Hire vs Purchase

Listing and explanation of the factors governing the benefits of hire against purchase of walkie talkie radio equipment.

For companies from a wide variety of industry sectors the decision as to whether to rent or buy two way / walkie talkie radio equipment that they will need for a job has serious ramifications and must be considered very carefully. There certainly are instances in which buying a piece of equipment instead of renting makes the most sense.

However, renting radio equipment rather than buying offers quite a few major advantages that can be beneficial to companies of all sizes across different industries. What follows is an overview of the benefits of renting vs. buying heavy equipment.

Convenience and Logistical Advantages to Renting Equipment

The UK economy is improving and that means that many companies who need radio equipment are finding themselves extremely busy and with full order books. Even if you haven’t seen a major upswing in jobs and projects, chances are you and your employees were already working hard. That is why one the biggest categories of advantages that renting has over owning is in the added convenience that it brings and lower logistical demands that it requires.

No Maintenance – radio equipment requires quite a bit of maintenance and upkeep to continue safely operating at their peak levels. It may also often require inspection and other routine testing. When a company rents radio equipment it is the rental company, not the hirer, that handles these maintenance needs. That is why it is difficult to beat the sheer convenience of removing the need for this maintenance and upkeep affords to companies who rent. This frees up a considerable amount of time, labour, and overall hassle and stress, especially when whole fleets of equipment come into play.

No Storage – One aspect of equipment ownership that many companies don’t adequately consider before buying is storage. Most radio equipment will begin to suffer over time if it is not stored correctly. Another factor to consider is the cost of storage. Renting the equipment itself in the first place removes this burden since it is the rental company that will have to deal with storage.

Transportation Is Made Easier – If your project or work site is far away from your primary location, or the location where you are storing your equipment, then another major logistical hurdle you will have to overcome is transportation. Once again transporting radio equipment, especially an entire fleet of it, can be very expensive, time-consuming, and logistically challenging. You may need to hire courier or other third-party companies just to move the equipment. Once again renting the equipment removes this burden since the equipment can often simply be delivered to the work site instead.

Time and Labour – A common thread that unites all of these logistical advantages to renting is the reduction in time and labour costs. These hidden costs often make owning much more expensive than it seems on the surface because, depending on fleet size, additional labour may need to be hired for upkeep and management, and at the very least these tasks will cut into overall productivity that could have been expended elsewhere. Some companies even need to set up entire divisions just to handle the logistics and upkeep of their equipment fleets.

Operational Advantages to Renting Equipment

There are also a great deal of operational advantages that renting radio equipment offers to companies. These operational advantages make the business run more smoothly and compete more effectively in ways that would not be feasible or realistic with equipment ownership. Simply put these are advantages that allow a company not just to survive, but to thrive in a competitive environment.

Supplement Capacity – Even for companies who have already made the decision to purchase radio equipment, there is often still a role to be played by equipment rental. That role is in supplementing capacity on an as-needed basis. It is not uncommon for particular projects to place demands on resources that exceed routine operations. That means that a company may already have a certain piece of equipment, or even multiple units of it, but still find that in order to get the job done in a timely, efficient manner they need to ramp up their capabilities still further with additional pieces of equipment. Obviously it’s much more cost effective to rent these temporary extra units than to purchase them outright for an isolated project. Equipment rental can also be useful to equip the company with speciality equipment that they may not have, but which can get the job done better than their general units.

Rent Before You Own – One major advantage to renting radio equipment is that even if you do intend to eventually buy the item, it allows you and your employees to become familiar with it before you purchase it. You can even try different brands and models for a more hands-on comparison. This allows your ultimate purchase to be much more informed and helps you set your expectations accordingly.

A Level Playing Field – One of the biggest factors that sets large companies apart from smaller ones is the amount and quality of resources that they have, including radio equipment. A huge conglomerate can afford the newest, high-end model with all the latest bells and whistles, whereas a smaller company would normally have to make do with more modest equipment for much longer. Renting levels the playing field by offering a much more affordable way for smaller companies to get access to top-level equipment.

Service – Renting radio equipment also offers an advantage over ownership in terms of the amount of support and assistance a company is able to receive. The equipment rental staff will be highly knowledgeable about a broad range of equipment, can make recommendations based on your particular needs for the project, and can give you a tutorial on safe and effective handling of the equipment. If something goes wrong with the equipment, or you aren’t sure how to do something, they can either walk you through troubleshooting or swap out the problem unit with a different one. This is typically much faster and easier than owning the equipment and having to go through the warranty steps, or getting no assistance at all if the equipment isn’t under warranty.

Financial Advantages to Renting Equipment

Considering that the majority of companies are in fact businesses that are trying to make a profit, often the most important consideration in whether to rent or buy radio equipment is what the financial ramifications of each decision will be. Often this is one of the most difficult aspects of the equation to accurately calculate because as mentioned above, it isn’t always easy to get good advice on what the true cost of an item will be in terms of the time, labour, maintenance, and the cost of storage. It is also tough to perfectly anticipate how often a piece of equipment will be used and what sort of returns it will generate. There are certainly scenarios in which it is more cost effective to own rather than rent; however, the following financial advantages to renting should definitely be taken into consideration before a decision is made.

Tax Deductions – Rental expenses are usually fully deductible to a company as a business expense. By contrast buying a piece of equipment is considered a capital expense and the full expense cannot be deducted in the year it was purchased. Capital costs will instead be amortized or depreciated over the life of the equipment.

No Depreciation – A drawback to purchasing just about any type of equipment is that it will immediately begin to depreciate in value, lowering the amount you would receive if you resold the equipment later. By contrast depreciation does not enter into rental considerations because the item is simply returned as agreed upon at the allotted time.

No Risk of Obsolescence – As technology advances and new government and industry regulations are enacted, there is a risk that a piece of radio equipment may become obsolete as it is replaced by a new iteration, or worse is rendered illegal or highly undesirable to use. For companies who own their own equipment this means that there may be little to no resale value whatsoever and there is even a risk that clients will not want or allow them to operate the obsolete equipment. This is not a concern for companies who rent their equipment because it would be the rental company that assumes the risk of the asset completely or drastically losing value and application.

Better Cash Flow – There is no getting around the fact that buying new radio equipment is expensive and in all but very large companies such a purchase is likely to have a significant impact on cash flow. By contrast renting a piece of equipment is a dramatically smaller expense which will have much less impact on the bottom line.

  • Tuesday, 04 August 2015