Before You Buy: Business Benefits of Renting or Contracting First
As a savvy business owner, you may be focused on finding the most cost-effective ways to complete work tasks and to serve your customers.
If your team uses heavy equipment or machinery from time to time, you may be wondering if it is more cost-effective to purchase equipment or to hire contractors who have their own equipment.
Each company has unique circumstances to consider, but you may find that these benefits of renting equipment may be overwhelmingly positive.
Eliminate High Purchase Costs
The most obvious expense associated with buying equipment or heavy machinery is the upfront cost to purchase these items.
You may pay cash for the items, and this could have a dramatic impact on your available cash to use for expansion, product development or other essential tasks.
If you take out a loan to pay for the equipment, your overhead will increase for the next few years until the loan is paid in full.
Use For-Hire Labor Services
When you purchase your own equipment, you generally also need to hire trained professionals to operate that equipment.
If you do not have in-house staff available to do this, you will need to add another salaried or hourly professional to your payroll.
Expenses for insurance, employee benefits, safety equipment and more must also be considered.
On the other hand, if you use for-hire labor for contract work, you only pay for the actual amount of labor used. The contractor assumes all relevant costs associated with labor services.
Avoid Maintenance and Repair Expenses
In addition to paying for labor and for the cost of purchase for in-house equipment, you also need to budget for maintenance and repairs for that equipment.
Additional costs may include fuel and insurance. On the other hand, when you consult a contractor for earth-moving equipment hire or to do other types of work for you as needed, the business typically absorbs these expenses.
This may make it easier for you to budget while also helping you to control expenses.
You can see that there are pros and cons associated with buying equipment versus hiring a contractor for as-needed work.
In many cases, the as-needed contractor services are more cost-effective. However, if your team will use the equipment heavily on a daily basis, buying the equipment and hiring dedicated staff to operate it may be a smarter option.
Take time to analyze each of these business factors so that you can decide which option is most practical and beneficial for your operation.
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Category: Business
