If you own a company that uses heavy equipment to get the job done, you know what it’s like having to maintain and find new pieces when the time comes. The equipment is the lifeblood of your company, and you need all of it to work the moment you need it without you having to pay too much.
If your business uses heavy equipment, there are basically two options for you: you can rent or lease the equipment, or you can buy the equipment outright. Each option has its pros and cons, and depending on the size of your business and its needs, one may be a much more superior option than the other. Here’s a quick comparison on the pros and cons of both options so you can figure out which one is right for your company.
Renting or leasing your company equipment can give you many options that may be right for you and your business.
The most important thing with leasing is that it’s perfect for companies that need to keep their equipment updated to the latest models. When you lease, you have the option of trading equipment in whenever you need to and resigning the lease with the updated pricing. This allows you to take advantage of technological breakthroughs quickly, so you can stay ahead of your competitors.
Another great reason to lease is that the up-front costs can be considerably lower than with buying. Because you are agreeing to make monthly payments for the duration of the lease, you will be able to save money with a small down payment to get the lease started. Then, you can budget your monthly pricing accordingly so you can space out the money you spend.
There are a few concerns when it comes to leasing equipment. The biggest one is that although you will save money on the front end of the lease, you may end up paying more than you would if you bought the equipment outright.
This is especially true the longer you keep the lease going, because you will undoubtedly be paying interest on the lease agreement, and after a few years, you may realize that it would’ve been cheaper to buy in the first place.
The other major concern is that you will not have any equity in the equipment you lease. That is, once the lease is over, you return it to the dealer and sign a new lease, or you move on: you cannot recoup any of the money you spent during the term of the lease. This can make many business owners think twice about leasing.
Your other option for obtaining equipment is to buy it outright, and for many companies, this makes much more sense.
The biggest advantage of buying the equipment is that it is yours to do whatever you want with. You can add any part (browse it at German Bliss) you may want and alter the equipment in any way you see fit. If there is maintenance necessary, then you can take care of it right away rather than having to wait for the leasing company to fix it for you.
One of the best things about buying is that you may be able to recoup some of the money you put in and use it toward newer equipment. If you keep the equipment in good condition, there’s no reason you shouldn’t be able to resell it in a few years and make some of the cash back. Then, you can put that back into the business, helping it grow.
One of the disadvantages of buying is that you are on the hook for all maintenance and repairs that must be done. There may be a warranty for wear and tear, but if you break an axle, or bend a blade, then you are responsible for fixing it. This can result in unexpected expenses, taking cash away from other things you may need.
You will also have a bigger up-front cost. This makes it impractical to buy and sell equipment every few years, meaning that you may be stuck with outdated technology unless you pay for a retrofit, which may cost more than it’s worth. If you need to stay current with technology, you would probably be better off leasing if you can.
As a business owner, you have several options when it comes to purchasing equipment. Which one is right for you?
This post was written by Yasmin Armstrong. Yasmin has a background in business. Though now semi-retired she is keen to pass on her business acumen with the younger generation, if they’re willing to listen!