For new or smaller businesses, the cost of plant and construction equipment is often prohibitive. Especially when you’re just starting out, plant and equipment isn’t cheap.
It’s all about cash flow in those early years.
You have to tread carefully before committing to equipment that may all too quickly become work-weary, obsolescent or even unused between jobs.
Fortunately, you have more than one option!
Renting machinery and plant – The pros
For more and more people, it makes sense to rent machinery if they use the equipment only occasionally and wish to pay only when they use it, rather than have it gather dust and cost money when not in use.
Renting the machinery on an ad hoc basis and returning it when a particular job is finished may be easier to budget and work out cheaper.
You can simply offset rental costs against the income for each job.
You will find you have greater choice and can hire machinery that suits the requirements of each particular job. You can change equipment as and when it suits you and your needs.
You are often able to acquire machinery that would otherwise be out of your price range.
Technology changes all the time. Keeping up with the latest innovations may make all the difference in your industry. Some machinery dates quickly. Obsolescence is someone else’s concern if you hire the machinery.
Renting comes without the worry of repairs. Responsibility for the repair of machinery usually lies with the owner or leaser. Fixing faulty equipment can be costly and is an unpredictable event that can add extra pressures to cash flow, especially with items of greater value.
Renting reduces expenditure in the short term so that you can invest your money elsewhere and grow your business in the long term.
And, of course, you will be doing your bit to reduce the environmental impact of manufacturing and transporting the world’s construction equipment. Factories around the globe use large amounts of natural resources to make this equipment.
Don’t forget, rental costs are tax deductible – reducing your annual tax bill.
Thanks to the sharing economy and platforms like Shareplant, finding the right equipment at the right price in the right location could not be simpler or quicker.
You can grow relationships with local organisations, who can offer you excellent customer service, flexibility and value for money.
Renting machinery and plant – The cons
To state the obvious, you will never own the equipment and will have to hand it back at the end of the contract.
It really depends on your individual business’s demand for equipment and the length of time you need it for.
In the long run, it could prove more expensive than buying the assets outright, especially if you are renting expensive machinery for an extended period.
Obviously, there’s the paperwork and some negotiating to consider when hiring, but with Shareplant’s online contracts, guides and forms, we’ve made this process as smooth as possible.
Buying machinery and plant – The pros
If your needs are constant and you use the same equipment all of the time, you’ll pay less in the long run if you bite the bullet and buy, possibly with a low-interest loan, dealer HP or business grant for such purchases.
The cost of newly purchased assets is treated as a tax capital allowance too.
It offers convenience and immediacy – the equipment is yours to use as soon as the payment is made.
You can choose machinery which fits your exact requirements, rather than someone else’s.
Profit from your owned plant and construction equipment
Owning your machinery and equipment gives you the opportunity to hire it out when it’s idle.
Any equipment standing idle is a wasted asset – someone is paying for that idle time, whether it is the owner or client.
Why not offset your running costs by hiring it out?
As well as increased profitability, such collaborations open up new business relationships and possible future clients.
The process could not be simpler through Shareplant’s innovative web platform – we connect smaller service providers with the large construction organisations.
Buying machinery and plant – The cons
The cost of purchasing machinery can be astronomical and to do this up front the cost is often prohibitive, particularly for smaller or newer businesses.
The responsibility of repair and maintenance of the equipment and plant also lies with you.
Final thoughts
If you wish to rent equipment whilst avoiding unfavourable terms, it pays to negotiate from an informed position. We’re happy to provide advice and support if you’re unsure which route to take.
Cranes and telehandlers don’t come cheap.
Financially, as well as practically, they have some heavy lifting to do if they are to earn their keep.