One of the first decisions that new business owners often make is whether to buy or rent the equipment they need. Renting equipment can seem like the most cost-efficient decision upfront,
but rental fees can quickly cut into your profits. Owning equipment can require a significant purchase upfront, which may not always be available to new business owners. We’re here to discuss why you may want to consider purchasing your equipment outright rather than financing it.
Avoid Expensive Rental Costs
Rental companies typically charge a premium price to rent out heavy-duty construction equipment. This equipment tends to have high maintenance and repair costs, and rental companies may overcharge to ensure they have enough to cover these costs. This means you may pay a premium price for renting equipment, even when your crews use them properly.
You may pay financing fees if you borrow to acquire your new work equipment. However, your company will own the equipment outright once you finish making the monthly payments. This means you can get rid of the rental or financing costs after a few years of payments.
Additionally, paid-off equipment is often considered an asset, increasing your company’s overall value. You could always sell the construction equipment you purchase in the future if your crew no longer needs it or you need to liquify your assets. The money you spend on your construction equipment, including interest fees and repairs, is also considered a business write-off. This means your business may qualify for more tax write-offs than if you had relied on renting equipment.
Prevent Schedule Conflicts With Competitors
When you rent equipment, you put yourself at risk of scheduling conflicts. If another construction company in the area reserves the specific equipment you need before you do, you may be left waiting weeks and sometimes months. This could sometimes lead to your company losing out on a proposed job. It could also affect your company’s reputation, thus impacting your ability to earn in the future.
Once you own the equipment, you might consider renting it out to other contractors. This allows you to earn on the tools even when you don’t have a job scheduled.
Avoid Unexpected Costs
Rental companies may sometimes charge unexpected costs, significantly cutting into your business earnings. For example, a rental company may charge you added fees for extending your rental when a project takes longer than expected. Many rental companies also charge a security deposit, which you may lose if the equipment suffers any damages. The rental company could also increase their prices at any time, leading to you paying more for the equipment you need.
Availability of the Specific Equipment You Need
If your company offers services that require specialty equipment, you may find it difficult to track down the necessary tools. For example, you may need a skid steer concrete breaker to remove and replace concrete for a client’s project. Your crew is limited to the concrete breaker sizes and power levels available through nearby rental companies. Improper sizing could lead to jobs that take longer to complete, ultimately affecting your bottom line.
Having easy access to the tools you need when you need them also allows your company to bid on last-minute projects. You won’t have to check with the nearest rental company to ensure they have the equipment you need available. You can also offer discounted rates on specific jobs to drive more business when you have the needed equipment stored and ready to use.
Greater Control Over Maintenance and Repairs
You don’t always get control over the condition of the equipment you rent. In fact, you’ll usually end up paying rent, regardless of the equipment’s condition. Owning your construction equipment gives you more control over preventative maintenance and repairs. You can schedule maintenance or repairs during crew downtime. You can also train your crew members to use the equipment in a way that avoids untimely breakdowns.
Of course, when you use the same equipment for each job, you also have the opportunity to train your team members better. Your company can train new hires on the exact equipment they’ll be working with on the job. Greater training means improved efficiency and safety. Your crew will also learn the ins and outs of the equipment, meaning you’ll know when maintenance or repairs are necessary.
Should you rent or buy your construction equipment? This is a question that many construction and landscaping companies ask at one time. Buying construction equipment offers many benefits over renting, including availability and cost. Construction business owners also have more control over project acceptance and scheduling when they own their equipment.
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