Companies in the construction industry need every competitive edge to be able to compete effectively. As owners look for every means to save a coin, renting machinery has become a critical factor in ensuring that costs are kept low for the company. In the construction industry, Power backup supplies, trucks, excavators, and loaders are essential for the business to operate at full capacity. But unlike other industries, the equipment must be streamlined for a just-in-time approach for maximum versatility and efficiency.
A cost-benefit analysis will provide critical data patterns that can guide you to making informed decisions about purchasing the equipment vs. renting it. Regardless of how the businesses differ in structure and size, very few organizations can afford to have the equipment sit unused. Many departments in the organization will have input on what approach to take when purchasing the equipment. Here are seven reasons why it cheaper to rent equipment as opposed to buying it:
1. Forgo a large amount of investment
Large equipment, such as a bulldozer, is an expensive cost that will sink a large sum of finances of the business onto one piece of equipment. To get the return on investment, the equipment must be used daily to be able to recover the cost, which, as we know, is not the case. When purchasing the equipment, it is hard to be “liquid” as the equipment consumes a lot of capital unless it is disposed to recover the investment sunk into it.
2. Reducing the Expenses in the Long Run
In cases of machinery, companies are forced to hire equipment consultants who are devoted to servicing the machines keeping them from faults. If you rent, you are not responsible to make sure the equipment wont cause a construction accident.
3. Reduce Storage and Transportation costs
The purchase of equipment comes with a storage headache. No one would allow their piece of machinery to be exposed to the elements of the weather, thus leading to rust in the long run that affects the performance of the equipment by degrading its performance. Transportation costs can be greatly solved when renting equipment as you can ensure that the machinery is delivered on-site by the rental company.
4. Cut Taxes paid
Rental expenses are way cheaper from a tax angle as the tax burden is on the rental company as they provide a good/service and therefore are required to remit their taxes to the government, thus the construction company benefiting from the tax deduction.
5. Reduce the coordination headaches
Coordination headaches about why equipment has broken down can be alleviated as it is part of the rental company to ensure that the equipment is well serviced and in the best shape.
6. Get the best equipment
Renting equipment gives the flexibility of having the best equipment as manufacturers are looking to improve the machinery they make day by day. This ensures that equipment with up-to-date features can benefit a business greater than an outdated piece of machinery that does the same job.
7. Avoiding Long-term commitment
Construction machinery requires a lot of finances to have them operational. Most of these companies approach a financial lender who will invest in the equipment at an agreed rate. This brings the construction company the long-term responsibility of repaying the investment.