Running a business is not easy and every successful business owner or manager knows that to be competitive they need to be smart and up to speed on all the latest innovations, but most of all they need to make the right investments at the right time that will help them to move their business forward.
Our team understands the complexity of investing in an expensive piece of machinery, such as a powered access platform, and we know that acquiring the equipment you need has to be something that fits your budget as well as your capital spending plans. This is why offering a wide range of acquisition methods to our clients is an integral part of the service we offer.
In this article I will outline each of the acquisition options that we offer to our customers and will explain some of their advantages and disadvantages to help you decide which is likely to be the best option for you.
Purchasing Outright
If you have the funds available to you and need to have equipment on site at all times then purchasing outright could make good financial sense.
Purchasing outright is most people's first choice and nearly 2/3 of all companies that acquired equipment in 2015 chose this route. However, before rushing into buying outright there are a number of factors to consider:
To make the decision easier for you we have put together a list of advantages and disadvantages for buying equipment outright.
Advantages:
Disadvantages:
Renting - Only available to incorporated businesses
For those businesses that can’t afford to purchase equipment outright, there are plenty of other options that will not put a strain on their finances.
With renting you can chose how long you want to keep the equipment for - anything from a day, to a month, to a year or even longer. While renting is a good fix if you needed a machine and did not have the finances to purchase it, it could cost you more in the long run as the costs can add up quickly, especially if you need equipment on site all the time in case of emergencies or unplanned tasks.
The answer is to compare the cost of rental versus the cost of ownership, which will differ for every business. Ownership, while having its advantages also comes with additional costs such as maintenance and operating costs, insurance, government licensing, etc. Renting a machine means all of those costs are included in the rental rate. The length of a project, or frequency of use of the equipment should also be considered. It doesn't make financial sense to purchase equipment that you only need to use 1-week a year, for example.
Advantages:
Disadvantages:
Asset Finance - Only available to incorporated businesses
Another very well established and convenient method of acquiring assets, if you were an incorporated company, is asset finance. In 2015 alone, £29bn was funded using finance. This number represents nearly 32% of UK's investment in machinery, equipment and software.
With asset finance you have three options for purchasing: finance lease, operating lease or hire purchase. With finance and operating lease you are effectively signing a contract to use the equipment on a low repayment rate for a certain period of time. With hire purchase on the other hand you own the equipment at the end of the agreement.
Finance is an easy and logical option for anyone who can't afford to take thousands of pounds out of their pocket all at once, but knows that in order for their business to move forward and remain competitive they need to invest in better technology or more equipment.
To learn all you need to know about finance, please read our blog Asset Finance for Powered Access Equipment.
Advantages:
Disadvantages:
The main difference between asset finance and renting is that with finance you would still need to go through a funder and to sign a contract usually for a minimum of two years. Renting on the other hand is a more short-term option and you can rent the equipment for as long as you want, though the monthly cost is usually far more than what would be paid under a finance agreement.
To find out which is the best acquisition option for you download our free decision tree below:
If you require any further guidance or advice you can get in touch with our team here.
References:
https://enewsletters.constructionexec.com/managingyourbusiness/2015/07/renting-vs-buying/
https://www.nibusinessinfo.co.uk/content/leasing-or-renting-business-equipment