If you’ve been getting contracts for well digging and rig development or maybe have some huge clients coming in offering you big contracts, it’s a chance for your company to finally expand and you feel like you need to upgrade your machinery but how to know if buying the machinery is the right choice for you or would renting them out would be a more favorable decision.
There’s no perfect scenario and basically the decision depends solely upon your needs. There are pros and cons to both aspects so you need to see which method would be more advantageous to your situation and which one would make it easier for you to work with. Cost is the initial most crucial factor but it isn’t the only one.
Here are a few points that might help you make a better decision;
Your financial situation is the biggest factor to consider before you make your decision but apart from looking at what the situation is now, try to calculate what it would be after a year or six months with either of the choices. For example the decision of renting out from a well drilling machine rental may seem favorable in the beginning but the costs would only add up to be way more than the costs of the equipment you buy. You also factor in the fact that you would be able to sell any bought equipment to get your money’s worth back if you ever in a financial crisis.
Once you have your own equipment, you can rent it out to other contractors who need it so that’s a win-win situation that gives you many options to get your money’s worth out of it.
Length of the Project
Out of the considerable number of things to take into account, venture length or the recurrence of projects on the are a central factor in whether you lease or purchase hardware. If the course of the project is short term, then renting is the option that would make a lot of sense, the only disadvantage of renting it out would be that the machine might not be used at all times due to delays or hold-ups, then you find yourself paying for something that isn’t making money for you in return.
If you’re going to be working on a long-term project and might take up similar projects in the future, it is best to invest in buying your own equipment. Some equipment may even be used for other projects as well.
Availability and Usage of Equipment
The biggest advantage of you owning your own equipment is that it is available at all times. Any unexpected changes in the plan of the project can be easily dealt with but such will not be the case if the equipment is rented and you might have to pay extra in case of emergency or any overtime.
Rented equipment can only be helpful if the project is short-term but buying your own equipment gives you an added advantage of flexibility. Even when you don’t have a project to work on you can lease your equipment out to other contractors and earn money. Even if your project ends and at one point you decide you don’t need the equipment anymore, you can auction it and be able to keep your investment. The only con to investing in buying your own equipment is the initial cost of it that might set you back a little.
Maintenance and Inspection
Maintaining the efficiency of the equipment and doing a detailed inspection after ever finishing day is crucial. You need to be sure the equipment you use has not been damaged in any way before it is taken out to work on the field. Your time management during the project has to be crucial so ask yourself if maintaining and inspecting the equipment is the responsibility you want on your shoulders or would you rather someone else took care of it for you. If you rent out the equipment, the providers will make sure to relieve you of this hassle and make sure the equipment is in the best shape possible.
Time Management and Response Time
The signs of a good contractor are his ability to be ready to provide anything whenever needed. If you don’t have your own equipment, managing or renting it out on emergency basis could be a hassle that might end up in you losing the gig. Buying your own equipment has an added advantage where you can pick things up from the warehouse when the need arises. There many things that can ask for your immediate attention or things you did not plan for. Having your own set of equipment will relieve you of the stress of renting out equipment in a hurry that might even cost you more.