Mike Terrell, OVR President
“EQUIPMENT – Renting vs. Buying for the Start-up Water Restoration Company"
Deciding whether to rent or buy equipment is one of many crucial decisions that a new owner has to make. Because this decision is usually made in the early stages of his/her new business, it will be greatly affected by budget, location and who you know in the industry. Allow me to explain.
Let's start with the basics:
To be successful, you must purchase your own extraction unit, meter kit, air scrubber and a certain number of dehumidifiers and air movers. The number of dehumidifiers and air movers will depend on your budget. If you have to rent these items every time a customer calls, you will have low profit margins, you will lose time and you will lose jobs!
If your budget allows, you should also purchase some specialty equipment such as power boxes, a hardwood floor drying system a hydroxyl generator and an E-TES unit. These tools will allow you to offer a wider variety of services, dry jobs faster and give you a great opportunity to market to adjusters.
If you are in a city, you may be able to rent some specialty equipment from your local supplier (if they carry it) or from a friendly competitor. However, if you are like my friends in Jackson, Ohio, you will likely have to purchase as the closest place to borrow or rent is 70 miles away! Please keep in mind that these items will not likely be available when everyone gets busy. So, again, you will lose jobs.
Equipment Rental…the Pro's:
When renting for short-term events or one-time jobs, it is more cost effective for contractors to rent additional drying equipment. This is especially true if there is no foreseeable use for the equipment in the future. When renting equipment, contractors are only responsible for the rental rate and the chosen rental protection plan. These savings allow contractors to put an influx of cash into their business. Renting additional drying equipment allows you to be “BIG”, to keep your commitments to your customers and keep your competitors away from them.
Equipment Purchases…the Con's:
Purchasing equipment results in high up-front costs and additional related expenses that are included in the total cost of ownership. For example, contractors that decide to purchase equipment must factor in costs associated with financing, maintenance and repairs, insurance, transportation, storage and energy, which can exceed 100 percent of the average initial purchase price. Please also keep in mind that the low payment plan may not seem so low when you are in one of the long, dry spells that are prone to happen in our industry.
The balancing act:
You should have rental expenses allocated in your yearly budget. The key is not to continue renting the same items too often…especially dehumidifiers and air movers! As time goes on, you can use your rental patterns to help you make decisions on future purchases, then modify your budget accordingly. Make purchases as your budget allows and when it makes sense, but continue to budget for rental expenses. You never know when the “big one” will come along…hopefully soon!