by Kyla Camille Nievera, Negosentro | Why is It Better to Hire Equipment, Rather than Buy It? | Running a business requires investing money smartly. Having this in mind, equipment seems like a logical place to put your money in, right? Well, not really. While you might be able to afford the newest piece of equipment right now, think about whether you will be able to do the same when that latest tech becomes yesterday’s news. Count in the maintenance costs and you will see that renting equipment instead of buying it might just be the most reasonable solution. If you are still not sure about this, we will address this problem in a more detailed manner so that once you get all the pros and cons, you will be able to make that decision for yourself.
You’ll be resistant to market fluctuations
Every market has its ups and downs. This especially goes for a construction business, which can be seen thriving in one moment and struggling in the very next. If you invest a lot of money in expensive equipment, the market downfall can soon become the downfall of your entire business, leaving you in debt and without constant income. Renting equipment, on the other hand, will mean that there are no strings pulling you down when things go wrong. You always have the option of returning the equipment and renting it again when the demand is up again.
Your equipment will always be up to date
One of the biggest problems in industries that use a lot of machinery is keeping up with the constant innovations in technology. Tools, machinery and equipment are updated on a regular basis, and while some corporate giants can afford to keep track of all of those changes, this can prove to be a daunting task for small businesses. Fortunately, rental companies are always offering the newest models, and it is a wiser choice to trade price equipment hire a piece of equipment than to buy a new one every few seasons.
You will avoid storage costs
Saving on additional costs for storing unused machines, tools and equipment in a place that is safe from the elements and intrusions is another major benefit of renting over buying equipment. Although initially it may not seem so, this may take up a huge chunk of your budget. In most cases, renting a warehouse is just the tip of the iceberg. Where’s the security guard paycheck? The surveillance cameras… the electricity costs… the transport… And while some pieces of equipment, like a compactor and a dozer can be stored outside, more delicate machines like a scissor lift are always stored indoors, which makes them perfect candidates for renting.
You’ll have nothing to do with maintenance
Besides storage, equipment requires maintenance which also has its price. Not only does every machine require regular maintenance but also checkups, and depending on how well you are doing the first one, that can be a small or a big expense. If the machine suffers a malfunction or a damage, that can turn into a whole chain of repairs. Renting equipment rids you of these worries.
You’ll solve a lot of money-related problems
Besides these obvious savings, you will make a bunch of small ones which will really make a difference when they pile up. First, you’ll forgo the upfront investment, but that’s not all. Second, you will not have to worry about gigantic taxes on machines, since rental expenses are often considered as project expenses, and sometimes they even have a type of tax-deduction benefit. Finally, if you rent equipment you will still maintain a strong borrowing power since banks look at the rented equipment in one way and at purchased one in a completely another way. Thinking in terms of assets, this means that a dated or malfunctioned machine could weaken your overall financial balance.
You’ll avoid a long-term commitment
If the very thought of a major capital-equipment buy makes you anxious, you are not the only one. Most machines cost a lot of money, and have to be maintained, used, stored and serviced. Equipment ownership requires keeping track of warranties, making decisions regarding service, considering eventual sale and disposal. All of these things make a long-term obligation not everyone is willing to commit to.
To summarize, renting equipment is simply easier than buying it. It saves you a lot of money, rids you of many worries and helps you stay competitive in your branch.