With increasing focus on bifurcating costs to lower them around the world, it is no surprise that organizations are finding ways to completely forego owning any assets. Take the example of the global transport services such as Uber that essentially own the most minute amount of assets and yet have turnover in millions. A similarly case of business is Airbnb.
Why You Should Rent it?
Motivated especially by these excessively profitable ventures out there, organizations look to capitalize on the concept of renting out equipment rather than buying it. But it is not just the example of these profitable companies that motivate organizations to rent equipment and not buy it. Here are some reasons:
Save On the Huge Initial Investment
Suppose you are a startup construction company in Melbourne that has acquired a construction contract after fighting tooth and nail for it. Since you are a startup, it is obvious that you might not have every machinery ever that you need. So, when you do start construction, isn’t it necessary that you look for access & boom lift hire services in Melbourne rather than going out to buy that piece of machinery?
Once you do complete the project and have some cash on hand, you could think about buying the equipment that you really needed.
When it comes to taxes, the IRS is one difficult customer to deal with. The assets of a company are taxed when the taxes are paid which means that the more assets you own, the more tax you have to pay. On the other hand, taking assets on rent can be huge tax saving. The rental expense is deducted in the profit and loss statement which means that the net profit is lower than it would be had you actually bought the equipment. Hence, more tax.
Finding better Investments
Your assets depreciate over time. This means that the investment you made in a piece of machinery is constantly losing its monetary value. On the other hand, had you decided to save the same amount of money in a saving account or invested in stocks, you could have even earned a return which could have multiplied the amount of capital you have in your business.
A great feature of rentals is the fact that you can use equipment that you could never have afforded in the near future. As a result, the competitive edge that huge organizations had against you is competed away because even with lower investment, you stand at the same level as they do. This evens out the competition and gives you opportunities to grow. As a result, not only does your quality of work match that of huge companies but your customer base comes to trust you, especially because you can provide the same services at lower costs than huge businesses will. There is nothing more than a startup could ask for that is better to grow in an industry against established businesses.
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