JCB CEA National Major Accounts Manager Owen Parker says it is important to choose the right equipment for construction businesses, but it is equally important to decide whether the business needs to hire the equipment or buy it.
The decision about hiring versus buying needs to be based on a range of factors including how soon the machine is needed and how often it’s going to be used.
When to rent
According to Owen, renting the equipment from a machinery hire business can be a simple way to quickly get a machine up and running for the job at hand, especially if the equipment is only required occasionally or for a short period of time. This option is also practical for businesses entering new sectors of the market, or for operators who have projects far from their main site, where the transport of machinery can be managed by the rental agency. Hiring construction equipment is also a good alternative for customers who need the latest machinery to secure new contracts, but may not have the capital to buy outright.
Renting equipment also means a lower initial outlay and reduced risk to business operators who are not certain they have a steady stream of work ahead. Owen believes renting from a hire company can be an ideal option for short to medium term, one-off or remotely located projects.
When to buy
The buy option is recommended for businesses that need flexibility about when and where they use their equipment, or those that anticipate using their machines for a longer period.
Owen explains that buying a piece of equipment outright provides the business total control, adds up to a lower lifetime cost compared to renting even though the initial cost is greater, and creates an asset to sell or trade, especially when upgrades are being considered. Buying brand new also means the business can select the machine to exact specifications as well as have access to the very latest models and features.
Ownership also comes with the responsibility to manage repairs and maintenance but Owen says this is not a barrier for many customers. He explains that lots of larger businesses have their own workshops and those who don’t, can get excellent support from a good dealership. He advises prospective equipment buyers to confirm the terms of after sales support at the time of purchase.
The benefits of buying – without buying
Owen says an option that works for many customers is a flexible financing solution organised through the dealership. Under JCB’s Flex Rental agreement, customers get to choose their exact specification and deploy the machine in their business for any application, just as they would if they had bought the machine outright. Buyers will take on a flexible lease where they make regular payments that may also be tax deductible.
According to Owen, JCB’s flexible rental option is quite different to hiring from a rental company as it is available at a lower cost over time and gives customers similar benefits to owning a piece of equipment outright, without the big upfront capital outlay.
At the end of the Flex Rental agreement, customers can choose to buy out their machine, upgrade or simply hand the equipment back. The payment structure is simply adjusted if the upgrade is done during the lease period.
Hire or Buy – Making the choice
Owen advises businesses to consult with a financial adviser or accountant before making this important decision since both choices come with tax and cash flow implications.
He notes that business success is dependent on getting the right equipment, regardless of how it is procured. The important thing is to choose a proven brand and work with a trusted supply partner.