Capital expenditure costs in a tool and/or plant hire business are generally quite substantial. A wide range of tools and equipment is generally needed, with more than one of each item available to customers. Tools need to be top-quality professional items rather than cheaper alternatives.
Now that you have given further thought to exactly how your hire business will operate, you might like to revisit your estimates of capital costs to make sure that you have identified all of the items you will need and any other capital costs you will incur. Remember that you'll need to replace broken, worn out or out-dated tools regularly and add to the range as new designs become available.
Don't forget to include any expenditure on your premises such as sign writing, or having your logo and livery put on any vehicles. Make sure you have thought about the security measures you will put in place - for example, a burglar alarm, or security shutters. If you are paying cash for all the items you are buying for your business, enter the amounts - including VAT - in the months when you expect to pay for them.
If you decide to buy some larger equipment on hire purchase, or with a loan, enter the deposit and the monthly payments in the months in which you will pay them. These payments will be made up of both capital and interest. Enter the capital here and the interest under 'Bank/finance charges and interest' in your cash flow. The agreement will identify the amount of interest payable annually - if you deduct this from the total amount you have to pay each year the balance is the capital.