Some Things to Consider When Renting Equipment for your Business
When buying equipment is either impractical or not financially feasible, small business owners can turn to leasing as a means of gaining the equipment that they need without owning it. Renting can represent an elegant solution to equipment based constraints on DIY projects, and for business owners with cash flow considerations, if there is a buy out option at the end of their leasing they may be able to use the production capacity of the equipment for less, then take over ownership of it once their business grows as a result of the increased production.
Do you have the insurance and/ or training necessary to operate your machinery? Heavy machinery can be dangerous, meaning that not just anyone can go ahead and lease it and operate it. Business owners should first verify that the equipment they want is able to be used with their current levels of qualification and insurance. If not, then compute the costs and time-frame of acquiring these into your strategy. If training a current employee in the use of the machinery is out of the question, then you can try to hire an already qualified person as either a full time employee or a contractor, but be aware of the additional costs involved in the hiring process as well.
Is the increased production capacity backed by present demand? The idea behind getting yourself new equipment is that the increased production will allow you to pay for your investment. In order to make sure that that will really be the case, you should perform market research allowing you to gauge for yourself whether or not there is sufficient demand for you to grow in this direction. Further than that, even if there is a market, you should know how many people are already serving it and what percentage of your target demographic you can expect to win away from competition. since obtaining new equipment is usually pricey, even to rent, knowing that your investment has the capacity to pay you back is akin t looking before you leap. If you are contemplating purchasing new equipment to satisfy a single client, consider whether this is in your best interest, or theirs.
Would you be better off waiting to buy? Do the math regarding your business’s potential to make money when buying over renting. Does having equipment faster mean that the profit margin is justified, or should you wait until you are in a position to simply purchase the machinery in order to avoid paying more through rent accumulation? If you are unsure, then you should meet with your accountant or review the books yourself in order to calculate the strongest move. If you could purchase the equipment outright through obtaining financing, think of whether or not that could work out better than renting.
Photo Credit to Jennifer Boyer on flickr