By Todd Layt
Buying sensibly can motivate success. Hiring efficiently can reduce costs
With times so tough, which is best? Whether you are a one man lawn care company or Landscape contractor, a large landscape maintenance or construction company, or a council parks and gardens department, the issue of hire versus buy will at some time raise its head. When considering buying or hiring, it is necessary to evaluate the number of times and the duration that workers need the equipment. Evaluating your budget, equipment maintenance, and the space you have for storing the equipment are other considerations. There are both economic and convenience reasons to either hire or buy, so it is not always an easy choice. Sometimes buying simply motivates you to chase work harder, and makes you more competitive.
If cost was the only issue, perhaps more equipment would be hired. Accountants would say, add up the cost of equipment, the service cost, storage cost, the cost of the finance, insurance, and tax implications then spread that over 4 or 5 years. Then work out how often you use the equipment, work out the hire costs over 4 or 5 years, and then compare the two. If hire is better value, then hire, if buying is better value then buy. However, it is not quite that simple. Convenience of owning equipment should be considered if the costs are close. If work is currently slow, hiring extra equipment for the short term may provide you with breathing space, before hard decisions are made. But remember there are some intangible cost and quotation advantages to owning your machinery.
Calculating these costs is often hard, so one way to do it, is to consider the use of the equipment. If it is used almost every day, then buying makes sense. If it is a specialty piece of equipment you use spasmodically, then hiring would be the best way to begin with. This is the easy option. Hire for a while first, then if you are hiring that piece of equipment regularly, it maybe time to consider buying. Core equipment that is used very regularly is usually better to buy, but before the purchase, it is often worth hiring a few different models first, so you can see which style of equipment better fits with the operation. Using Zero Turn mowers for example, it may be worth hiring a few different sized mowers, to find out which type suits your sites best.
Buying sensibly can motivate success.
In a competitive world like today, hiring equipment can lose you bids. Contractors, who own machinery, will usually be able to bid work lower than those who need to hire equipment. Quoting with your own equipment at sensible but regularly lower prices than contractors that for example hire in mini skid steer equipment, can result in more work and change the balance of the equation between hiring and buying. Acme Landscapes took the risk to buy a mini Skid steer, whist Widget Landscapes kept hiring one when needed. The extra work that Acme got from having its own skid steer in the end made the financials for buying better than hiring. The reality is that if Acme did not buy the machine it would never have had the motivation or competitive position to go out and chase the extra work.
There are reasons other than the cost to hire equipment. Often equipment is needed on short notice, due to a large storm, or your own equipment maybe damaged or in for scheduled repairs. If a large storm is the reason to hire, then the hire company will have huge demand, so having a good relationship with a local hire company helps, as does a quick response. Book the equipment quickly in these circumstances, as others will also be chasing the equipment.
Hiring sensibly can reduce costs.
Planning can make hiring equipment more economical. For example, rather than renting a lawn aerator for one day for one job, try to organize the equipment so you can use it for more clients. Aerate lawns of many clients at once. This type of thinking can earn a lawn maintenance contractor a lot of extra income in quiet periods. Just before spring hits, and you are too busy mowing, offer your clients lawn aeration, or dethatching. It is harder to use hired construction equipment on a number of jobs, but not impossible. If you can have 2 jobs that need a rotary hoe, or skid steer in the same day, you can share that cost over both jobs.
Other reasons to hire.
Apart from try before you buy there are many reasons why hire companies claim hiring is a great option. Can hiring really save money? Hire companies claim that without any capital outlay, you will have access to the latest modern equipment, devoid of the problems and costs of registration, insurance, depreciation, storage, repairs and maintenance. By hiring, you can have the latest equipment, making obsolescence less of a problem. Hire equipment is also a full tax deduction. Meeting peek demands is where hire equipment is such a useful tool, especially for such a seasonal vocation as landscape maintenance. It allows you to hire extra equipment and men for the summer period, without huge capital expenditure. For construction contractors hire equipment can be a Godsend for the period leading up to Christmas. Reliability of hire equipment is often claimed to be better. Equipment that sits in a shed for much of the year may develop problems. For the Lawn care business, hire companies have a great range of grounds maintenance equipment, including debris cleaners, aerators, dethatchers, mowers, ground protection mats, spreaders, top dressing equipment, tractors, trailers, utility vehicles and a lot more.
Choosing a hire company.
When choosing a hire company, managers should consider aspects such as company’s location, price and ability to provide the required equipment, the age of their equipment, and the level of customer service. Often it is when things go wrong, that determines how good a rental company is. If a breakdown occurs, this really tests the make up of the hire company. A good company will get you going again quickly, whether it means fixing the equipment, or getting you a replacement.
Tips for renting equipment.
Prior to signing the rental agreement, and during and after use, renters should consider several aspects. Firstly, check the agreement has the right price; what are the terms of payment; and what the liability issues are. You should be aware of who is liable if you damage the equipment during use. Also, what happens if someone gets injured when they’re using the equipment or because of the equipment? You should also pay close attention to the equipments’ physical features. Before taking the equipment, check it for problems, and have damage noted on the agreement. Make sure it runs before you leave. With regards to safety, you should ask if the machine complies with all current regulations, and that the user has the correct safety equipment for the machine. On site enure the equipment is safe from vandalism. Don’t leave the keys in the machine, as kids love to play with apparatus. Make sure all the attachments and tools that come with the machine are secure. Finally, ensure that the equipment is returned in good order, and get a signature on the return slip.
Buying equipment with lots of fittings for versatility is another option.
Many machines come with all sorts of attachments, making them a multipurpose choice. This may make buying equipment more attractive. For example, many skid steer and mini skid steer machines come with a wide array of attachments. If you are buying this style of equipment, consider ones that have many attachments. Some companies will hire the attachments, meaning you only need to buy the core attachments. With smaller equipment, new multipurpose types are now available making the idea of buying equipment easier. Also available are lawn and garden maintenance combination systems such as brushcutter drive systems, which with attachments, can also be a soil cultivator, hedge trimmer, edger, line trimmer, pole pruner, bristle brush, and power sweeper.
Labour is very costly.
Whether you chose to buy or hire, labour saving equipment is becoming more important. Sometimes it is worth upgrading quicker than usual, simply because the new equipment saves so much time and labour costs compared to older models. For larger companies it is worth evaluating on a yearly basis your equipment inventory. Maybe hire some of the new machinery, to see if the staff gets through work quicker. If the results stack up, then upgrading could be the right choice. It is incredible how equipment manufacturers keep improving productivity, so it is vital to keep up with what’s new. For this reason Landscape Manager and Landscape Contractor magazine will continue to review the latest machinery, keeping you informed of productivity improvements.
Finally, if you are having trouble working out whether to buy new equipment, or hire more equipment, it is not a bad idea to write down all the costs and savings on paper. It may even be worth involving your accountant every couple of years, to get accurate figures.