Budgeting for your construction business goes well beyond just your current project. Although you always have to consider the scope of work, size, and type of projects you’re taking on when investing in equipment, you also have to consider the working capital of your business, your overall growth strategy, and your current cash flow.
In parts one and two of this four-part article, our Sarasota construction attorneys covered the criteria to consider before investing in equipment. We also discussed when you should consider buying construction equipment. In this part, we will shift gears and discuss the pros and cons of renting equipment. Remember, for business growth and legal protection, the Sarasota construction lawyers of Cotney Construction Law are here to help.
Should I Rent Construction Equipment?
For businesses just starting out that have yet to carve out a solid niche in the industry, renting construction equipment provides you with an opportunity to procure projects with a bit more flexibility. You can elect to rent what you need for that particular project and you aren’t locked into a long-term investment. Renting also weeds out other associated costs like storage, transportation, and upkeep. Although you lose the familiarity aspect of purchasing equipment when you rent, you do have an array of state-of-the-art equipment to choose from. You can always rent out equipment that you love and then purchase that same make and model after you are comfortable utilizing it.
Consult a Construction Lawyer Before You Rent
Although renting does offer construction firms some undeniable benefits, rental costs are a steep short-term investment. Before you agree to rent from a local vendor, have a Sarasota construction attorney review your contract. Issues like who is at fault for repair costs or timely delivery of the equipment can impact a project’s deadline and the financial capabilities of a business. Our construction tax attorneys can also give you valuable advice on tax write-offs from renting.
Consider the Time Spent Researching Vendors
Although renting does eliminate a lot of the extra costs compared to owning, it takes significant time for construction firms to research what equipment they want to rent, get the best deal they can find in their area, and ensure that they are partnering with a reliable vendor. Depending on your business operations, this time focused on tasks away from the jobsite can impact your operations. This is one additional element that must be considered before renting.
If you prefer not to invest too much cash upfront on equipment, but you also want equipment longer than a week or two, leasing could be the right option for you. In the final part of this article, our construction attorneys will discuss the pros and cons of leasing.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.