- December 20, 2018
- Posted by: khawaja senan
- Category: Equipment Rental
For a business which solely depends on heavy equipment, it requires a huge investment. It can’t be ignored since it’s the essential element to bring your construction business forward on the path of profit.
Also, it takes a while until your business finally starts to pay off the investments you’ve made in it in the form of various expenses like buying heavy construction equipment, business promotion, paying salaries of the staff etc.
As a business owner, you should know that the expenses you estimate before getting into it are always estimated. There are a lot of things which come up in the form of expenses when you start your business and you have to pay for them too.
So, always focus on saving money as much as you can. But that doesn’t mean you have to compromise on quality. Save as much as possible, but not forcibly. For that reason, a construction business owner needs to ask himself two questions:
Do you really need to buy new equipment?
If you’re not sure, then…
Is it possible to start by renting used heavy equipment?
If you’re still not sure then…
You’re at right spot dear friend!
Why should you buy or rent used heavy equipment?
To answer that in one word, they are “CHEAP”. With no noticeable compromise in functionality, you can save a lot by buying or renting used equipment as compared to buying or renting new ones.
Is the used equipment ‘much’ cheaper than the new one?
YES! Construction equipment resale values follow the similar pattern as an automobile. The moment you spend an hour using a new dozer, wheel loader or excavator, its value drops by 20% to 40%. Yes, that’s a huge price drop especially when you’ve paid hundreds-of-thousands-of-dollars. We don’t call it a loss.
As a thumb rule, always remember this:
NEVER INVEST MONEY THAT YOU CAN’T AFFORD TO LOSE.
To make things more understandable, here is an example: if you purchased a $500,000 dozer, you lose an estimated $100,000 worth of an equipment value in the first hour of its first job! Scary right?
Alright, I understood that investing in new equipment when the business itself is budding can be a huge expense. But are there any specific advantages of buying or renting used equipment instead? YES, DEAR FRIEND!
What are the advantages of buying or renting used heavy equipment?
Today we’ll be discussing why you should buy or rent only used heavy equipment for your construction business and what are the advantages of doing so.
This is the most important factor out of all. Money is everything in a business and if you can’t control it then you won’t survive in the game for longer. It’s not always required that new things are the best.
If you can find used equipment which is in excellent condition then go for it. Either buy it or rent it if you’re extremely strict on budget. Used equipment can often be found at a decent and affordable price tag.
Avoidable Initial Depreciation
The prices of new equipment are increasing exponentially day by day. Lately, the average price of any piece of construction equipment has jumped in between 15% – 20%. So, it’s always best to avoid initial depreciation which comes when you buy brand new equipment for your construction business.
You Decide the ROI
If you want the best ROI (Return on Investment) then do some research and look for the maximum pricing gap between new and used construction equipment. ROI is one of the most important factors.
You decide the ROI of any investment by paying for it. The lower it is the better. After all, it’s all about making the profit and you need to ensure that your investment pays for itself as soon as possible so that you can actually start making some profit out of it.
Financial relief does not end there! You pay much lower taxes when you buy or rent out used equipment compared to a brand new one. There are also other costs that will be much less like insurance. All additional costs will be much lower since the start of the low purchase price.
Controlled Flow of Money
No matter if you pay for your piece of equipment in cash or take a loan for it, there are other kinds of regular expenses too that you have to keep an eye on. EMI of equipment Loan, equipment maintenance charges, and miscellaneous business expenses are some of those amounts that you’ve to pay often.
When you pay less by going with used equipment instead of new equipment, you ensure the longevity of your business and have a proper control over your future investments too.
Get the most out of your Investment
When you go for the used equipment, you’ve plenty of choices and possibilities are limitless. As you decide to buy used equipment, you decide to save a lot of money which open the doors to a lot of choices for you. You don’t have to think twice before making a deal for branded used equipment.
This happens most of the time when you have a specific taste or brand preference. With your choice of brand for your used heavy equipment, you can ensure the quality standards before making it a part of your business because not all pieces of equipment are made to the same quality standards.
So, you have two choices; either settles for a new inferior machine or buy the brand you want at a used equipment price. The choice is yours 😉
Better Resale Value
As we mentioned above, the value of construction equipment takes the biggest hit in the first year of its operation. Same goes for the resale value. Only the well-maintained equipment tends to hold its value for many years to come.
When you choose used equipment, you avoid that first year hit. Now, you can sit back and relax while your machines make money for you and still get the best price when you resell them. So, there is no fear of any initial loss and no fear means more productivity. This factor alone will give your company a lot of flexibility.
Buying a new machine requires a lot of patience, sometimes for months. It’s due to low availability of machinery you are looking for buying. When you need a machine urgently then buying used equipment is your best bet.
The internet is a huge pool of resources. You just have to look closely and anything can be found. You can go to any reputable used and new equipment selling and rental sites and contact them.
Buying used equipment is always a beneficial deal. There are a lot of advantages associated with used equipment and we have mentioned some of them above. It’s very easy to expand a fleet of used equipment than a fleet of new ones with no difference in quality and functionality. Hope this article helped you and you found what you were looking for.