Renting vs Acquiring: A Contractor’s Guide to Money Management

Contractors need a long list of equipment, but buying it outright is often a strain on the bottom line.  How can you best decide what you should rent and what you should buy? We’ll take a look at the most common items a contractor needs and discuss whether purchasing is a good investment.

Renting vs Acquiring: A Contractor’s Guide to Money Management

Heavy Equipment

Certain heavy equipment is used on every job. Others may be used occasionally. That forms a dividing line for contractors who are trying to decide what to purchase.

For instance, a bulldozer, forklift, and backhoe are likely to be used on every worksite. This makes it likely that investing in this equipment will pay you back. You will have to figure in the cost of maintenance, but you could make some money by renting out this equipment when it isn’t in use. This can recover some of the costs.

On the other hand, there are other machines you may only need for days or weeks. A trencher, compactor, grader, roller, or telescopic handler may be useful, but you don’t want to be stuck with the maintenance. If rentals can be used according to your schedule, you can reduce your overhead. You won’t have to maintain these large machines, but you will still get them when you need them.

Evaluating how much you will use each machine can help you decide whether to buy a new excavator or rent one. Obviously, not everyone needs to own a dragline excavator, paver, or skid-steer loader, but it may be worth it to do a cost analysis of each machine to decide which you need to own or rent. You can consider buying the equipment and reselling it to recoup some of your costs later.

Wood Mats and Composite Construction Mats

Large projects inevitably require construction mats. The originals are made of wood, but there are also CLT and laminate varieties. All of these have a short lifespan of one to two years. If there’s a long break between projects, it can make sense to rent them. On the other hand, you may have to pay for any rentals that come apart during use. Since these mats can rot or split, the likelihood of losing some is high.

On the other hand, composite industrial mats will last a very long time. You can expect five years, a decade, or more. This is a huge difference, and it is just one reason that composite mats are a good investment.

Composite mats are lightweight, allowing you to cover more ground from one delivery. This can cut your truck deliveries down from six to one. Furthermore, composites don’t absorb chemicals and don’t rot. They won’t absorb water and get heavier. Since they last for a longer period, you will never have to pay for this ground protection t least for a very long time. If you should decide you don’t need them, composite mats can fetch 40 percent or more of their original value. When you add up the reasons, buying composite mats is a good investment.

Haulers and Pickup Trucks

The same logic on heavy equipment applies to fleet trucks. You may want to own a dump truck, concrete truck, reach truck, or an articulated hauler, but you only need them occasionally. You can do a careful analysis of how often these trucks are needed and how predictable their use is.

Unlike heavy equipment that can only perform a specific task, pickup trucks may perform multiple roles. They can sub for a dump truck or hauler if the loads are light enough. Owning fleet pickups is often a good investment. Deciding how many may be the most important aspect of ownership. Too few may mean work is slowed. Too many may mean the cost of maintenance and repairs is too high.

As you evaluate each large expenditure, keep in mind how the machine or item is used, and whether or not owning it will pay you back in the long run. Machinery and trucks will have to be maintained, but at least composite construction mats just need to be rinsed and readied for the next job ahead.

Francis Nwokike

Francis Nwokike is a Social Entrepreneur and an experienced Disaster Manager. I love discussing new business trends and marketing tips. I share ideas and tips that will help you grow your business.

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