In operating a construction company, knowing where to put your capital is essential in achieving high-profit margins. There are many aspects of a business involved in construction which can contribute to financial losses. For example, a vital part of what makes a company successful is the availability of heavy equipment and machinery used for various projects. In this case, there is always the dilemma of whether it is best to keep renting or decide to buy instead.
Buying heavy equipment versus renting has distinct advantages and disadvantages. There are times when renting makes the most sense, and is more economical too. But in the long run, owning equipment also improves the company’s image and reputation.
What are the benefits of renting equipment?
Renting heavy equipment is popular for several good reasons. The following are some of the most notable benefits of renting heavy equipment which are guiding principles that most construction companies rely on.
- Low up-front cost. If you consider owning pieces of equipment such as heavy-duty cranes, loaders, and bulldozers, then you need to set aside a significant portion of capital as these are expensive pieces of machinery. In most projects that require cranes, there are companies like Crane Hire Peterborough that provide services for short and long term leases. It is therefore not a sound financial investment for every company to buy large pieces of machinery that also require storage space and maintenance.
- Faster lead time. There are instances when a project requires special equipment that companies do not own. Renting is an excellent solution because it results in more rapid acquisition and better lead times.
Apart from these, renting equipment also gives the company access to the latest and most advanced pieces of machinery available. The rental company also handles logistics and clean-up after completing the rental agreement.
The benefits of buying used equipment
Buying equipment does not only mean investing in brand-new machinery. Another suitable solution construction companies often look into is buying used equipment. A distinct advantage of second-hand machinery is the lower cost. Typically, used heavy equipment for sale is still in good working condition and may only require minimal repairs or replacement of parts.
Heavy equipment also depreciates very fast. If you buy brand-new, you will also shoulder the most significant portion of the initial depreciation. On the other hand, buying used equipment means that hurdle is long gone. Although used equipment will continue to depreciate, it will be gradual over time and less significant in cost.
Heavy equipment and machinery are built to last. A well-maintained piece of equipment regardless of if bought second-hand will endure years of use. Even then, it is still possible to resell the equipment at a modest price.
In conclusion, both renting and buying used equipment are sensible solutions construction companies may consider. Choosing one option over another is entirely based on the situation and the company’s current financial situation. By conducting a cost-benefit analysis, you can better decide which solution will be ideal in meeting the company’s long-term goals.