Buy Vs Hire Your Construction Equipment.
No matter the size of your business, one certain question you may be thinking is, “should I buy or hire my construction equipment?”. Choosing whether to buy vs hire your construction equipment, depends solely on your personal preference and finical status.
Please feel free to use this article (buy vs hire your construction equipment) as a guide to help you understand, which method of obtainment will work best for you and your business. Here is a detailed overview of several different factors you need to assess before choosing whether to hire or purchase.
Factors to consider whether to purchase or hire?
Your financial status?
What is your financial status? As a lot of things do in life… one of the largest factors determining whether you should buy or hire your construction equipment is, what have you got in the bank.? It is important to understand the level of investment that you need before starting. There is no other way about it, construction equipment is expensive. Even if you are to consider buying second hand, you need to make sure you are going to be able to afford the machinery without crippling yourself.
These days machinery can be bought in various manors, from contract purchase hiring, and auctions to leasing the equipment. However, before jumping straight in you need to ensure that your investment is going to be worth it… When are you going to see that investment back in your bank?? This will completely depend on…
Frequency of use?
The second most important factor that you should consider is the frequency of how much you are going to use the construction equipment? It could be for as little as a day or a long period. The frequency of use will reveal how quickly you will receive your investment back.
If you are intending to use the machinery once, then it would be far more cost-effective to hire the machinery instead. The last thing you want to commit to is something that is going to sit in storage for most of the time that it is in your possession. Ensure you do your sums. Hiring construction equipment can offer far more flexibility as you only pay for it when you have used it.
This brings us to the next factor that you will want to consider as a business owner, which is the level of risk…
Risk level?
Ownership of machinery doesn’t just cover the cost of purchase. It also covers the repairs, and your returns need to be higher to ensure a good return on investment. Purchasing construction equipment 2nd hand can be a very risky business. Therefore, if you eventually decide that purchasing is the right avenue for you, always look for ways to mitigate your risk by purchasing from an approved dealer.
Generally, if you choose to hire equipment, the price that you are quoted is the overall cost of using the machinery. As well as being delivered and collected when and where you need it, hassle-free. Compared to owning equipment, hiring machinery is a very low-risk strategy to enable you to complete your project.
Why do people choose to hire construction equipment?
“Deciding to hire construction equipment is a choice made by those who generally don’t require specific machinery all of the time” … BUT, IS THIS TRUE? Along with not being responsible for the ownership of hiring construction equipment, a lot of businesses choose to hire for the following reasons:
Equipment quality
The equipment quality of hired machinery can be exceptional value for money compared to purchasing a brand new or 2nd hand. Hire equipment is required to go through a large amount of testing before being redeployed to its next location.
Availability
Instead of just purchasing one piece of equipment, you can be far more flexible. You are not tied down to using that one piece of machinery, and unlike purchasing, can swap sizes, types etc. Hiring your machinery allows you to spread your opportunity over a larger selection of construction equipment.
Servicing
All machinery needs to be serviced, and in some cases needs to be annually tested. People choose to use hire machinery because by doing so, they cut out the servicing, labour and additional upkeep costs of the machine. Instead, they benefit from a piece of machinery that is ready to work for whatever period it is required to do so.
Support
What happens when you break down…? Support is key in construction, however, support with your equipment is not free of charge when it comes to owning your equipment. Businesses choose to hire construction equipment because they get the security that if something goes wrong. It will be fixed asap, with no additional cost and requires no man-hours to do so. Generally, customers who choose to hire benefit from a replacement machine if something is to go wrong. Allowing operators to continue and stay on track.
Delivery/ logistics
How do you get your equipment where you need it? Chances are if you own the equipment, you will be the one organising the logistics of it. Plant or construction equipment logistics are key to any successful construction business. However, this requires a lot of time and even additional employees. Another reason why businesses choose to hire as all delivery and logistics are included when quoted from hiring equipment.
Affordability
The final reason why businesses choose to hire rather than buy construction equipment is because of its affordability. There is no upfront payment and businesses can hire machinery specifically which then can be invoiced to their customer. Overall, not affecting cash flow and avoids large financial investments.
Why do businesses choose to buy construction equipment?
Choosing to purchase your construction equipment can have many benefits to a business such as:
Owning your equipment
Purchasing your equipment gives you full control of what you do with the machinery. You have a choice when to purchase and update any aspect of it. All of which count as valuable assets within your business.
Not relying on 3rd parties
Some businesses prefer not to rely on others to provide them with the equipment. This could be due to a lack of trust, or unwillingness to negotiate other businesses working hours. Not relying on others puts owners in the driving seat of when equipment can be used or even transported.
How it looks on your business
Having your construction equipment can be seen as a positive for the success of your business. From an outsider, or customer’s point of view, a business that can afford its machinery can be seen as a profitable one. This can build additional trust between you and potential customers.
Disadvantages to buy vs hire your construction equipment?
Downtime
Downtime is costly. When you purchase a machine and it is not working and earning you money, it is costing you. This is more apparent when construction equipment is taken out on a CPH or Hire lease contract. Ensure if you commit to purchasing equipment that you have enough work to justify it.
Transport
Transport logistics can be a nightmare. Especially if you are managing some large equipment across the country. This may require further staffing/employment to ensure equipment deliveries, movement notices and logistics are completed on time.
Cost
Purchasing construction equipment is not a cheap activity. The overall costs can exceed all expectations when not all factors are taken into consideration. Don’t leave any stone unturned especially when it comes to analysing your budgets.
Running costs
In addition to the purchasing, storage and logistics of purchased equipment are the running costs. Regular servicing, and inspections all need to be funded to ensure your equipment doesn’t let you down on site. Unlike hiring construction equipment, there is no option to have a replacement at no extra cost.
Less choice
When you commit to purchasing one piece of equipment that is all you will have access to. If you need something larger, smaller, or completely different, you will then have to purchase a completely different piece of equipment item.
Machinery development
Construction equipment is ever-evolving. This year’s releases will inevitably become old technology within a few years. With the constant development of machinery, purchasing equipment could put your productivity levels down year on year. Using the latest machinery can ensure you remain as productive as possible.
Which is cheaper? Buy vs hire construction equipment?
There are several pros and cons to fighting the corner of both sides of whether to buy or hire construction equipment. However, every business’s needs and requirements are different. Affordability and control are two of the biggest factors that every business needs to take into consideration regardless of which path they prefer. Construction companies that have a large enough infostructure and work to justify owning their equipment. However, some would prefer to use a hire service that can cater directly to their needs.
Where can I find a construction equipment hire service?
WHC Hire Services has been providing construction equipment to businesses of all sizes for over 20 years. During this time we have helped thousands of businesses, big and small complete their projects.
Our mission is simple, provide the latest machinery, when and where it is needed, in perfect working order, allowing you to get the job done. With an ever-developing fleet of plant and tool equipment, our services and attention to detail awarded us with an internationally recognised Gold Medal Award from RoSPA. To see our latest plant and tool hire equipment, get started today by clicking here.