Excavators, skid steers, loaders, lifts, power supplies, trucks, and other equipment are essential to any business. But like any resource or department, they can be streamlined for maximum versatility and efficiency. As the company pores over the balance sheets, it pays to explore and compare the costs of buying and owning equipment against leasing or renting it.
Before you settle on buying new equipment or renting an excavator or power supplies, take the time to analyse your cost-benefit situation.
Examine the Situation of Your Business First
Before you make a decision, step back, and analyse your business’s financial and cost-benefit situation. A logical and educated decision will result as you consider the following factors:
- Frequency of need for equipment
- Estimated rental payments for the machines needed, as well as the period of use
- Storage and transportation expenses
- Available capital and financing options
- The estimated cost of service and maintenance over the equipment’s life
- Need for skills with the equipment
- Special technology
- Multiple uses for machines both bought or rented
- Internal capability to maintain, test, and service machines
The assessment will reveal the data needed for decision-making. These data include hours saved or wasted, usage duration, capital, loss of potential, profit, etc.
If you plan to transition from renting to buying equipment, the equipment in question should be used at least 60 to 70 percent of the time. On the other hand, if you have little or no use for the equipment after a particular job or a set of projects, renting might be your best option.
Rental Equipment: When Is It THE Option?
Rental options offer flexibility that extends finance and logistics and fills during an emergency or an outage. Also, the high competition among rental providers works to your advantage with specials, discounts, and offers.
Equipment rental is a viable option for your business if your goal is one (or all) of the following reasons:
- Decrease long-term expenses. Companies work with equipment consultants or maintenance teams devoted to service or maintain machines necessary for seamless operations. Mechanics are in charge of checking hydraulics and fluids, as well as changing parts and upgrading technology. In some cases, sudden leaks happen, compromising the use and transport of the equipment and adding to your expenses.
Service and expense of maintenance are often unpredictable. Rental fees, on the other hand, are easy to gauge.
- Forgo the upfront investment. Equipment (especially the large ones such as telehandlers, excavators, or tracked dozers) require expensive capital, which takes a couple of ‘good years’ to come about. When you purchase equipment, your money is tied to it until you decide to sell it. If you use it well and wish to sell it after years of use, the sale offers are lower.
When you rent equipment, you’re free from capital equipment obligations, which gives you more funds to maintain other vital parts of the business or pursue growth opportunities.
- Reduce the waiting time and its associated losses. Most managers and owners would agree that lost time on any project wastes profit and compromises deadline compliance. In any industry, it’s never good to have the team wait around on a piece of equipment.
When you rent your equipment, you can pick it up for the days you need it. If you need skid steers for two months, you can get it. If you need an excavator for a week, you can get that, too. The equipment will be delivered to you when the project starts, and you can return it once you finish.
Also, since professionals service and maintain the equipment, unprecedented machine malfunctions are less likely to happen and waste your job hours.
- Avoid long-term commitment. Purchased machines and equipment cost a lot of money. Apart from the purchase, you have to maintain and service them throughout their lives. Also, there are service-contract decisions to make, warranties to track, and financing options to consider. If you do not have the time to keep up with these requirements, renting is better for you.
- Gain more flexible options. Equipment rental companies help businesses to respond to financial fluctuations, specialty niches, and issues concerning supply and demand. Renting equipment also offers a versatile option, especially when you have a cooperative relationship with your equipment rental company.
- Add hours and convenience. Managing one piece of machinery requires a host of responsibilities: testing, fluid checks, maintenance, and service. Free up your schedule by letting a rental company handle these logistics.
Buying equipment is not disadvantageous, but it is not an option for all businesses. If you cannot commit or do not have the financial capability or time to purchase equipment, consider renting.