Posted on: March 28, 2018 11:25 am
Doing Better Business: 20 Ways Equipment Rental Enhances the Bottom Line
All kinds of businesses need an array of equipment to complete work, satisfy clients, meet deadlines and make a profit, and equipment is a variable by which companies can either gain benefits or assume liability.
While it’s always been important to business, a world of razor-thin profit margins makes it even more essential than ever to manage equipment well, including selection, maintenance, operation, service and replacement. Alban Cat has Cat equipment for rent and helps people in a variety of businesses find equipment solutions that create benefits.
Many industries benefit from renting equipment rather than buying it, including:
- Waste management
Whether you decide to buy or rent, we have a lineup of new and used machines with the capabilities you need to complete work in the most efficient way possible. We can help you reap the full benefits of equipment rental.
1. Join the Rental Majority
A 2014 poll revealed that 60 percent of construction executives say rental was a more cost-effective way than ownership to manage on-site equipment. A 2016 survey of 500 construction professionals showed their top three reasons for renting equipment:
- Because they can rent equipment specific to the project/work/task — 42 percent
- Because the amount of work needed does not justify equipment ownership — 29 percent
- Because they like being able to return equipment for rent — 17 percent
Number two brings up an interesting question that most owners, as well as fleet and other managers, have considered or will consider in the future: How do I know when it’s time to buy the equipment? While the expense-to-revenue ratio is important, one widely accepted standard of when you should buy is when the equipment is needed at least 60-70 percent of the time.
2. Exploit Rental Potential
Companies and people rent equipment for a number of reasons. While everyone would likely have other items on their list, or prioritize them differently, there are some common themes:
- Increase overall capability when and where needed
- Save money in many cases
- Help meet deadline crunches
- Provide specialty performance
- Satisfy temporary production increases
- Fill in when regular machines need maintenance or fail
- Expand machine inventory
- Eliminate responsibility of testing, maintenance and service
The range of capabilities among equipment of all sizes, especially for construction and industry, can help businesses serve niche markets and win new and different kinds of projects. You can use rentals to fill in during an outage or emergency, and enable flexibility in logistics and finance.
Each individual business can do a cost-benefit analysis to reveal the extent to which equipment rentals may benefit them. Generally, companies can use the analysis data to see how many of the benefits of equipment rental can apply to them.
3. Improve Efficiency
Nearly everyone knows it’s difficult or impossible when, for example, you try to use a flat-head screwdriver to loosen a Phillips-head screw or vice-versa. Similarly, big or small equipment should be matched to the job it will do as precisely as possible. Everything from the drive train and hydraulic abilities to the attachments and accessories can affect job efficiency and project schedule.
An oversized, undersized or imprecise machine can make a huge difference in overall production and especially wear and tear on the machine. Calculate the time and resources lost when something breaks or dies an early death, and the efficiency of equipment rental over the long run seems more substantial.
For a hypothetical example, an aging machine may require three extra hours of maintenance per week, for a total of about 150 hours per year, or more if it breaks down and causes a delay. Those lost hours are not only annoying, but also affect the bottom line.
4. Increase Productivity
Along with doing things faster and more easily, equipment rental also brings the possibility of better productivity, since you can precisely match the machine to the task.
For another hypothetical example, say a bigger bucket on the excavator or a tracked loader to expedite materials transport could shave 10 minutes off the task each time it’s completed. Especially if it’s a repetitive task done dozens of times each day, doing the job with a machine made to do it will simply enable you to finish more work in less time.
5. Prevent Breakdowns
There’s practically nothing worse than having production on a job site come to a standstill because a piece of equipment stopped running. Progress doesn’t happen, people go idle and resources are pulled from other areas to solve the breakdown problem. Depending on what the problem is with the machine, production could be affected for hours or even days.
When you rent Cat equipment from Alban Cat, you’re assured that it’s in top running condition, because it’s professionally inspected and maintained. If the unusual breakdown does occur with rental equipment, it’s likely you’ll get a replacement machine or a needed repair faster than it would take to get the same for a company-owned machine.
6. Chase New Kinds of Work
One of the ways equipment can affect the bottom line positively is by enabling a business to rent the type of equipment needed to do a certain kind of work. Whether you work in agriculture cutting crops, in construction moving earth or in some other industry doing another job, the right machine helps you win contracts and new work.
If you’re looking to do precision digging work, but don’t have the hydraulic power or attachments for it, you can use rental options to open a door to new possibilities. The principle applies across all industries, since there’s such a wide variety of heavy (and smaller) equipment that caters to nearly any need.
Equipment rental will also help you sharpen your competitive edge, since you can rent the same kind of machines that the bigger companies own. You can also consider and commit to tasks and jobs for which your standard fleet may not be equipped.
7. Delegate Maintenance
Some companies have entire teams whose only job is to maintain the equipment and machines, while many leave the maintenance to the professionals. Anyone who has been responsible for the upkeep of even one machine knows what a headache it can be to remember oil checks, fluid changes and visual inspections. And when it comes to changing out a part, most people are faced with pulling a worker from another duty to do it.
In equipment rental, that maintenance, service and repair of machines is left to the rental company, not the business owner, and many of them find that to be of immeasurable value. If something springs a leak, they notify their consultant for a quick repair and/or can get a replacement machine fairly quickly.
It’s a lot of work to manage maintenance, count hours, train operators and test machines, and the workload multiplies with each piece of machinery in the fleet. More and more companies find it to be more profitable and much less stressful to have a lease or rental agreement that leaves all the responsibility of maintenance and the machines to experts who specialize in them.
8. Gauge Costs More Accurately
Simply put, it’s a lot easier to predict and estimate equipment rental costs than equipment ownership costs. For example, a rental agreement enables you to put a loader here and an articulated truck there for specific amounts of time, as well as to know exactly what the cost will be. In ownership, the condition and status of the machine remain variables that can make a positive or negative difference.
An owned machine might be undersized or oversized for the job, it may be old and not powerful enough for the job or could have way too much strength for the task at hand. How well the equipment is maintained and to what standard can mean the difference between equipment that yields peak performance and no breakdowns and a machine that limps along and frequently requires attention or parts replacement.
Figuring the true cost of ownership over the life of a piece of equipment is often a subjective exercise. Ownership includes insurance, taxes, depreciation, warranties and any certifications or permits, whereas equipment rental costs are clearer, shorter-term and easier to estimate accurately.
9. Accomplish Compliance
Worry-free compliance with all local and state codes comes along with equipment rental from Alban Cat, and each business owner or manager has to gauge the value of that benefit for themselves. The states in our main territory of Maryland, Virginia, Delaware and Washington D.C. have some of the country’s most stringent codes pertaining to emissions control, job site safety and other equipment-related issues.
Any kind of compliancy tangle has the potential to affect productivity and delay job completion. The compliance requirements may vary a bit, too, depending on where you’re working and what kind of job it is. For example, there might be different regulations for on-road equipment than for off-road equipment, and the requirements might be tiered according to how powerful the equipment is.
No company wants or needs the financial and reputational ding related to a real or perceived violation of standards. When you use rental equipment through a reputable company, that compliance headache is all but eliminated.
10. Stay Safe
Faulty or substandard equipment has the potential to create unsafe conditions and cause accidents. Most businesses want to do everything they possibly can to prevent mishaps, injuries and worse, because they can negatively impact the bottom line.
Maintenance and service standards, as well as sufficient operator training and all the required permits contribute to overall safety and help you meet local, state and federal standards. In this way, a rental equipment agreement with a quality, reputable, strong dealer helps protect both individual workers and the overall company.
Since Caterpillar® is a dominant industry leader, it’s not unusual for many types of businesses and contractors to seek Cat construction equipment for rent as a best practice safety measure.
11. Forego Storage and Transport
Where to put big equipment and how to get it from place to place rank among the top issues of businesses who use it, because both the storage and transportation of heavy equipment is expensive and logistically complicated. Some machines need to be kept out of the weather, and most equipment requires some kind of special truck or trailer for transport.
Equipment rental removes not only the headache and cost of actually maintaining a place to keep the machines, but also the hassle of coordination in making sure there’s space, gas, drivers and other resources to make the transfers.
12. Avoid Capital Expenses
Many owners wait and wait to have that great profit year so they can purchase a new piece of equipment, but equipment rental can be a way to bid and win those bigger jobs now and work your way up to ownership. Everybody would have a different benchmark of when it’s time to buy a machine, but they’re like any other asset.
Equipment depreciates, has safety requirements, often needs to be certified, generates taxes and must be sold at the end of its life. These are headaches that many business owners would rather avoid until their business grows to the point where they can envision being comfortable with all the costs of ownership and capital expenses.
13. Boost Borrowing Power
Once a business buys a piece of major equipment, its money is tied to that capital expense throughout the life of the equipment and/or until it’s sold. Normally, lenders and other evaluators of businesses’ credit worthiness do not view equipment rental expenses as a liability.
Capital equipment isn’t necessarily seen as a liability, but bankers know well the expenses associated with it. Most companies must make payments on the machine for a period of time and then maintain, service and eventually sell it. The dollars used to pay those expenses could be used for collateral and other loan payments.
14. Tap Into Tax Savings
It’s worth noting that you can usually deduct equipment rental costs as a business expense, whereas owned equipment is taxed as an asset and gradually loses value over its lifetime. Depending on the nature of a business, equipment rental expenses are generally more financially flexible than big purchases that count as capital.
When it comes to assets and liabilities, aging machines can detract from a company’s overall financial portfolio.
15. Try the Latest and Greatest Equipment
Rented equipment can be a way to use more updated machines than a business can afford to buy for itself, including specialty and light- and heavy-duty machines. Particularly with Cat machines, the abilities range from precisely applied pressure to broad, raw power. Many of them have computer-aided controls to help users do the job more efficiently, safely and quickly.
When you rent key pieces of equipment, there’s no chance of your fleet becoming obsolete or undersized. You can always try the newest attachment or accessory by renting it, to see if it would serve you for a certain project or line of work. Anyone thinking about a major equipment purchase can use rental equipment to shop around and try different machines for a day or a during a project in order to test their capabilities.
16. Augment the Fleet
Rental is a great solution for when a company or owner would like to get a certain kind of work but doesn’t have the machine it would take, or enough machines. You can rent that excavator, loader, aerial boom or other equipment that’s needed to either perform a certain kind of work or to give you enough resources to do bigger jobs.
With a rental agreement in place, you can almost achieve on-demand delivery and pickup of heavy equipment. It’s possible to add an earth mover for a month or a backhoe with a precision arm for a few days or a week, as well as just about any other combination of machines and lengths of time.
17. Built-in Flexibility and Options
Your business may need trucks, loaders, excavators, skid steers, uninterruptible power supplies or other resources, and all must be streamlined for the best efficiency and responsiveness. Today’s volatile market demands that all businesses constantly search for new ways to deliver quality service and a great end product.
Equipment rental opens a door into specialty markets, bigger jobs, temporary tasks and other such perks that come with good and better contracts for work. Some business owners find solutions through one versatile machine that performs several functions, using interchangeable accessories or attachments.
A rental partnership with a quality dealer such as Alban Cat strengthens any company’s ability to respond to niche needs, financial volatility and market fluctuations. It’s an option that adapts with a business.
18. Simplify Scheduling
One of the most challenging parts of being in any business that requires light and heavy equipment is making sure the needed pieces are where they need to be at the time they need to be there. When you rent equipment through Alban Cat, you gain an expert partner who eliminates many of the logistical worries associated with scheduling. In many cases, our tracking and inventory software and other tools can also benefit those who rent from us.
Nobody can start or finish work if the necessary resources are not in place and ready to go when crews arrive. A worst-case scenario for your bottom line is to have people standing around waiting because a needed machine has not arrived yet. Good equipment coordination and scheduling holds the potential to streamline operations, which has been known to save money, boost morale and occasionally shorten the workday.
19. Require Examination
Back to the cost-benefit analysis, another plus of equipment rental is that you’ll gain insight naturally as you evaluate your needs for:
- Labor or time saved or wasted
- Uses for potential rented or owned machines
- Estimated cost of ownership
- Estimated cost of rental
- Frequency of need for equipment
- Transport and storage expenses
- Financial options
- Training or technology needs
Evaluation of many factors takes place as someone considers the need for rental equipment, and it reveals data that’s useful for making wise decisions.
20. Opt Out of Long-Term Commitments
Some business owners may not ever make a capital purchase because they fear the long-term commitment of it. Any kind of equipment, and especially heavy machines, is expensive and usually generates debt. Its use and service must be coordinated so that it neither gets overworked nor underused. You must track hours, chase warranty details and then worry about disposal at the end of the machine’s life.
Ownership carries with it lots of responsibility that some companies simply don’t have the time or resources to handle. Equipment rental eliminates the concern over commitment and can give owners, operators and managers the knowledge and experience they need to confidently purchase a machine in the future.
Pick a Professional, Prepared Partner
Alban Cat serves Maryland, Delaware, Virginia and D.C. with a complete line of new, used and rental Cat tools. Our inventory includes everything from the heaviest on-and off-road equipment that rips, lifts and digs to the pieces that supply uninterruptible power and A-to-Z attachments and accessories to address any tasks in all kinds of environments. With 12 convenient rental locations throughout our service area, there is sure to be an Alban Cat nearby to you.
We also offer new and used Cat machines as well as other brands, plus comprehensive lease and rental capabilities, parts and service for all brands, financing options and a broad, deep supply of expertise in our dedicated professionals.
Whatever benefits you may seek through rental equipment, Alban Cat most likely has the means to realize them. Don’t hesitate to let us know how we can help to enhance your business’ bottom line.