The adage states, “A man is only as good as his tools.”
That’s especially true when you have a big job to do and a deadline is coming quickly. There’s equipment on the showroom floor that would help you achieve the task. The question is whether you should purchase, lease, or rent that equipment?
There are many factors to consider when deciding this question and each situation is different. We encourage you to not make the decision based on finances alone. Luckily, the experienced team at Summit Bobcat can help you determine which option may be best for you and your business.
For anyone in this business to be successful, they must have the appropriate equipment available at a moment’s notice. So should you buy all of the equipment outright? Or is it a smarter financial play to lease it? Or do you just rent it for this job? There are advantages and disadvantages associated with each choice.
Pros and Cons of Buying/Leasing Construction Equipment
If you have the capital, it may be wise to purchase construction equipment outright. This makes availability and convenience a non-issue, as the equipment is always ready at any time for any jobsite that needs it. Operators can learn and master a specific machine instead of learning the quirks of a number of different ones, which should result in increased productivity and, ultimately, an increased bottom line.
As mentioned earlier, though, capital is key. Owning a machine means that you are responsible for transportation, storage, insurance, and maintenance (though a planned maintenance agreement with Summit Bobcat will make sure that your equipment keeps working as hard as you do). There are costs associated with owning construction equipment aside from just the initial purchase costs.
Where capital is limited, you will have to make decisions on which construction equipment you purchase. Construction vehicles cost a lot of money, and hand-operated onsite equipment may be a lot cheaper. This doesn’t necessarily mean you should focus on buying all the small-medium priced equipment. You’ll want to make sure that you’re looking at the right equipment for the tasks that you consistently manage.
If you want to keep your cash flow more fluid, or you’re interested in getting new equipment every few years, then leasing may be the right option for you. It gives your the same benefits as owning but at a fraction of the monthly cost. Of course, you’ll want to understand the residual and end-of-agreement terms.
Especially with Bobcat equipment, one of the benefits of owning is the sheer number of attachments that you can add to your machine to make the equipment even more versatile and beneficial. Since you can purchase or rent attachments from Summit Bobcat, it allows you to do even more with your equipment.
You may want to also consider the tax benefit of purchasing/leasing. Section 179 of the Federal Tax Code allows you to to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. Read our blog for more information. Of course, we encourage you to speak with your tax advisor for specific details.
Pros and Cons of Renting Construction Equipment
If you have a more sporadic workload, renting may be the best option when it comes to construction equipment. Renting may be a more cost-effective option in these situations because you don’t have to worry about storing the machine during downtime, transporting the machine to a jobsite, insuring it, or even performing all the routine maintenance associated with construction equipment — the renting company will handle all of this. In addition, since there are so many different types of construction equipment, only leasing the machines needed for a specific job for a set amount of time may be cheaper than buying all the different machines or attachments outright.
Of course, over time, the cost of renting equipment may really start to add up. Another factor to consider is availability. You may have to wait for equipment to be available. Or you may need to rush to finish the job within a certain timeframe in order to reduce rental costs and get the equipment back on schedule. Finally, there are some less-than-honest rental companies who promise a lot more than they deliver. Finding the right company to rent from, such as Summit Bobcat will, of course, negate a lot of these issues.
Do Your Homework
Whichever direction you choose, we encourage you to do your homework. Choose a reputable brand and work with a company that can support your purchase, whether it’s with warranty repairs, maintenance, genuine replacement parts, software updates, and more.