Whether you’ve just landed a big contract which means you’ll need to bring in more resources or you’re simply looking to streamline your day to day activities, hiring equipment rather than purchasing it outright can offer several advantages. Here we take a look at some of the benefits and balance them out against their long-term feasibility.
‘Pay as you go’ model
One of the biggest reasons companies choose to hire rather than buy equipment is sheer affordability. Making a big financial outlay for new equipment sometimes just isn’t possible within the constraints of your budget or cashflow. Hiring equipment and testing it out until you have the funds to purchase it can help you boost that cashflow and save up to buy later.
Depending on your requirements, you might even be able to rent used equipment that’s still perfectly capable of doing the job, but without the worry of it being your problem if it breaks down – and of course, with a much more attractive price tag for its rental.
Access to current technologies and protection against obsolescence
Depending on the industry you work in, tools, equipment and even software packages can become obsolete quickly. There’s little point investing in something you’re only going to get a few years use out of before it has to be replaced again. In fields where rapid technological advancement is taking place, having the option to hire the right model at the right time often makes a lot more sense. Having access to the latest tools of the trade can make your business more competitive, allow you to offer a larger range of products or services, and ultimately boost sales.
Try before you buy
And because you’re hiring, you also have the option to try out a few different models before you actually commit to purchasing one. This gives you time not just to make sure the equipment works for your needs, but to get real world experience of how much (and if) it actually boosts your profits. Once you have these figures at hand, it become a lot easier to work out how quickly a purchase would ‘pay for itself’, or if it makes more financial sense just to keep renting it.
This is especially useful in the case of labor-saving devices, where it isn’t easy to predict how equipment that has the potential to save your employees time would actually translate into monetary terms. Forklift rentals are an excellent example – they have lots of potential to boost productivity and improve efficiency in your warehouse or fulfillment center, but you might want to give several models a test run, see which your employees prefer, and have the opportunity to collect some stats before purchasing one.
Budgeting made easier
In sectors like construction, many projects are budgeted for on a per-project basis. It’s tricky to factor in costs like equipment maintenance and account for things like wear and tear to equipment in this model – but failing to factor these kinds of expenses in can lead to nasty surprises down the line. When equipment is hired, on the other hand, you have a neat and tidy sum to budget for, and things like wear and tear and servicing aren’t your concern. This is another big advantage of hiring the right equipment – letting the rental company use their expertise to maintain and service the equipment you’ve hired from them, while you get on with the tasks you’re an expert in.
Balancing short-term gains against long-term costs
Of course, if you’re using something regularly and it’s become indispensable to your business operations, it doesn’t always make sense to keep renting equipment indefinitely. Here are two key questions you can ask yourself to determine whether it’s worth purchasing equipment outright or not:
How does the monthly rental compare to the purchase price?
Sometimes these comparisons are easy – if having the right equipment on hand is dramatically boosting profits, but you’re paying a third of the purchase price each month to hire it, it doesn’t make sense to continue to rent. In real life, of course, these comparisons are rarely so clean and dried! You’ll also need to consider the added cost of performing your own servicing and maintenance and any associated training, for example.
How much use can I expect to get out of my purchase?
If you’ve been renting the same piece of equipment for a while, you probably have a good sense of how reliable it is. But if you’re not sure how long you can expect a piece of machinery to be useful to you, it’s better to do your research beforehand and go in with your eyes open before you commit to buying outright.
