While cost might be the first thing that comes to mind when it comes to buying versus hiring plant equipment, there are more factors that need considering when making a decision. Here we way up the advantages and disadvantages of each to help you make an informed decision for your business.
Assessing your needs
First consider the exact equipment you need, how often you need it, and when you are likely to not need it again. Some equipment you might use almost daily and on an ongoing basis, so the price per use will be very low. In this case investing in plant equipment that you own actually works out to be the cheaper option in the long run. However, if you’re only in need of particular equipment occasionally and just for the length of one construction project, hiring plant equipment is likely to be the more cost effective routine. Make a list of equipment you are considering, projects you are catering for, time frames and get a clear picture of your needs and price per use.
Tax
Now is the time to get your accountant on the phone. Find out how much owning this equipment would reflect on your business taxes, compared with that of hiring costs. Typically hiring will keep cash flows at a slightly more manageable rate, but there may be hidden tax benefits to owning this equipment. Do your research and see how the figures stack up.
Storage
Given the scale of plant equipment, factoring in the amount of storage you will require is essential. If you have some storage already, this may make buying a more appealing option. If not, then the cost of storage can add be an unanticipated shock. Hiring equipment will allow you to skip storage costs and responsibilities altogether and keep your business nimble.
Repairs and maintenance
A major advantage of hiring construction machinery is off loading the responsibility of repairs and maintenance back to the hire company. This type of machinery demands regular and extensive upkeep, and costs have to cover cleaning, tools for repairs, labour, testing and overall administration. Once warranties expire these costs will go up and the day to day running costs will likely increase.
Second hand equipment
Perhaps your need for construction equipment is so high that owning is a non-negotiable, in which case consider buying second hand equipment. Many businesses launch into buying equipment before carefully considering their needs, and so there is so good quality second hand equipment on the market that may be the best solution for your situation.
Likewise, keep in mind the potential for some healthy returns when you come to selling your own equipment and factor that in to your decision making.