Choosing to rent vs. buy construction equipment will affect everything in your business from how you care for your fleet to monthly payments you make. Depending on your situation, renting may serve your operation better than buying. Because several factors play into the decision, no universal answer exists. Find out if your business has a model that works better with renting than buying heavy equipment.
Rentals are a popular option for construction companies and contractors who need heavy equipment for short periods. Ask yourself the following questions to determine if you should rent or buy your business's construction equipment.
For businesses without a lot of immediate cash on hand to purchase heavy equipment, renting may be a better option. You will pay less initially for the rental while still getting to use the equipment as needed. Additionally, you can skip insurance premiums and maintenance costs when you rent instead of buy equipment.
When you spend less money upfront, you have more working capital to invest in your company's operations. If you want to hire more workers or rent more equipment, you will have the money to do so since you do not have capital tied up in purchased machinery.
If you need to use the equipment for a short time, renting offers the lowest cost option, especially if you need the machinery for six months or less. Buying equipment for such a short time does not give you a return on your investment, but renting the machinery will. With flexible rental agreements, you can rent equipment for several months, if you need it. When buying does not work for your budget, renting can help you keep working and get your job done.
When you rent, you get to see how your crew adapts to using the machinery and how well it fits into your job site and operations. Renting lets you select from a variety of sizes and brands to find the one perfect for your business before buying. During the rental period, get feedback from your crews to see which equipment they work best with and if they have other recommendations for machinery options that you should look for in your next rental or purchase.
Using a try-before-you-buy approach helps you make the most informed decision before investing in heavy equipment. When, through renting equipment, you know that it will work well with your site and operations, you can feel more confident that your purchase was a quality investment.
Equipment you own comes with the added cost of having to make repairs and conduct regular maintenance on it. When you rent, though, you get the benefit of enjoying well-maintained machines. Maintenance costs combine into the rental payments, so you can free yourself from worrying about separate fees to have repairs done on your rented heavy equipment.
For heavy equipment, you must have adequate storage to prevent damage when not using the machinery. With rented machinery, the rental company stores the equipment for you. Not needing to store the equipment during the off-season means you have one less thing to worry about.
Even if you have an existing fleet of purchased equipment, you still have limitations based on the number of machines you own. When you allow yourself the option to rent, you have all the options available from your rental store at your disposal. You get more equipment choices than those you would typically have in your fleet.
For example, if you need a snowblower, you may not have bought one due to its seasonal use. However, a rental company puts the perfect snowblower for your job at your fingertips when you need it.
Do you want to use the latest models of heavy equipment? As technology improves in the construction industry and similar fields, heavy equipment becomes even more efficient. Rentals offer equipment with these technological advances. You get to try equipment with these features, such as Cat® Grade Technologies, which enables you to grade land faster. This technology automates the process for several types of terrain grading — rough, fine and finish.
If you regularly work out of state or take long-distance projects, getting the equipment you own to the site can involve high transportation costs. In these situations, renting equipment from a local rental store close to the site will cut down on your expenses.
The amount of use you get from your equipment will help you decide whether renting or buying is better for your operation. Estimate the number of days you will use the equipment for over a six-month period. Divide the days of use by 30 to calculate the percentage of use you get. If this value is below 40%, renting is the best option. If it is between 40% and 65%, consider other factors on this list to determine if you should rent or buy. Higher use percentages mean you should buy the machinery.
When you have multiple jobs at once, handling the logistics of getting your fleet to the right places when needed can introduce even more problems. For example, one job site may lose productivity while its workers wait for the arrival of equipment from another site.
Instead of worrying about transporting heavy equipment between job sites, rent the machinery you need. With renting, you can enjoy the benefits of having backhoes at two sites, even if you only own one.
If you identify with these situations, you should rent your heavy equipment for at least some of your projects. Now that you know several reasons why you may want to rent heavy equipment, contact us at The Cat Rental Store. We have equipment solutions for any job from Caterpillar and 70 other allied brands.