Realizing the Benefits of Equipment Rental
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.