When To Rent And When To Buy Equipment
In the world of machine driven manufacturing if you want to increase production to match a growth cycle you logically have to add on more machines. But even if your company is enjoying a steady pattern of growth, the cost of increasing production can be enormous. No matter what industry you are in or what your requirements are, your business needs every monetary advantage possible and machine manufacturers know this. This is why rental or lease options for industrial machines are becoming increasingly more popular. So the question is this – when do you rent and when do you buy?
When capital is available.
This one may seem fairly obvious, but it may not be depending on how you answer the following questions. Do you currently have the available capital to absorb the cost of buying the new machine? How about the hiring and training of employees to run said machine? What about maintenance costs? What about installation and start-up costs? These kind of things can pile up. Once everything is added together does the cost of a new machine still make sense?
How long will the machine be in use?
One of the important considerations to review is where this need for production is coming from. Is it because of a new customer contract? How long will that contract last? Is it something that can be depended upon for the full life cycle of the machine and if so is the need based on a trend that is dependable or is this something that is a new development? Can this machine be used for a different purpose in case the new contract runs out – or in the worst case doesn’t pan out. Answering these types of questions will help frame whether the machine will be a lasting investment.
Is the technology on the upswing or downswing?
Another possible justification towards renting rather than buying has to do with what type of product you are producing and whether it is on the way to being outdated. If it is a newer product that is growing because of a current demand, is this a dependable trend or is it fad? Could renting a machine allow you to test the waters a bit before diving in headfirst by committing to a very large purchase? If it is an older product you could have a similar worry that demand may drop off. Is there any thing on the horizon that may replace your product? Is the product you make going to be something in production, say, five, ten or even fifteen years down the road? Whatever the answer, it is important to ask these questions before making a purchase that could make or break your bottom line.
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