The advantages of renting vs leasing business equipment
As a business owner you face countless crucial decisions each and every day. And the outcome of your choices could directly impact the success or failure of your company. You have to decide which clients to work with, what strategy to follow, and who to recruit to a particular job role. But another crucial decision, especially for business owners in industries like manufacturing, construction, and engineering, is whether to buy or rent your business equipment.
Depending on the nature of your work, you may require the use of lathes, industrial drills, forklifts, and other heavy duty kits. And these tools aren’t cheap – they can set you back a significant amount so you want to be sure you are making the right decision. Since every business is unique, there is no right or wrong answer. The decision of whether to rent or buy your equipment is entirely down to your specific needs and circumstances. To help you make your decision, here are the advantages of each course of action.
Lower initial cost: If you have limited capital then leasing can make it much easier to afford the essential equipment you need to run your business. Let’s say you need some scissor lifts for your new warehouse. Rather than paying outright for the cost of the equipment, a scissor lift hire company will allow you to make monthly payments for as long as you need. And if you only require use of them every now and then, you may still save a great deal of money in the long run.
Flexible payment terms: One of the great things about leasing equipment is that you can usually pay according to your means. You will be able to make payments in regular installments that are manageable and much more advantageous than taking out a loan.
Ease of upgrade: Technology is advancing at a rapid rate, and business tools become outdated all the time. Leasing equipment means that it is easy to upgrade to a new and improved model any time you like. Conversely, if you buy an expensive piece of machinery and it is soon replaced by a shiny new model, then you have to make the difficult choice between upgrading at a loss, or being outshone by your more forward-thinking competitors.
Lower overall cost: Buying equipment, although more expensive in the short term, will cost you less overall. If you can raise the necessary capital upfront, and you know you will require the equipment for a long time, then this might be a preferable solution.
Ownership: When you rent equipment, you don’t own it, meaning that you don’t build any equity. But when you buy it, you benefit from ownership of an asset, which you can later sell on secondhand or for spare parts if you need to reclaim some of your expense.
Tax incentives: Depending on where your business is based, there may be tax incentives for buying machinery and equipment. You may be able to deduct the cost of your newly-purchased assets from your taxes.
In conclusion, your decision to buy or lease will depend on your financial circumstances and long term strategy. Although renting is often the safe option, purchasing is an investment that can pay dividends in the long run.