Small business owners in the building industry spend a lot of time juggling competing priorities to keep work on schedule, especially if they are working on several projects at the same time. It only takes a piece of hire equipment to arrive late, causing an expensive delay, to have some builders thinking about buying their own equipment to have on hand when needed.
Costs of Full Ownership vs. Renting on Demand
However, construction equipment is expensive to purchase, transport, store and maintain, so before taking the step from renting to buying, several things should be considered. The first is the financial situation of the business, especially its capacity to service loans into the future. The on-going costs to buy an expensive machine include loan repayments, insurance, storage, maintenance and licensing requirements, while renting costs only include the use of the machine for a specified timeframe with all the other costs met by the hiring company.
Frequency of Use and Maintenance vs. One-off Use and Hire of Trained Operators
The next consideration is the frequency of use of the machine. If the business has multiple, long-term projects where it is needed, owning could be the preferred option. For a short-term proposition with one or two projects, hiring is more practical. A further issue is that of managing the machinery and associated equipment. This requires regular maintenance including keeping records, ensuring that at all times the machine is insured and registered, and that anyone operating it is trained, experienced and, where necessary, licensed. If you rent, all this is included in the hire fees.
We understand all these issues because our business at Dee Gees Bobcats is the hiring out of machinery such as excavators, bobcats, tippers, post hold borers, levellers and other earthmoving equipment. We have an established reputation for reliability and quality outcomes, plus the convenience for our clients of bringing our equipment to their location on time and ready to work.
Storage, Transportation and Upgrade Costs Borne by the Owners
Business owners who purchase their equipment are responsible for the costs associated with finding suitable storage, and the transportation of the machinery to multiple sites as required. With hired equipment these costs are borne by the hire company. It is a similar situation with the cost of upgrades needed to keep the machinery compliant with operational standards and safety requirements. These need to be done regularly and are an expensive part of owning construction equipment.
It All Depends on the Direction of the Business
Choosing between renting and buying really depends on the future direction of the business. If the owners are planning to expand, buying makes sense, but if they are happy to maintain the status quo, continuing to rent on demand is sufficient to satisfy their clients.