The key to a successful business is not only looking for effective solutions to current problems but also correct planning for long-term prospects. In particular, the second aspect can be applied to equipment purchases, because it is often postponed until the last minute, due to the greater economic efficiency of renting it. However, is it worth renting equipment if you plan to use it regularly? Actually, below, we will try to give a reasoned answer to this question.
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5 Benefits That Reveal the Long-Term Potential of Equipment Purchases
For start-up businesses, renting may seem like a convenient and cost-effective solution, but given the ever-accumulating payments you’ll part with month after month, it’s hardly the best option. That’s why we’ve decided to highlight the benefits of buying that are achieved in the long term.
Cost reduction
Equipment rental involves regular payments that accumulate each month and can significantly exceed the cost of a full purchase. Thus, the longer you use the equipment, the more you will have to spend on its rental (but, at the same time, no assets will be added to your property). Let’s consider an example: with the rental cost of lifting equipment at $3,000 per month, over three years, you will spend $108,000, which is usually much more than the cost of buying new equipment.
If you add to this the risks associated with the potential increase in rental rates due to inflation, changes in the manufacturer’s model range, or increased user demand, it becomes clear that even the planned rental budget can ultimately be inflated. Thus, by choosing equipment purchases, you protect yourself from such force majeure and instead get the opportunity to accurately predict your costs.
Formation of company assets
Purchased equipment always becomes part of the company’s assets, positively affecting its market value and financial stability. This is especially important when obtaining loans or investments since having expensive equipment in your possession increases the trust of banks and partners.
At the same time, rented equipment does not imply any ownership rights to it, which means that it cannot be sold if at some point your business needs to redistribute resources or update its fleet of equipment. Thus, the money invested in rent will be lost irreversibly and will not be able to be transformed into a valuable asset for your company.
End-to-end control and independence
The equipment you rent always remains the property of its direct owner, which imposes certain restrictions on you – in particular, you may face its shortage during periods of peak workloads, delivery delays, or strict terms of use. Moreover, if the rented equipment breaks down, the replacement process may be delayed, which will lead your business to long-term downtime and financial losses.
At the same time, owning the equipment gives you complete independence, starting from the ability to use it at any time and ending with the absence of any restrictions associated with rental contracts. This is especially important for businesses operating in areas where efficiency and constant availability of equipment are essential (this includes construction, logistics, manufacturing, etc.).
Tax advantages
Another non-obvious advantage of purchasing equipment is the favorable taxation typical for some regions. In particular, many of them provide certain tax benefits for the purchase of equipment to reduce the financial burden on businesses.
This means that legislation may allow the costs of purchasing equipment to be taken into account as capital investments to gradually decommission them through depreciation. Moreover, in some cases, the government may offer subsidies or preferential financing for the purchase of equipment, which makes its purchase even more profitable.
Possibility of partial return on investment
Indeed, the initial costs of purchasing equipment may seem like a significant hole in the budget, but it is important to understand that over time, they fully pay off. Specifically, companies that use equipment on a regular basis quickly come out on top due to the absence of rental payments, reduced operating costs, and increased efficiency, which is no longer subject to force majeure typical for those who rent machines.
In addition, the purchased equipment can be used for many years, and with proper maintenance, its service life increases a lot. And, even if over time you need to update the fleet, old models can be resold to compensate for part of the initial costs (it is worth noting that such equipment loses only little in its market value).
Conclusion
If you want to look to the future of your business with confidence and eliminate suboptimal expenses, purchasing equipment may be a more profitable option, as it will allow you to reduce operating costs, gain full control over your assets, and increase the external market value of your business. Therefore, if you are considering purchasing lifting and construction equipment, you should check the Zuma Sales range.
