So there you are at Bauma, admiring a beautiful new mobile crane on display, dreaming of being able to own such a machine, with your name in big letters right across the boom. But you are just a humble operator. That crane costs $1m. Where is someone like you going to get that sort of money from.

Then suddenly, like some kind of fairy godmother, out steps the manufacturer’s sales director or maybe even he is the managing director. He puts an arm around your shoulders and says: “Son, I’ve noticed that you are a highly skilled operator. You know cranes. You understand this industry. You would make a fine rental company owner.” You listen hard and excitedly as he continues.

“I’d like to make you an offer. You take this crane. You can have it. Pay me nothing for a year. Get rich on the revenue that this machine will generate for you. Then, when the money starts coming in, you can pay me for the crane.” “Wow!” you think to yourself. “That is truly a great offer. The worst that can happen is that if I make a real mess of things and make no money from it, I have to give the crane back. But at least I would have had a go. What a great opportunity for me.” You accept the kind offer and for the next 12 months you work harder than you have ever worked before. With your own crane you have your own business and, slowly but surely, you are making it a success in spite of the depressed rental rates.

Twelve months later your fairy godmother appears on your doorstep. “Hello, remember me. You owe me $1m. It is time to pay me for that crane.” Crash! That’s the sound of your recently-developed self-confidence hitting the floor.

But it’s okay really. You have planned for this moment. You are a hot shot businessman now with a proper set of accounts showing healthy revenue. You are now a good prospect for a loan.

So you pay a visit to your friendly bank manager. “I’d like to borrow $1m please. Look at my accounts. I’m a good investment for you.” “Certainly sir,” the friendly bank manager replies. “And what do you intend to use the money for?” You explain that you have this mobile crane that is beginning to make you into quite the businessman, only now you have to pay for it.

“And you will be using the crane as collateral will you, sir?” “Uhhm… okay then.” “And how much is this crane worth?” “$1m,” you reply.

“Really? But that is the same as the purchase price for a brand new crane. Are you telling me that your crane has not depreciated at all in the 12 months that you have been using it so intensively?” Crash! This time it’s the sound of a very large penny dropping really heavily. You realise that you are having to find $1m to pay for something that is worth only about $800,000. You cannot get a loan for the full amount. Even though you have not had to make repayments on the crane in your first year of trading, with all the other start-up costs you haven’t saved anything like enough money to offset the depreciation in the value of the equipment.

Your request for a loan is turned down wherever you look. The fairy godmother takes back possession of the crane, and you go back to being a wage slave, working for someone else, making them rich instead of yourself.

And the moral is?

The moral of this story is: Never accept a deal without first getting good financial advice. A wise man said that if it sounds to good to be true, then it probably isn’t.

Talk to a bank or a financial advisor to determine what you will need to pay towards the crane in the future in order to receive conventional financing. If the manufacturer is so keen to give you the crane free for a year, set up a repayment schedule from the outset.

And whatever you do, don’t be fooled into thinking that the money that the crane generates during the ‘free’ period is clear profit to be spent on personal consumption.

They say never look a gift horse in the mouth. But a horse of a different kind should come to mind – a big wooden one.