Having the right equipment is the key for every business owner. You need to have the right equipment on hand to provide the level of service that your customers expect. Not having access to the industrial equipment that you need to get the job done can really eat into your profits. Making the decision to buy or rent industrial equipment is really dependent on a variety of factors.
Unforeseen variables may include industrial auctions, liquidation sales, or an old-fashioned good deal. You have to take your situation into account and make the best decision for your business. Here are the main factors to consider when you are deciding if you should buy or rent industrial equipment:
How Much Capital Do You Have On Hand?
The biggest deciding factor for if you should buy or rent industrial equipment comes down to the amount of capital that you have access to. If you are strapped for additional funds, it is not a wise business decision to tie up all your available money in the purchase of industrial equipment. Many companies go out of business because they do not make wise decisions with the funds that they have available. When you are just beginning, it might be better to buy only the equipment that you absolutely need and rent the rest. Renting helps you to conserve cash in a way that buying your industrial equipment outright does not.
As an example, let’s look at the Deere Model 310 SJbackhoe which according to Equipment World, would cost somewhere around $75,000 (with about $10,000 of give-and-take depending on the features). Purchasing this backhoe outright would take a huge chunk of money from your budget. Now if you opted to purchase an older, used model at an auction, you could save a tremendous amount. Equipment World pegged the auction price of a 2004 model 310 SJ at $39,680. That equates to more than $35,000 saved.
What are the Risks Involved?
Industrial equipment can be incredibly expensive. When you purchase this type of equipment it is an investment and a risk. By renting industrial equipment you are limiting the amount of risk that your business is exposed to. It all depends on how much risk you are willing to take on and how confident you are that this risk will pay off and your business will be successful in the end. If you are more of a risk taker, you might see buying your industrial equipment as a wise decision, but if you are adverse to risk renting might seem like a much safer alternative. Renting helps you to reduce risk in a way that many business owners find comforting. It all depends on the amount of risk that you are willing to take on.
The choice to rent or buy industrial equipment always comes down to choice of preference. If you have the available funds and are fine with taking on the risk, owning your own equipment is normally preferred. However, since most folks simply don’t have the luxury of an unrestricted budget, renting or leasing industrial equipment and heavy machinery is a much more feasible option. At least in that respectyou’re not having to foot the entire bill for cost of the equipment upfront.