Business owners often wonder whether they should buy equipment or rent it. Many factors need to be considered when making this calculation. The following items are just a few things to consider.
More Job Opportunities
A company may find it needs to turn down jobs because it doesn’t have the right equipment. There is no need to do this. Contact a heavy construction equipment company and rent the equipment. Doing so allows every business to take on jobs it may otherwise not have considered. The cost of renting the equipment is passed on to the customer, so the company doesn’t lose money. With the additional funds brought in thanks to these extra jobs, the company may find it can purchase the needed equipment sooner. In addition, see if the construction equipment company offers used equipment for sale. This is a great way to save on an item the company uses regularly but currently doesn’t own.
No Storage Required
A company saves money by renting equipment because it doesn’t need to store the equipment when it isn’t in use. If the organization doesn’t use a piece of heavy equipment regularly, the storage costs add up. This equipment cannot be left outside where it is exposed to the elements. Doing so could lead to early failure or costly repairs. Save the company funds for equipment that is used regularly and doesn’t need long-term storage.
Initial Purchase Price
The cost of heavy equipment continues to rise, thanks to supply and demand and other market forces. Many companies find they cannot expand because they lack the capital to invest in new equipment. Renting this equipment allows them to complete the expansion in less time. The company won’t be tied to a particular piece of equipment and can be more flexible in terms of the jobs accepted. In addition, the company’s bottom line isn’t negatively affected by the large purchase. The owner can budget for the rental expenses and set aside money to purchase frequently used equipment in the future.
Save on Transportation Costs
Companies spend a great deal of money transporting heavy equipment to various job sites. Although the company passes these costs on to the customer, they add up. With fuel prices rising at astounding rates, a company may find they have been undercharging in this area in recent months.
When a contractor provided the customer with the quote, they used fuel prices at that time. They are now paying more than expected. When a company rents heavy equipment, the fee includes the fuel to deliver the equipment and pick it up. There are no unpleasant surprises like one that may be seen at a fueling station today.
A Backup Plan
Equipment breaks down even with regular maintenance. Don’t let this stop a job in its tracks. Turn to a heavy equipment rental provider and allow the project to continue uninterrupted. This improves customer satisfaction and ensures the company’s reputation doesn’t take a hit.
Certain companies today not only send out someone with the necessary equipment, but they can also dispatch a mechanic to find out what is wrong with the non-operational machinery. This saves the company time and money because they only work with one provider and won’t need to transport the non-operating machine to a shop.
No Maintenance Costs
The rental provider handles all maintenance for the heavy equipment it rents to customers. The company using the machine doesn’t have that expense. While the rental fee includes these costs, they are spread across multiple customers. Furthermore, the company that rents this equipment is responsible for ensuring it is operating properly and safe for use. The rental provider also handles all record-keeping associated with maintenance and repair tasks, taking this burden off the company using the equipment.
Every business owner knows how quickly a piece of equipment depreciates. To minimize this depreciation, a company may invest a lot of time in maintaining the equipment. They can then resell it for a better price. However, over time, this task takes up valuable time, and the owner has no guarantee they will recover much of the initial purchase price.
Market factors play a role in how much the machine will bring in when the owner decides to replace or upgrade the equipment. When renting, concerns about depreciation are eliminated. They now fall on the rental provider’s shoulders. In addition, the owner can choose a newer machine when it becomes available without being forced to sell the old one to invest in the new equipment.
When a company rents heavy equipment, the fees associated with doing so can be marked off on its taxes. This allows the business owner to keep more of the revenue generated and use it for other purposes. If the company buys the equipment, however, it can only mark off depreciation. Doing so takes more time and effort to calculate, and this time can be better used for other tasks. Speak with an accountant to learn the benefits and drawbacks of renting and buying when it comes to the company’s bottom line.
When a company purchases heavy equipment, it goes against the bottom line. If they rent equipment, they can budget for it monthly and it doesn’t go on the company balance sheet as a liability. Take this into consideration and determine which option best fits the budget currently.
Every company must determine whether it makes more sense to rent or buy equipment. In addition, it depends on the machinery being considered. For example, a company that does excavations on a daily basis will need the right equipment to complete this task. Buying makes more sense in this situation, as the company knows the equipment will be available when needed.
If this same company has been asked to handle another task that requires the use of equipment it doesn’t own, renting is the better option. Money isn’t being spent on a machine that will sit idle most of the time. Consider all factors when deciding which option is right for your unique situation.