If you own your own construction company, you know that your profit is dependent on ensuring that your liabilities or costs are less than the assets or money that your projects brings in. Unfortunately, sometimes there may be a thin line between making a profit and incurring a loss. To make the most profit you can, you need to look for ways to cut your costs. Renting some of the equipment you need may be one of the ways to do this. Not only can renting equipment help to save you money, but it may help you grow your company more quickly than you could if you attempted to purchase all of the equipment you will need.
Renting Equipment Will Allow You To Increase The Amount Of Business You Are Able To Do
The amount of business you are able to perform has a direct impact on your bottom line. While new contracts may be a welcomed addition, they can be difficult to fulfill if you do not have enough of the right equipment to get the work done. Even if you own the right equipment, you cannot use it in two places at the same time.
By renting equipment, you will be able to increase the amount of jobs that you will be able to take on at any given time. It will give you access to specialized equipment that you may only use on occasion. This can give your business the ability to take on jobs that you may otherwise be unable to do. Being able to take on more work, as well as perform specialized work, can make your operation look larger than it really is. This may lead to larger or more specialized contracts in the future.
Renting Equipment May Help You Strengthen Your Borrowing Power
As a business owner, there may be a time that you need to borrow money in an effort to help to grow your business. When you go to the bank, one of the things they will want to see is your balance sheets listing your assets versus your liabilities. When you purchase equipment, it will show up as an asset, but any outstanding loan you have against it will show up as a liability. Unfortunately, if you end up owing more than the equipment is worth, it can count against you.
When you rent equipment, this equipment does not show up on your balance sheets. Although it will not show up as an asset, it will also not show up as a liability. This can reduce your debt-to-income ratio, which in turn may help you to qualify for a lower interest rate on the money you are attempting to borrow.
Renting Equipment Will Help You Reduce Some Of Your Business Costs
Many rental companies will deliver any equipment you rent directly to your construction site. This is an especially valuable service for large pieces of equipment that will take a considerable amount of time to move from place to place, or that will require you to have specialized equipment to moving them.
Having the equipment delivered directly to you will help you save the value of travel time. This cost not only includes the gas involved in getting the equipment back and forth, but also includes some of the following:
- The wages of the employees having to perform the transportation
- Loss of production
- Specialized permits for moving over-sized equipment
- The wear and tear to the transporting vehicles
- Toll costs and more
You will need to calculate these travel costs and subtract them from your rental cost to really see what your equipment rental is really costing you, as well as the savings that will transfer to your bottom line.
In addition to reducing these costs, renting your equipment can also help you to reduce some of the following:
- Maintenance costs
- Storage costs
- Replacement costs
- Property taxes
- Licensing costs
- Depreciation and more
The next time you need a piece of equipment to perform a job, consider renting it prior to going out and buying it. This may help you to make a sound decision in whether or not the piece of equipment would be a good addition for your business. By testing out rental equipment in advance, you will also get the opportunity to try the equipment out prior to purchasing it.
For more information and details, talk with an equipment rental company, such as All-Star Equipment, directly.