Transport Equipment: Hire vs Purchase
Transport equipment is one of the biggest capital expenses for many businesses, yet it’s also an area that’s often overlooked on the balance sheet. While purchasing, maintaining and running a fleet of trailers might make sense for some larger companies, there are numerous advantages to renting your transport equipment instead.
Six reasons to hire rather than purchase
- There are no costly overheads or major capital outlay. You’ll have quick and easy access to a range of modern trailers without laying down a hefty upfront cost. This makes renting transport equipment a particularly good idea for startups, small companies or growing businesses.
- Servicing and repairs are easily managed, and there are no ongoing maintenance costs. Haulmore’s team of skilled mechanics will be on hand, so you won’t need to hire or manage in-house mechanics and engineers.
- Renting frees up funds that would otherwise be tied up in assets. Redirect your money into the business areas that need it most.
- Flexible rental agreements mean you can return your units when you no longer need them. This will allow you to accurately estimate and contain costs on a specific project.
- You’ll have the versatility to meet peak demand as it occurs. Every business goes through peaks and troughs, and hiring your transport equipment will give you more flexibility to deal with both.
- The cost of hiring a trailer is tax-deductible. You can claim a tax deduction for using transport equipment hired for business purposes.
Make time for an evaluation now, and save money later
Conducting a simple, cost-benefit analysis can provide valuable data and help you make an informed and logical decision about equipment rental versus ownership. Here are some questions to consider.
What are the specific transportation needs of your business?
Take a step back to evaluate the main priorities of your business, how much equipment you really require in order to meet them, and what type of equipment is suited to the job too. Consider:
- The frequency of need for transport equipment
- Additional equipment needs that might be required should customer demand increase
- The approximate amount of labour needed with renting vs buying
As a general guideline, if your transport equipment is needed less than 60 to 70 per cent of the time, it normally makes more financial sense to hire rather than purchase. Likewise, if you require equipment for a project that is likely to take months rather than years to complete, then renting is the more viable financial option.
What is your current financial situation? How much capital do you have?
You need to evaluate if you have the capital to purchase and maintain the trailers that your business requires. If you don’t have the capital to spare, then renting is the most financially sensible option.
Keep in mind:
- The approximate cost of a new machine
- Financing options and available capital
- Estimated cost of maintenance and service over equipment lifetime
- Accreditation and permit expenses
- Licensing expenses
- Transportation and storage expenses
- Estimated rental payments for the period of use and trailers needed
Which business areas need to be involved?
The procurement, finance, production and administration departments in your company can all have an important input on the decision to hire or purchase. Consider:
- Whether the equipment will require special technology, skills or training to operate
- The availability of the new-purchase equipment
- Possible multiple uses for trailers
- Internal capability to test, maintain and service each unit