When I started working with my Uncle Bob last summer, I assumed that construction would be an easy, fun way to make a few extra bucks. However, I quickly discovered that construction work was serious business, filled with risks, difficulty, and rewards. After almost being creamed by a few backhoe booms, I learned how to stay out of the way. However, staying safe around heavy machinery isn't always easy to do. My blog talks about how to use machinery properly and what you need to do to stay safe so that you can return home to your family each and every day.
When you are just starting out as a construction company, there are limits to how much you can borrow and how much you can purchase without going bankrupt your first year in business. You want to set limits and ask for only the amount of money you know you will need for payroll and for the bare minimum in heavy construction equipment. If you want more equipment, you need to find ways to work around the hefty price tag. One of those ways is with "bare rentals." Here is how a "bare rental" works.
"Own" the Equipment While You Rent It
The one major difference between actually owning heavy construction equipment and using bare rentals is the price. With a bare rental, you are fully responsible for all the maintenance, the repairs and the replacement of the equipment, along with the rental price. It is the same as owning the equipment, without the full ownership benefit. This has one additional major benefit for any brand-new construction company. If you hate how a certain brand functions or operates, you do not have to worry about paying for it indefinitely because you did not agree to buy it and you can swap it out for something else. But, if you had actually bought the same equipment instead of getting it from a bare rental company, you would have to sell it instead of give it back, and that could prove to be difficult.
Additionally, some bare rental crane companies will sell their old cranes or offer a "lease-to-own" program on their rentals. While this might be more costly over time than borrowing enough money to buy your equipment up front, it does give you additional purchasing, renting and leasing options that you may not have considered before. Then, if you find a bare rental crane (or any other bare rental) that you would love to own and keep, you can work out the lease-to-own details with the bare rental company.
A Word of Advice Regarding Bare Rentals
The only down side to utilizing bare rental cranes and other bare rental equipment is that you take full responsibility for the equipment. This means that if it is damaged, stolen, set on fire, falls off a cliff, etc., you have to pay for it in full. Some bare rental companies do offer daily insurance, which protects both their assets and yours in the event that the equipment ends up in an accident or is badly damaged.
If you love all of the positives to bare rentals and are seriously considering renting some equipment to keep operating costs low, make sure you take the insurance on the rentals as well.