike > >At 03:56 PM 11/8/2009, you wrote: > >Do you feel it has a negative affect on your companies value if you >dont own > >the CPE? > > > >On Sun, Nov 8, 2009 at 3:50 PM, Michael Baird <m...@tc3net.com> wrote: > > > > > You don't have to pay property tax on the CPE. You don't have to go >pick > > > up the device if the customer quits. You can charge the customer for > > > replacement radios. You can offer a value add-on product such as >modem > > > insurance. > > > > > > Regards > > > Michael Baird > > > > I've always provided the CPE to the end user and retained >ownership as > > > part > > > > of the service. That was mostly due to the high cost of CPE in the >past. > > > > With the advent of lower CPE cost, I'm considering changing that >to where > > > > the customer buys their own CPE. I'd like to hear the pros and >cons to > > > this > > > > strategy. > > > > -RickG > > > > > > > > > > > > > > > > > >------------------------------------------------------------------------ >-------- > > > > WISPA Wants You! Join today! > > > > http://signup.wispa.org/ > > > > > > > > > >------------------------------------------------------------------------ >-------- > > > > > > > > WISPA Wireless List: wireless@wispa.org > > > > > > > > Subscribe/Unsubscribe: > > > > http://lists.wispa.org/mailman/listinfo/wireless > > > > > > > > Archives: http://lists.wispa.org/pipermail/wireless/ > > > > > > > > > > > > > > > > > > > > > >------------------------------------------------------------------------ >-------- > > > WISPA Wants You! Join today! > > > http://signup.wispa.org/ > > > > > > > > >------------------------------------------------------------------------ >-------- > > > > > > WISPA Wireless List: wireless@wispa.org > > > > > > Subscribe/Unsubscribe: > > > http://lists.wispa.org/mailman/listinfo/wireless > > > > > > Archives: http://lists.wispa.org/pipermail/wireless/ > > > > > > > > >----------------------------------------------------------------------- >--------- > >WISPA Wants You! Join today! > >http://signup.wispa.org/ > >----------------------------------------------------------------------- >--------- > > > >WISPA Wireless List: wireless@wispa.org > > > >Subscribe/Unsubscribe: > >http://lists.wispa.org/mailman/listinfo/wireless > > > >Archives: http://lists.wispa.org/pipermail/wireless/ > > > > >------------------------------------------------------------------------ >-------- >WISPA Wants You! Join today! >http://signup.wispa.org/ >------------------------------------------------------------------------ >-------- > >WISPA Wireless List: wireless@wispa.org > >Subscribe/Unsubscribe: >http://lists.wispa.org/mailman/listinfo/wireless > >Archives: http://lists.wispa.org/pipermail/wireless/ > > >-------------------------------------------------------------------------------- >WISPA Wants You! Join today! >http://signup.wispa.org/ >-------------------------------------------------------------------------------- > >WISPA Wireless List: wireless@wispa.org > >Subscribe/Unsubscribe: >http://lists.wispa.org/mailman/listinfo/wireless > >Archives: http://lists.wispa.org/pipermail/wireless/ -------------------------------------------------------------------------------- WISPA Wants You! Join today! http://signup.wispa.org/ -------------------------------------------------------------------------------- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
