When you run a construction company, it’s easy to be tempted by the lure of ownership of equipment – knowing you are the owner and can use it any time you want or need to, and knowing it is at your disposal for all your future projects, may sound like a dream come true. It’s tempting, but you should realise it’s tempting mostly on an emotional level. When it comes to the bottom line, purchasing your equipment may not be the wisest thing to do.
It’s not just about the financial considerations (although that’s, of course, a big factor). It’s also about peace of mind, availability, maintenance, eliminating risks, and planning for the future. Do you have a big construction project? Here’s why renting is better than buying your equipment.
This is all about committing to something you’re not sure you’ll need on a constant basis. It’s about risk control. Imaging buying a machine (a long-term commitment) for projects you hope will push through, but may turn out to require different equipment. Imagine the possible downtime of the machine you bought. This is not a scare tactic – this is reality.
Projects come and go, and different projects need different equipment. When you buy, you need to ensure that there is certain utility and that it’s worth the investment. If you can’t say for sure what the next project is or where it will come from, then you’re in for uncertain utility, which can literally ruin you.
When you are renting, you have a fixed fee per contract, and this contract is relatively short-term. Most contracts are flexible, such as the ones from crane hire specialists like www.aphcranes.co.uk. This steady payment ensures all your needs and makes bookkeeping a lot easier.
When you buy, you have what you have. When you rent, you get what you need for the job at hand – and that makes a very big difference. In today’s rapidly innovative world, it pays to have the up-to-date equipment the project requires.
Depending on your contract, all your maintenance requirements are taken care of, resulting in fewer headaches, and less investment required.
Cash flow predictions
A fixed monthly rental payment is excellent for stability in cash flow. It allows for much better planning.
Here’s one more thing that should convince you that renting is far more profitable than buying when you’re going from project to project: tax deductions. When you rent your equipment, you incur costs, which can then be deducted from income and this means you pay lower taxes. You don’t have this benefit when you purchase, as it will be noted down as a capital gain. There are simply too many advantages to renting – it’s time to look into it.