Renting Makes Sense
Knowing your business and assessing each situation are crucial when deciding to rent or buy equipment.
You’ve got options when it comes to renting or buying a home, leasing or owning a car or renting to own an appliance. Much of your decision depends on your present need and comfort level. So, too, is the case when it comes to renting or buying a piece of machinery. The most viable option for one company may be the least practical for another. In many cases, renting proves to be a cost-effective, efficient source in at least some part of every operation. The key is to know your business well enough to decide which avenue suits it best.
Many of the needs rental centers meet include equipment maintenance and storage, wider variety of and innovative equipment available, trained professionals who know the equipment and service of parts and breakdowns. Another advantage to renting involves the seasonality issue. It proves to be a better choice when you need certain types of equipment on only a temporary basis. “Some customers do a great deal of seasonal work, so it makes sense for them to rent when they have jobs scheduled,” says Paul Parker, marketing manager of ROMCO Equipment Co., Dallas. “Also, you may have a core group of machines that will always be on a job while others are more specialized. Rather than have those specialized items sit and do nothing, many of our customers rent for need.”
Dave Griffith, CEO of Modern Group, Bristol, Pa., describes renting vs. buying as a simple math issue. He says renting suits a contractor going from job to job due to the changeability of each job. And tough economic times require some to have to take on jobs not normally part of the routine. Rental centers provide a larger variety of equipment and will be able to satisfy these specialized needs. “It’s a pretty straight forward issue,” Griffith says. “It’s an availability issue.”
“Renting allows customers to be flexible in the jobs they bid,” says Jeff Maxson, director of sales at Cashman Equipment, Las Vegas. “They may need a variety of pieces for a job and not have the capital to purchase, so renting becomes the obvious choice and the best business decision.”
Not having to maintain the equipment in house is also an enticing reason to rent. Rental centers make it possible for grounds maintenance companies to put more energy into actual landscaping duties. Companies that rent don’t have to train employees or incur the expense of machines and tools used to upkeep the products. Also, a maintenance department involves continually training mechanics and providing a location for them to work.
Even if you own equipment, it often won’t necessarily be the most innovative types available. However, rental centers are expected to provide the latest machinery to customers. Better equipment means better results. The newer, more powerful equipment makes your job easier, which saves you time and money.
Part of the beauty of a rental center is that its employees are familiar with a large variety of equipment and the different types of uses for it. The rental center knows which piece of equipment best applies to each of your jobs. While providing such information, the rental center’s employees can also teach you about the equipment and offer tips and suggestions on how to obtain maximum use, safely and efficiently.
Transporting some equipment can be very effortless. But larger types of equipment require trailers and other types of delivery vehicles. Rental centers employ trained professionals and provide equipment to make this process carefree for contractors.
Breakdowns occur in any area of any business. How fast you repair or replace the equipment can be the difference between losing and maintaining a job. Results can be very costly. A competent rental center provides relief to such mishaps immediately with service and repair trucks that transport parts, hoses, fluids and solvents. If necessary, rental centers will deliver a new piece of equipment or take the broken-down item back to the shop and return it in time for you to finish the job.
All rental centers have a parts department, so customers don’t have to deal with the storing and organizing of these hundreds and thousands of parts. The rental center keeps an updated inventory while replacing parts quickly, and also knows how much to stock and where to get parts when needed.
A lot of rental centers have items that are for sale the day they’re available for rent. If you are interested, you can apply for one of their many purchasing programs. “Others use the rental process as a way to invest towards a purchase,” Parker says. “During that time, operators can become familiar with the machine and learn ways to maximize productivity. It serves as an extended test drive.”
The prospect of renting doesn’t seem to be losing its thrust. “Renting rather than owning means all equpment costs are variable rather than fixed,” says Don Scott, vice president of sales and marketing, National Equipment Services, Evanston, Ill. “This helps customers keep their cost structures in line with market demands and invest their funds in areas that will help their businesses grow.”
Griffith views the rental option as having evolved over the years. “I think you’re seeing a huge shift from first to second to third generation, folks being better financial managers,” he says. “I think it’s a remarkably healthy business.”
Carlo Cavecchi, CEO of HSS RentX questions those who may be leery of renting. “I would ask them whether they have truly analyzed the cost of equipment that sits idle for even a short period of time. What is the cost of maintaining it? Storing it? Insuring it? Transporting it between jobs? Replacing parts? And if the equipment is more than a year old, is there a newer model on the market that could do a better job? Finally, I would ask them to take a hard look at the cost of capital involved in buying equipment, not just the outright cost, but the lost opportunity cost of tying up capital that could be put to better use elsewhere in the business or that could be used to improve the balance sheet.”
The decision to rent or buy needs to be based on what is most effective for your own business.
“Like any other business decision, management needs to do an honest assessment of the situation,” Parker explains. “There are times when renting is a better option. Other times you’re better off going long-term with a purchase. There are so many variables that can affect which decision is best and nobody knows your business like you do. A good equipment dealer will be glad to help you weigh your decision, but the bottom line is to follow your gut instinct.”
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