Construction and renovation equipment is never cheap, but they are, quite literally, tools of the trade for general and specialist contractors. Previously, this was a severe limitation for smaller businesses without a substantial financial funding. They could only provide services based on the equipment they actually owned as rental options were either very limited or too expensive.
That is no longer how things work of course, since there is an entire, separate industry that lends construction equipment to general and specialist contractors of every type and scale. As a result, even some of the largest construction companies in the world now hire their equipment when it makes more financial sense for them to do so.
So, does this mean that hiring is the better option when it comes to construction tools? In general, it is indeed more profitable to hire construction equipment than to buy it outright. As to how and why that is, some explanations and examples are necessary to illustrate the point in better clarity.
Profiting from the First Project
Nothing plays a bigger role in business decisions than the available or feasible budget. For example, new businesses may not have the funds necessary to buy all the tools they need and use regularly. Whereas that would have proven to be a serious shortcoming in the old days, it is perfectly possible to work around a low budget today. In fact, if you can manage your expenses well, hiring is a more profitable proposition altogether, since affordable tool hire options are available for all construction equipment from access lifts and lighting towers to excavators and dumpers/loaders.
The opportunity to hire construction tools at affordable rates enables new contractors to start earning profits off their very first project. The system works so well because contractors that don’t own the equipment they use, don’t have a large chunk of their start-up funds invested in them either. Since they pay for hiring tools only when needed and only for as long as needed, breaking even on the very first project is a feasible expectation.
The Complete Absence of Equipment Updating Needs
Technology has come a long way in construction and the equipment used is getting smarter, safer, more productive, and more efficient all the time. The rate of progress in this modern era of technology is nothing short of remarkable, but it does have a negative side to it as well, at least from a business perspective. To better explain the problem, let’s beak it down into two main dilemmas.
If companies do not update their tools to meet the latest standards, they will lag behind competitors that do. At the same time, it’s far too costly to keep updating expensive construction equipment at the same rate that they are being introduced to the market these days. At least it’s not a practical solution, given how badly that would affect the bottom line.
This defeats the usefulness of buying construction tools almost completely. It brings forward an advantage of hiring construction tools that we often overlook. The option to hire the latest equipment makes it a better option in terms of not just expense, but productivity, performance, and quality as well. For example, you could spend upwards of £3,000 on a single plate compactor this year, only to find that the manufacturer has released an improved version of the model at a cheaper rate next year. Competitors who decide to buy will then have an advantage over you, while paying less for it!
Now think about contractors who did not buy any soil compactors at all, but simply looked through their latest options in Wacker plate hire, and chose whatever suited the project best at that precise time. They can hire as many of the latest plate compactors as they need for a fraction of the equipment’s price. Furthermore, they can do so without spending any money out of pocket because they are already working on a budget per day that was precalculated to be profitable during the planning stage itself.
Almost Zero Maintenance Costs
General contractors often end up wasting a chunk of their revenue on maintaining construction equipment that they don’t use often enough to justify the cost. By hiring the tools needed and only when needed, the money saved in not needing to maintain expensive and idle construction equipment feeds the bottom line.
When you hire construction tools, your maintenance responsibility towards them lasts only for as long as they are rented out to you for use. Compared to the maintenance cost of equipment that a company really owns, the cost of maintaining hired construction tools is negligible.