By Tom Hubbell
Equipment rental
revenues continued to outpace gross domestic product (GDP) by nearly four times
in early-2013, and strong growth is expected for the industry through 2017. As
many business owners and home improvement enthusiasts are trying to do more
with less, they are turning to equipment rental. This ensures that they get the
right equipment, for the right job, at the right time and, therefore, reduce
overall costs and increase profits.
Many factors should
be consideration when making a rent-versus-buy decision. How often will I use
the equipment? Are there enough projects in the pipeline to justify the capital
expenditure? Can I get financing and at what cost? Do I have the ability and staff
to maintain the equipment? What’s the real total cost of ownership?
For construction
professionals, equipment rental has become a way of doing business. Construction
professionals know to rent equipment for specialized projects or to expand
their fleets during peak times to maximize efficiency. For home owners and
do-it-yourself enthusiasts, a variety of popular home remodeling television
shows have brought equipment rental to the forefront as a viable solution to
reap professional results.
Regardless of your
wants and needs, renting equipment makes good business and economic sense for
many reasons.
Eliminate
the cost of ownership
Owning equipment
can be a risky venture for construction professionals, particularly in today’s uncertain
economy and tight credit market. Conserving capital is a core benefit of opting
to rent equipment for a job. It eliminates dollars that might be tied up in
fleet, and allows the money to be used elsewhere in your business.
In addition to the
capital outlay, many extra costs come with owning equipment. Operating costs
like continual maintenance, repair, safety inspections, fuel, transportation
and storage make the total cost of the equipment unpredictable, and those costs
will tend to increase during the life of equipment. Factoring in depreciation,
taxes, insurances, permits and maintenance labor adds even more to the total
cost of ownership.
Equipment
utilization is a key factor in total ownership cost. If equipment isn’t used used
frequently enough, the return on the capital investment will take many years to
recover. Another trap is utilizing a purchased piece of equipment to “make do”
versus having the exact piece of equipment you need for the job. Rental
provides you with the right piece of equipment at the right time to increase
efficiency and speed.
Routine maintenance
also carries a cost – not only with necessary materials such as oil and spare
parts – but also additional staff time. Having maintenance professionals on
staff to address equipment issues and ensuring that they are properly trained
on a variety of equipment can be costly.
Insurance costs also
increase when new equipment is added to a fleet, adding to the rising total
cost of ownership. Newer equipment is at a higher risk for theft, making
premiums to cover the units higher than covering aged units. Warranties also
can be an expensive proposition as equipment may need to be transported back to
the manufacturer for repairs or service.
But that’s not
all. Increased overhead costs are associated with buying new equipment. For
instance, new equipment needs to have a storage place when not in use. This may
involve having to build a new facility to house the units, often a costly
undertaking. Transporting equipment is another consideration. New units may
require new modes of transportation to the jobsite, and that could be an
additional expense.
Availability of equipment
When renting
equipment, construction professionals have access to the latest equipment
available on the market. Rental companies replace their core construction fleets
more frequently to ensure they have the latest equipment. As a result, rented construction
equipment typically is equipped with newer technology and the latest safety
features and codes.
Not only do rental
companies carry the latest equipment, but also they carry a wide variety of
products that help get the job done every step of the way. They also may carry
different makes and models of equipment to provide construction professionals a
selection, should they prefer a particular manufacturer.
Fleet flexibility
is yet another benefit that equipment rental offers. It’s not an easy job to
predict when projects will be awarded and how multiple project schedules will
mesh when managing a construction business. Supplementing a core fleet with
rental is a way to grow the number of projects and capture new business, while
conserving capital.
Your local rental
store can help secure the right equipment for the job, on short notice and
deliver it to the jobsite. Many rental stores also provide round-the-clock
support to keep your project on schedule and increase productivity.
Save time
and hassle
The overall
capital expenditure process can consume a great deal of time. When you consider
the time commitment to research equipment; review manufacturer specifications
to ensure that the equipment meets your goals; draw up a pricing proposal; and
find the right financial institution to partner with, you could spend weeks of
valuable time. A phone call to your local rental store will secure the right
equipment for your job within minutes.
From time to time,
equipment breaks down and, when it does, it can be a real hassle. Rental
companies work hard to eliminate that issue for contractors. They maintain
equipment to manufacturer standards and perform regular and systematic maintenance
to keep units rental ready. Transporting a replacement piece of equipment to
your jobsite also ensures that construction professionals can maximize their
time working and minimize downtime.
Finding a
rental partner
Thousands of
American Rental Association (ARA) member rental stores are located across the
country, and finding the one with the right equipment is simple. A quick visit
to RentalHQ.com, a rental store locator, will help construction professionals
find the nearest rental store.
Tom Hubbell is VP, marketing and
communications for the American Rental Association.
