Hiring vs. Buying Equipment: A Guide

When you’re gathering up the equipment you need to start your very own production or manufacturing company, one of the very first considerations you’ll need to make is whether to purchase or hire your machinery. This is an incredibly tricky question to answer without some reflection, planning, and forethought, which is what the following article offers. With the ownership of your equipment of paramount importance when you’re producing materials and goods, you need to make a wise decision on where to buy, or where to rent, equipment for your facility.

Cost

One of the joys of hiring over buying equipment is that you won’t have to pay one up-front fee for whatever you’re buying – be it a boring machine, a conveyor belt, or a baler. That said, if you’re concerned about the cost of new machinery, you should be able to cover it with a business loan, which you can pay back in installments or using a payment plan with the company from whom you purchase your machinery. As such, cost shouldn’t be a huge factor in your decision as to whether to buy or rent your equipment.

Liability

When you own equipment, after having bought it, you’ll find that the liability for its upkeep transfers to you. This means that, in the event of a breakage or a malfunction, it’s your responsibility to have your machinery fixed as quickly as possible – and you’ll pick up the bill. Now, it’s likely that your equipment provider will have a warranty, a call-out service, or other mechanisms in place in order to help you maintain and repair your equipment, whether you’ve bought it or rented it. Conversely, if you are renting, the impetus is on the provider you’re renting from to fix your machinery as quickly as possible.

Long-Term or Short-Term Plans?

In general, it pays to purchase machinery and equipment if you expect to be in the manufacturing and production business for the long term, but it’s wiser to rent if you’re in it for the short term. Even a production span of five years might be considered short term for most businesses. Meanwhile, if you’re purchasing expensive equipment, you need to be sure that you can repurpose and resell it if you’re expecting that your production run won’t extend for many years to come. So, deciding how long your business will run for is key to deciding how to make investments in your equipment.

Urgency

Finally, many businesses that are looking to set up in the manufacturing and production industry find that the upfront costs of purchasing land, a warehouse, and all the facilities required to produce goods can be incredibly high. Of course, you’ll offset this investment over time with your earnings, but if you’re urgently looking to set up your facility, it’s advisable to rent your machines for a short while until you’re sure your firm will be profitable. You can always decide to swap in new machines or to purchase your current machines after a period of time in production.

Buying or renting is a difficult question to answer in the manufacturing space, but these tips will help you reach a smart decision for the financial stability of your firm.